Tuesday 20 November 2018
[Mr Clive Betts in the Chair]
Road Safety and the Legal Framework
I beg to move,
That this House has considered road safety and the legal framework.
It is a pleasure to serve under your chairmanship, Mr Betts.
I thank the Backbench Business Committee for enabling this important debate on road justice and the legal framework from the perspective of vulnerable road users, which follows two debates on road safety held in this House over the past few weeks. The first was led by the hon. Member for Stoke-on-Trent South (Jack Brereton), and the second was a Government debate led by the Minister of State, Department for Transport, the hon. Member for Hereford and South Herefordshire (Jesse Norman).
Those important debates highlighted a range of issues that lead to avoidable road death and serious injury, particularly to vulnerable road users, such as those on foot or riding pedal cycles, but also to motorcyclists, wheelchair users, horse riders and others. As well as raising concerns about issues such as investment in highways, road design, training and The Highway Code, Members present at both debates expressed concerns about gaps in the application of road traffic offences and penalties, highlighted by the experiences brought to them by constituents following deaths and serious injuries among vulnerable road users.
I thank Brake, RoadPeace, Cycling UK and the House of Commons Library for helping me to prepare for this debate by providing detailed briefings. I secured this debate jointly with the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont). We are both officers of the all-party parliamentary group on cycling, which last year held an inquiry entitled “Cycling and the Justice System”, culminating in a report that was published in May 2017. That report made 14 recommendations, but today we will focus on just four areas of road justice that we contend need review by Government: clarity over the distinction in charging and sentencing between dangerous and careless driving; misuse of the exceptional hardship rule in respect of driving bans; inadequate sentences for leaving the scene of an accident; and car-dooring.
All of those who are involved have no doubt that there is a need for a review. The wider context is that we and the Government share an ambition to make walking and cycling the natural choice for shorter journeys to reduce congestion, cut pollution, improve health, rejuvenate our shopping parades and save us all money. We also need to cut the cost of the effects of death and serious injury, including through lost futures and exorbitant health costs. Part of the solution is to address gaps in our road traffic laws.
The laws and their prosecution should be there to encourage safer driving, reduce casualties, improve road safety through the deterrent effect, and reduce irresponsible behaviour on our roads. The effectiveness of road traffic laws is of particular importance to vulnerable road users because irresponsible driving presents a disproportionate threat to them. It also puts people off travelling by foot or by bike, despite the huge health and environmental benefits of doing so. We generally expect high safety standards and strong obligations to avoid or minimise hazards in other risky professions, such as rail drivers and airline pilots, and other dangerous workplaces, such as construction sites. However, for drivers of vehicles, lapses of concentration that cause death or injury are regularly dismissed as accidents or carelessness, rather than something that is avoidable.
My hon. Friend is making an extremely good speech in a very good debate, but will she bear it in mind that many employees in this country are put in a dangerous and vulnerable position because their employers force them to work untrained? I am thinking of Deliveroo, and those delivery people who get on a motorcycle or bicycle with no training and are put in a very vulnerable position. We have all seen it and we know that the accident rate is increasing. Employers are putting untrained people in a vulnerable position.
My hon. Friend makes an excellent point. There are strong standards in certain industries, such as for those who drive coaches and buses, and I agree that there should be a similar standard in that area. That is the only way to ensure that employers are not forcing their employees or contractors to drive too fast in order to get the job done.
We cannot afford to be relaxed about road deaths and serious injuries. The UK’s road death rate is relatively low, but sadly it is levelling off rather than continuing to decline. The legal framework and our justice system need to send the message that road crime is a real crime, and that it is unacceptable to endanger other road users. When I learned to drive 40 years ago, my teacher told me, “Always expect the unexpected,” because even if it is the fault of the dog or the child who runs out between the cars in front of the driver, ultimately it is the driver who will be responsible for their death. My teacher taught me to always drive with that in mind, whatever the driving conditions. That does not always mean driving at 20 mph; it is about appropriateness and safety within the conditions of the road, and always expecting the unexpected.
As I say, the legal framework and our justice system need to send the message that road crime is a real crime. The Government have taken notice of that need, but more action is awaited. In May 2014, the then Secretary of State for Justice, who is now the Secretary of State for Transport, responded to the road justice campaign run by Cycling UK and Brake by announcing plans for a comprehensive review of road traffic offences and sentencing. However, after substantial delays to that review, the Government announced a consultation in December 2016 on a much more limited set of proposals. Those proposals included increasing the maximum penalty for causing death by dangerous driving or death by careless driving while under the influence of drugs from 14 years to life imprisonment, and introducing a new sentence of causing serious injury by careless driving.
After further delays, the Government published a report on that consultation in October 2017. It recorded support for the above proposals, but noted that concerns had been expressed regarding a lack of clarity about the distinction between “dangerous” and “careless”. In response, the consultation said, the Government would work with criminal justice practitioners and victims’ groups to examine ways of improving the information available through the criminal justice process. To the best of our knowledge, no such work has yet been undertaken.
In the meantime, in September 2017, the Department for Transport announced plans for a separate consultation on cycling offences, following the death of Kim Briggs, who died when hit by a fixed-wheel bike ridden by Charlie Alliston that illegally lacked a front brake. That consultation was launched in August this year. Confusingly, it was initiated by the Department for Transport, even though the previous motor offences consultation was announced and conducted by the Ministry of Justice. There was a large response to that consultation, indicating the level of concern about singling out cycling offences based on a single fatality resulting from irresponsible cycling, when the law fails so spectacularly in hundreds, if not thousands, of cases every year in which people are killed or very seriously injured by irresponsible driving. The law is neither clear nor consistent.
The hon. Lady is making an extremely good set of points. I represent an area where walking, road running, horse riding and cycling are probably even more prominent than in the rest of the country. Since 2014, when action was first mooted, 1,800 people have died on the roads from all four of those categories and others as well. Does the hon. Lady agree that it is time to stop navel-contemplating and to start acting to protect people’s lives?
I absolutely agree with the hon. Gentleman. Above all, by not taking action, the Government are failing to take irresponsible people off the roads in the interests of public protection.
Are death and serious injury caused by driving a roads issue or are they crimes? I would say that they are crimes and that this issue therefore falls under the remit of the Ministry of Justice. I am therefore glad that a Justice Minister is responding today—somebody who I believe to be honourable and diligent in his work, as I saw as a member of the Select Committee on Justice.
As I say, there is a need for clarity and consistency about the distinction between dangerous and careless driving. There is a perception, particularly among victims of road crashes and their families, as well as among Members who have spoken in previous debates in this place, that public prosecutors too often favour prosecuting motorists who have caused a death or serious injury with the lesser offence of careless driving, for which they are more likely to gain a conviction than on the charge of dangerous driving. That is particularly the case because there is such a stark difference in the penalties for those offences. For death by dangerous driving, the maximum penalty is 14 years in prison, although I think the Government are minded to increase that to life in certain circumstances.
My hon. Friend has kindly referred twice to Brake, which is based in my constituency. She has not mentioned the Parliamentary Advisory Council for Transport Safety, whose watchword is basing good policy on good research. Is she going to say a little more about what the research needs are to make a clear correlation between what is happening on the roads and in the justice system?
I hope to be able to, but I realise that time is short, so I might not be able to go into the detail that my hon. Friend mentioned. He has just stepped down as chair of PACTS. I am also a member of PACTS, which has done an awful lot of excellent work in this place on road safety.
Due to the subjective nature of the definitions, too often we see the downgrading of cases from causing death by dangerous driving to other charges, simply because they are easier to prove. Using the term “careless” undermines and trivialises the gravitas of the offence and its impact on victims and their families. Cycling UK has done an excellent study called “Failure to see”, which expresses that stark difference in a range of different cases. I recommend that study to those involved in this subject.
Does my hon. Friend agree that there is increasing concern among road users, particularly cyclists and pedestrians, that greater numbers of cars are being fitted with tinted or almost smoked glass? That makes it incredibly difficult for other road users to see the face of the driver and know whether they have been seen and the driver is aware of the potential danger.
That is clearly of concern. My understanding is that there are standards for tinted glass, but whether all vehicle owners are abiding by those standards is an issue. Those cases need to be prosecuted, and we all know that the resources for finding those offences are declining.
The Government have said that they will create a new offence of causing serious injury by careless driving, and Ministers have said they will introduce new legislation as soon as parliamentary time allows. We look forward to that Bill. The charges and penalties for causing death or serious injury should be overhauled to ensure that prosecutors are not incentivised to opt for an easier won charge. We look to the Sentencing Council for that work, for which I believe the Ministry of Justice has responsibility. Overall, we ask for closer collaboration between the Ministry of Justice and the Department for Transport to ensure joined-up thinking on the definition of offences, with each consulted on the other’s work. I do not mind which Department leads; I just want to see action.
Finally, I will talk about driving bans. I agree with Brake that driving is a privilege, not a right, and that those who have shown disregard for the law should not be allowed to drive. We have a well-respected system of penalty points in this country, based on the expectation that people lose their licence when they reach 12 penalty points as they clearly have too often been driving dangerously, usually with speed violations. However, there is a loophole whereby many drivers who claim exceptional hardship in court manage to avoid losing their licence. That right is not accorded to most other offences with a risk to life, so the loophole should be closed. These people have already had a second chance in totting up points. The guidelines for magistrates need to be looked at in that respect.
In most high-risk occupations, someone’s licence to operate is removed immediately if there is a suspicion that they were responsible for an offence that causes death or serious injury. The same should occur for driving offences. Anyone arrested on suspicion of an offence that carries a mandatory driving ban should have their driving licence temporarily suspended until the case reaches a conclusion or is dropped. The advantages are that it keeps the issue out of court, is understandable, is instant and avoids the “innocent until proven guilty” problem. It would also have a deterrent effect. An alternative would be for anyone charged after killing or seriously injuring another to have their licence removed as a condition of bail. In the time it takes for a case to come to court, the driver charged can continue driving, potentially putting others in danger. The first option is the better one.
Thank you, Mr Betts. My colleague the hon. Member for Berwickshire, Roxburgh and Selkirk will cover the other issues.
It is a pleasure to serve under your chairmanship, Mr Betts. I thank the hon. Member for Brentford and Isleworth (Ruth Cadbury) for leading this debate—I was delighted to co-sponsor the application for it. The fact that we are both here today, representing different parties and very different constituencies, goes to show how this issue affects all parts of the United Kingdom. My thanks also go to the road charity Brake, Sustrans and Cycling UK for providing helpful information on the topic ahead of today’s debate.
This is absolutely not a debate about motorists against cyclists. For the record, I am both. Road users are not tribes of people competing for space on our tarmac. Road users are simply people—our constituents, our friends and our relatives—trying only to get around, whether that be on foot, on bike or by car. If we want to make our roads a safer place, the statistics do not lie: more than 99% of pedestrian deaths in the UK are caused by motorised vehicles. It does not take a degree in physics to understand that 1 tonne of metal travelling at high speed has the potential to cause greater harm than a 15 kg bike going at 15 mph on a good day. In the face of that, it is abundantly clear that if we want to make our roads safer, cutting down on irresponsible driving must be the priority.
The hon. Lady has already spoken about the need for a review of road traffic laws, particularly on dangerous and careless driving, and I would like to associate myself with those remarks. Another area that we need to look at closely is the law on hit and run offences. The current maximum prison sentence for failing to stop is six months. There is already a presumption against short custodial sentences in Scotland, and offenders are automatically let out early across the UK. That means that someone convicted of a failure to stop offence often escapes a custodial sentence completely.
I refer my hon. Friend to the case of Sean Morley, who was hit and killed on the A444 just outside Nuneaton. He survived for three hours after he was hit by a car. Regrettably, he was not discovered for several hours and he died. The driver was later convicted of failing to stop and failing to report an accident and was given a 16-week sentence. I do not think anyone would argue that that was not completely inadequate. Does my hon. Friend agree that it is not only sentencing that needs to be far stronger, but the sentencing guidelines given to judges?
My hon. Friend makes an excellent point. There are too many tragic cases like that involving our constituents. I will come to that point later in my contribution.
Failure to stop means a motorist was involved in an accident with another vehicle or person and was aware of the incident, but drove off anyway, with no thought about the damage or hurt caused. However, it can also be used as a means to escape a more serious punishment, such as if a drunk driver fails to stop in order to sober up. Failure to stop is a serious offence that should be treated seriously. It needs to end and we need to increase the maximum penalty to be in line with the maximum penalty for dangerous driving.
Another relatively simple measure to improve road safety would be to look at car-dooring. I think most cyclists are aware of the danger or have had to swerve to avoid a door opening in their path. I have had to do that on a number of occasions. I welcome the Government’s announcement that The Highway Code will be reviewed to include the so-called Dutch reach, where people open a car door with the hand furthest from the door. I hope that that will be included as a requirement so that learner drivers are taught it as a standard part of their lessons and test.
I congratulate the hon. Gentleman and my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) on securing this important debate this morning. Does the hon. Gentleman agree that the standardisation of helmet cams for cyclists and dashboard-mounted cams would provide the sort of evidence that could help bring cases to justice such as he has described in his speech?
I am grateful for that intervention. We should look at anything that can gather more evidence to help prosecutors. Ultimately we want to make our roads as safe as possible for all road users and deter irresponsible behaviour. If cameras help to contribute towards that, they would be beneficial.
However, we need to also look at whether a new offence needs to be created. Between 2011 and 2015, more than 3,100 people were recorded as being injured or killed as a result of a vehicle door being opened negligently, including cyclist Sam Harding, who was killed in August 2012 when a driver opened his plastic-tinted door in Sam’s path, knocking him under a bus. The maximum penalty for opening a car door negligently was a £1,000 fine, so the Crown Prosecution Service tried, unsuccessfully, to prosecute for manslaughter. The driver responsible received only a £200 fine. Clearly, this area of the law might not be working and needs to be reviewed.
I am a little worried. Emotionally I want to support the hon. Gentleman, but first, the research on exemplary sentencing and a reduction in casualties is not strong. Secondly, when it comes to car-dooring as a serious offence—a lot of young and inexperienced people do it—does he agree that technology is rapidly helping us? New cars can assist us and tell us if there is a car or motorcyclist overtaking.
The hon. Gentleman makes an important point, but for the sake of our justice system, it cannot be right that a life is lost and the person responsible for that loss of life faces only a £200 penalty as a consequence. There is surely something fundamentally wrong with our justice system if that is how it works. It is clearly not good either for the victim or for their friends and family if justice is not seen to be delivered, so I think there is a strong case to look at sentencing and the guidance given to the judiciary in such cases.
We are calling for a much wider review of road safety offences than is currently proposed. The Government have taken action, which is to be welcomed. The announcement of life sentences for causing death by dangerous driving while under the influence of drugs or alcohol was overdue, although it needs to be implemented soon. The Department for Transport also has plans for a pilot scheme that will offer driving instructors training to put cyclists’ safety at the forefront of their minds when teaching new drivers, and The Highway Code review, with a focus on cyclist and pedestrian safety, is also a good step forward. However, the Government need a wide-ranging review of motoring offences as a matter of urgency.
The Government are right to look again at the law surrounding injury or fatalities caused by cyclists. I have every sympathy with Matt Briggs, who lost his wife, Kim, when she was killed by a reckless cyclist. Kim’s father is a constituent of mine who lives in Coldstream, my own town. It makes no sense to focus on cycling offences without reviewing the much greater number of motorist offences. It is time for the Government to improve road safety for our most vulnerable road users, clear up the inconsistencies caused by the current dangerous and careless driving offences, and review the law on penalty points and hit and run offences.
My party rightly has a reputation for being tough on crime, but I feel we make an exception as a party—indeed, we make an exception as a society—if the crime is committed behind the wheel. Perhaps it is because cars are so commonplace and so central to our daily lives that their potential danger has become normalised. It is time to tackle this issue and send out a clear message to the small minority of irresponsible motorists that the safety of vulnerable road users is more important. I look forward to hearing from colleagues during this debate and from the Minister at the end.
Order. We have nine Back-Bench speakers to come, which means an absolute maximum of four minutes each. Please do not go any longer than that.
It is a pleasure to serve under your chairmanship, Mr Betts. I am grateful for the opportunity to speak in this important debate. I want to talk about deaths and serious injuries caused by dangerous drivers and the legislation around sentencing.
Many Members will be aware that in response to pressure and campaigning from bereaved families, MPs and the road safety charity Brake with its “Roads to Justice” campaign, the Government finally agreed in December 2016 to hold a consultation on sentencing for those who cause death and serious injury by dangerous driving. The consultation ran until February 2017 and received more than 9,000 responses.
In October last year, the Government announced that, as a result of the consultation, they would introduce tougher sentences for those causing death and serious injury by dangerous driving, including the possibility of life sentences to replace the current maximum sentence of 14 years. When that was announced more than a year ago, there was much relief among campaigners and bereaved families that at last the Government were taking action to ensure that other families would not have to suffer the same injustices. Not only were those families sentenced to a lifetime of grief at the loss of a loved one, but they suffered the injustice of seeing their loved one’s killer receive a prison sentence of just a few years.
Ian and Dawn Brown-Lartey, in my constituency, had a 25-year-old son, Joseph, who was killed by a 19-year-old driving an uninsured and unlicensed hired Audi at 80 mph in a 30 mph zone. He ran through a red light and smashed into Joseph’s car, killing him outright. Joseph’s killer was imprisoned for six years in May 2015 and has since been released on licence after serving half his sentence. Joseph’s father, Ian, has accused the Government of paying lip service to their promises a year ago to impose stiffer punishments on the most dangerous offenders who cause fatal crashes, because nothing has happened since then. No draft legislation has appeared and, despite numerous questions, letters and debates, no changes have been made to the sentencing guidelines. The longer the Government drag their feet over implementing the changes, the more families will continue to suffer.
In just the past two weeks in my constituency we have had one fatality and two cases of serious injury to pedestrians on our roads. In two out of the three cases the drivers were arrested for dangerous driving. When I read those stories in the local paper, my heart sank at the thought of the anguish that the victims’ families must be going through, not only in dealing with death or serious injury, but knowing that, with the law as it stands, if the drivers are convicted of dangerous driving they will serve only a short sentence.
With the anniversary of the Government’s announcement that tougher sentences would be introduced, and with no action having yet been taken, I again wrote to the Ministry of Justice asking when the legislation would be passed. Disappointingly, the message I received yesterday was that there was no available legislative slot to introduce a Bill, or a suitable Bill that could be used to introduce the changes. So families continue to suffer, and the Government, having promised bereaved families more than a year ago that they would take action, have delivered nothing.
I thank the hon. Member for Brentford and Isleworth (Ruth Cadbury) and my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for bringing this important issue to the House’s attention. It is right that we adequately address the problem of accidents that lead to death and serious injury on our roads. I am grateful for the attention given to providing the safest possible road network through good legislation, and for the tangible impact it will have in saving lives in my constituency and across the country. That is to be welcomed.
However, I implore the Government to consider the safety of horses and their riders in any measures to improve the law for vulnerable road users. Having listened carefully to concerns raised by constituents in west Cornwall, and having worked closely with the British Horse Society over recent years, I am disappointed that the opportunity created by reviewing and altering both the guidance and the law has not been adequately used to consider the safety of horses and their riders.
Horses and their riders are often forgotten as vulnerable road users compared with cyclists and pedestrians. Given the direct similarities between the way in which drivers should view cyclists and horse riders when passing, it makes sense to link the two in the review of guidance and legislation. My friends in the British Horse Society recently provided me with the current statistics on horses and riders who have been injured or killed as a result of road traffic accidents, and they are truly damning. Some 237 horses have been killed, 40 riders have been killed and 899 horses have been seriously injured. Furthermore, 85% of those incidents have been a result of drivers passing too fast or too close. For a rural constituency such as mine where there are many horse riders, that is a wake-up call, and the Government should recognise it as such.
There have been improvements in the awareness and consideration given to horses and their riders, in large part as a result of education campaigns such as the British Horse Society’s “Dead Slow” campaign and partnerships with the police and driving institutions. However, that is not enough. More needs to be done at Government level to ensure that horses and their riders are a key part of the national debate on road safety. I call on the Government to include in any change to legislation strengthened sections relating to the safety of that important and vulnerable group.
Fresh advice and guidance should explain not only why drivers should take extra care and slow down when passing horses but the consequences of passing too close and too fast. At present, only section 3 of the Road Traffic Act 1988—“Careless, and inconsiderate, driving”—can be used if horses are passed too fast or too close. I am simply asking for a more conscious and deliberate effort across the nation to educate drivers on the needs and risks of those riding a horse, and for the definition of a road traffic offence to be strengthened. Those measures would save lives of drivers, riders and horses, and spare all those concerned the distress of dealing with such dreadful accidents.
More must be done. I urge the Minister to work with the Roads Minister to take seriously recent requests that the Government consider and then implement speed limits and minimum distances when drivers are passing horses. That is not a perfect answer, but it would be a significant step and a statement of intent that horses and their riders are recognised as a vulnerable group and will no longer be overlooked in this debate.
I urge the Minister not to overlook the matter of equestrian safety when exploring new road traffic offences and subsequent sentencing. The similarities to cyclists are stark. It therefore makes no sense to turn a blind eye to the matter of horse safety, given the opportunity to improve road safety for vulnerable road users.
It is a pleasure to see you presiding over the debate, Mr Betts. I am pleased to follow the hon. Member for St Ives (Derek Thomas). I congratulate my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) and the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) on securing this important debate. I also thank the Parliamentary Advisory Council for Transport Safety, Cycling UK, and Brake for their briefings.
Today’s debate concerns the legal framework. First, the police need to catch those who break road safety laws, and to do that they need to be there. I would be grateful if the Minister advised us on what discussions he has had with Ministers in the Home Office about the loss of road traffic officers in recent years. Secondly, sentences need to be handed down. Thirdly, there need to be clear legal definitions and fair punishment.
As we have heard, Cycling UK, along with road crash victims’ charities Brake and RoadPeace, are calling for the Government to review road traffic offences and penalties to ensure that the law delivers just and safe outcomes for all road users. I was concerned to learn that the number of driving bans imposed by English and Welsh courts has declined by 60% in 11 years, from 155,000 in 2005 to just 62,000 in 2016. Will the Minister clarify what is happening?
In June 2017, more than 10,000 drivers in Britain were still allowed to drive despite having more than 12 points on their licence, as my hon. Friend the Member for Brentford and Isleworth mentioned. Will the Minister tell us whether that troubles him? Moreover, last year, police forces in England and Wales carried out the fewest number of breath tests since records began in 2002, according to Home Office figures. Is that indicative of a policy change from the Government, or does it also reflect a reduction in police traffic officer numbers?
The prevalence of uninsured drivers, which PACTS links to dangerous driving, road casualties and wider criminality, is also worrying. Will the Minister advise on whether that troubles him? What discussions have taken place with the Home Office and the National Police Chiefs Council to address those matters?
Along with PACTS, I support the establishment of a new offence of causing death or serious injury by dangerous and careless cycling. However, we would like the Government to commission a broader review covering a wider range of dangerous road behaviour, rather than focusing just on cyclists. Cycling UK has issued suggestions on what such a review, akin to what was promised in 2014, could examine. It advises that the review should clarify the definitions of “dangerous” and “careless”, review the accompanying maximum sentences, remove the ability of convicted drivers to avoid driving bans routinely, increase the £1,000 maximum penalty for car-dooring, and ensure that any revisions to cycling offences and penalties reflect key differences between driving and cycling.
Clearly we need a full review. As a cyclist myself, I see other cyclists ignoring the rules of the road. Some cyclists need a judicial shock, but other road users need one even more. The numbers killed and seriously injured on our roads have stagnated in recent years. The Ministry of Justice has an important role to play in protecting the vulnerable and reducing those figures. I look forward to hearing how the Minister intends to assist with that project.
I associate myself completely with the comments made about the need for greater clarity on the definition of careless and dangerous driving, for tougher penalties and tougher action on driving disqualification, and for tougher penalties on hit and run drivers.
I will raise some issues that have not been mentioned so far, which are highly relevant to road safety. I have constituents who work in the haulage industry who tell me that the rest centres provided for them in retail distribution centres are often such that they cannot rest. They are noisy and crowded, and there is nowhere that is comfortable for them. They are prevented from lying down in the bed in the back of their trucks during rest periods. That says to me that many drivers who are getting back into their lorries after a supposed rest period are not rested, and that they could rest safely if they could sleep in quietness in the back of their cabs. That is not allowed in many retail distribution centres, which is a serious issue. I would like the Minister to take that back to the Department for Transport.
Another road safety issue is people registering their vehicles at addresses of convenience—a Post Office box address. When a letter comes through the door because the person has been speeding, the authorities cannot take action. Bedfordshire police did a major study of that a few years ago, and I pay tribute to Sergeant Sean Quinn. The study showed that thousands of penalties were not being acted on because cars were being registered at addresses of convenience. That is a serious issue that puts some drivers beyond the law and puts us all in danger.
There is a similar issue with foreign licence plates. So far this year, Central Bedfordshire Council has issued 335 parking enforcement notices to vehicles with foreign plates, 250 of which have been cancelled because they cannot trace the driver. That applies not only to parking but to speed cameras. Again, drivers can drive with impunity. It is an offence not to register a foreign vehicle if someone has been here for six months. The police cannot track that, and I do not believe that the Driver and Vehicle Licensing Agency is doing so either. That is another loophole in the law that makes the roads more dangerous for us all.
False number plates have also been drawn to my attention. People make up a false number plate, and then commit crime or drive dangerously. Again, they cannot be traced and are beyond the law. That too is a serious offence, which I do not think that the authorities have caught up with properly.
Potholes are highly relevant to the debate. A constituent told me about £500 of damage to his car recently. For a cyclist, of course, swerving to avoid a pothole can lead to serious injury or death, and has done on a number of occasions. That is why I welcome the extra money going towards our roads. We need to realise that potholes can lead to serious injury or death for cyclists.
I completely support the points that have been made about car-dooring. The Dutch reach should be standard; it should be taught by every driving instructor and made part of the driving test, because we all need to get used to using it. I speak as someone who drove into the open door of a council dustcart many years ago and was injured.
Finally, we need a degree of civility and understanding. Whether we are on a horse, in a car or on a bicycle, we need to show one another courtesy and civility. It is not difficult to slow down or pass wide. Motorists, cyclists and horse riders are all in different positions, but proper courtesy and consideration to all of us would keep us all safer.
Order. I have to reduce the time limit to three minutes because there seem to be more hon. Members who want to speak. I will need to call the winding-up speakers at 10.29 am.
It is a pleasure to serve under your chairmanship, Mr Betts. I welcome this opportunity to debate road safety again. I have said on many occasions that although I do not think that any one approach alone can make our roads safer, an improved legal framework is essential if we are to reduce deaths and deliver justice for victims and their families.
In 2017, we saw the highest number of road deaths since 2011. In West Yorkshire, 815 people were killed or seriously injured in road traffic crashes last year. The child casualty rate in my constituency is 52% higher than the national average, and progress in reducing deaths and serious injuries has been 30% slower than elsewhere. Indeed, my constituency has one of the highest rates in the country of children being killed or seriously injured on our roads.
In the short time available, I would like to focus on a few areas in which we need to make changes; I hope the Minister will be able to respond to my points. First, as ever, I must raise the issue of how the law deals with drivers who cause death through dangerous or careless driving. As many hon. Members present will know, in October 2017, following a consultation, the Ministry of Justice announced a series of changes to the law on death by dangerous and careless driving, including life sentences for those who cause death by dangerous driving and for careless drivers who kill while under the influence of drink or drugs, as well as a new offence of causing serious injury through careless driving. The Government now claim that those changes will be incorporated into a review of cycle safety.
I have to say that that is completely unacceptable. It is right that the Government review cycle laws, but it is just not good enough that the changes already announced to sentencing are being rolled into an open-ended process. Those changes have still not been implemented, and we have not received a satisfactory answer about why there has been a delay. We still do not know when the changes will finally come into force. I appeal to the Minister to take the opportunity to finally give us some answers.
Finally, I turn to points and disqualification, in particular the “exceptional hardship” loophole. We must ensure that the exceptional hardship rule, which allows drivers to keep their licence even when they have reached 12 points, is not abused. Data from the DVLA shows that in Bradford alone, more than 200 hundred people successfully used the exceptional hardship argument last year to escape a ban. Across Britain, 11,000 drivers still have their driving licences, despite passing the points limit of 12. Some have 40 or 50 points. We cannot allow drivers who have consistently broken the rules to continue driving. It makes a mockery of our laws and puts other road users at risk.
As always, I will end with a reminder of the immense human cost of dangerous driving. Every family who has lost a loved one in a road crash knows just how devastating it is. Anything that we can do to make our roads safer, including creating a stronger legal framework, must be done as a matter of urgency.
Inactivity is far more dangerous to people’s health than cycling or walking. We need to get the message out loud and clear that cycling and walking are great for our health, and we need to get Britain moving. One of the greatest deterrents, however, particularly for parents, is fear of the danger of our roads.
I will add to points made by other hon. Members by speaking about those drivers who escape all consequences. I suggest to the Minister that we need to get across the immediacy and certainty of consequences. The line between careless and dangerous driving is a very blurred one; today’s careless driver is tomorrow’s dangerous driver. We need to ensure that people do not entirely escape consequences and that they know what will follow. I agree that we need to close the exceptional hardship loophole. Merely inconveniencing and fining those who are at the beginning of their journey to becoming dangerous drivers is not enough.
I also ask the Minister to consider the role of restorative justice. To give an example, I got the phone call that no parent wants to get, telling me that my daughter was unconscious in the back of an ambulance. While wearing hi-vis in a cycle lane, she had been knocked off her bicycle by a careless or even dangerous driver who was in a hurry and was turning into a side road. If my daughter had not been wearing a cycle helmet, she would undoubtedly have been killed or very seriously injured. I was shocked that she was interviewed in the casualty department while she was still concussed.
There were no consequences whatever for the driver. My daughter is not a vindictive person and nor am I, but at the very least I would have expected someone to investigate the incident. Witnesses came forward and were happy to testify, but nothing happened. When someone has been very seriously injured in such a collision, restorative justice could play a role. I hope the Minister will consider how we can ensure that drivers meet the person whom they have injured. Until that takes place, they should face some immediate consequences—a ban, at least.
It is a pleasure to serve under your chairmanship, Mr Betts. Let me take the opportunity to contextualise the debate by showing the real impact of unsafe road behaviour when appropriate action is not taken. We should all aim for zero deaths and injuries on our roads and pavements, and the only way to achieve that is by supporting road safety with practical investment and appropriate legislation.
On Saturday, I attended a beautiful service at St Martin’s church at Birmingham’s first World Day of Remembrance for Road Traffic Victims. I was extremely honoured to have been invited to the event by RoadPeace. It was touching to remember all those who have lost their lives. Since the day was first commemorated 25 years ago, more than 30 million people have died on the world’s roads, including in the horrific scenes in my constituency last year in which six people were killed.
To bring focus to the issue and to the need for strong and fair judicial structures around road safety, I would like to read an extract from the poem that I read this weekend alongside my hon. Friend the Member for Birmingham, Erdington (Jack Dromey):
“This is not the way things were supposed to be
To stare at a plaque with the words ‘Remember me’
And be filled with thoughts of you.
It had seemed that time was limitless, and there was still so much to say;
It had never occurred that one so full of life could be confined to yesterday.
Back then, road deaths were just stories to us,
small segments on the news,
And we never quite understood all the fuss;
Until we became the next family to walk in those shoes.”
In one terrible 24-hour period, three young people and four others were seriously injured on Greater Manchester roads. Our road traffic laws are failing to deliver justice or promote road safety. Does my hon. Friend agree that the Government must review road safety in its entirety and ensure that we have measures to protect vulnerable road users such as those who have been killed in Greater Manchester?
I absolutely agree.
The poem that I have just read was written by Lucy Harrison, the sister of my constituent. She lost her brother when a car going at 93 mph hit him as he crossed the road. Having had him taken from them, his family had to go through a trial and the Court of Appeal before the driver who caused the crash, and who had failed to stop, was given a sentence of four and a half years. The driver is now due to be released after serving just two years.
One point that Lucy has raised is that people talk about the incident as an accident. These crashes are not accidents. Road safety legislation is in place to make sure that people feel safe on and around our roads. If someone breaks the law and commits a crime on the road, we must call it what it is. She is therefore calling for tougher sentencing and a change in society’s perception of death by dangerous driving.
Any road policy designed to keep all road and pavement users safe, regardless of their mode of transport, requires an effective road justice system. A year on from the announcement of tougher sentences for drivers who kill, the Government have failed to introduce legislation. Families of road crash victims across the UK are still waiting for justice. As Lucy says, people need to see that her brother
“was a human with a family, not just a statistic, because it can just be like another road death where he became a statistic or a story.”
On behalf of Lucy, Tony Worth and the many other families of victims, I urge the Government to deliver justice for road crash victims and keep the dangerous drivers off the road.
I thank the hon. Member for Brentford and Isleworth (Ruth Cadbury) for bringing this debate forward.
The Road Safety Foundation’s annual report, “Getting back on track”, which was launched in partnership with Ageas UK, clearly says that if we had been on track to halve road deaths in this decade, in line with international targets, an extra 2,549 people would not have lost their lives between 2010 and 2017. Some 1,793 people were killed in road crashes in 2017, and 73 people were killed or seriously injured every day. Motorcycle fatalities increased by 9% from 319 in 2016 to 349 in 2017. In comparison with what the UK Government spend on education and GP services, £35 billion, or nearly 2% of GDP, is lost as a result of road crashes each year. There is a financial cost.
As other hon. Members have done, I want to talk about how this issue has affected me. My brother Keith, who is 6 feet 2 inches, was involved in a motorbike accident. Now he has carers who come in four times a day. He cannot manage his money. He cannot walk without a cane. He cannot speak or think like he once did. My mother looks after him, and everyone tries to help. Sometimes, we see the accidents but not the effect on the families. An accident in a sport that Keith loved has had a very clear impact on him and our family.
Across our constituencies, there are those who have lost loved ones, or who have lost their limbs or their way of life in an accident. More than saving money, better road safety is about saving lives and the quality of those lives.
We have talked many times in Westminster Hall and in the main Chamber about road safety, and I want in particular to mention road safety around schools. Two schools in my constituency have 20 mph zones around them, but there are many others that still have a need for safety, such as Grey Abbey Primary School, which dates back to 1847 and sits on a 90° blind bend in the road. There needs to be help for that.
Ring-fenced funding would mean more traffic-calming schemes, and more traffic-calming schemes would mean fewer accidents; importantly, reduced speed means less damage to children. Texting while driving and distracting friends while driving also need to be addressed. It is estimated that if the Government were to invest £75 million per year over the next five years, 1,450 people would be spared the trauma of death or injury. The value of injury prevention exceeds half a billion over the same period. For every £1 invested in safer roads, £4.40 of economic value is created. The figures on the finances are very clear.
While we do not have a devolved Government in Northern Ireland due to the intransigence of Sinn Féin, I ask the Minister to ring-fence funding and ensure that the relevant Department in Northern Ireland understands what is expected from that additional funding.
I congratulate my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) on securing this debate. As we have heard, this is an increasing problem and an ever present danger on our roads. Just two months ago in my constituency, over a four-week period there were three deaths on our streets—Emscote Road, Radford Road and Banbury Road—and numerous road traffic accidents.
We have to change attitudes on how we view and use road space. As was mentioned by the hon. Member for Totnes (Dr Wollaston), we need to encourage more people to use the road space, while making provision for the safety of all users. These are not motorways; they are roads for all to use. Alongside introducing changes to the legal framework, we need to ensure that we are changing behaviour at the same time.
Clearly, there are many causes. There are increasing pressures in modern life—pressures to get to work and to get the kids to school, and so on—but there are also a greater number of delivery drivers. More and more people are using the internet to shop and there are more and more deliveries to home and so on. Many of those delivery drivers, in the new gig economy, are being forced to work at such a pace that they are perhaps less observant of regulations and other road users than they might ordinarily be. They are under more and more pressure. Likewise, new housing developments around our towns put more pressure on the central town area infrastructure, with insufficient capacity to deal with the additional road use.
We also see a lack of enforcement of speed limits on our streets, with fewer police and the removal of cameras. When I served on the county council, I and other Labour councillors introduced a speed watch programme. It was great, but wearing high visibility jackets was hardly a deterrent to people speeding in our towns.
I would welcome more 20 mph zones in our town centres, which would send out a very clear message for more measured speeds in our town centres. I would like to see tougher sentences on people who fail to stop—the existing six months for leaving the scene of a crime is ridiculous. Likewise, the loophole for those who have 12 points on their licence is quite ridiculous, given the seriousness of their convictions. Finally, is it acceptable to have insurance products that insure someone against losing their licence? I would say not.
I recently stood down as chair of the all-party parliamentary group for transport safety, and retain my role as chair of the charity the Parliamentary Advisory Council for Transport Safety. I stood down because I now chair the World Health Organisation’s Global Network for Road Safety Legislators.
This issue is rightly called the greatest epidemic of our times by the United Nations. Some 1.3 million people are being killed on our roads, and 10 times that number are being seriously injured. It is an enormous challenge for all of us.
When I introduced my first private Member’s Bill, to ban children from being carried unrestrained in cars, and when we started PACTS and organised the seatbelt legislation, we had one mantra, which was to base all our work on great research. If there are good laws based on great research, enforced rigorously and fairly, that leads to results, and we have seen a reduction in deaths and serious injuries across most of Europe. We need to expand that further. This is a timely debate, as it is Road Safety Week. We have this fine organisation, PACTS, which has organised its work over many years on research, on good laws and on keeping the population of the country with us, which is very important. My plea today is that we keep our minds on evidence-based research.
I know about the feelings when someone is tragically killed. I came into this road safety area after a terrible accident on returning with my number two daughter from her christening. It was a dreadful smash, and thank God we survived. Ever since then, I have been passionate about saving these lives, but we can get carried away. This is not about vengeance. The laws should be right and commensurate. Sometimes, we see appeals for tough legislation and tough penalties, and we can get carried away. I believe that if we look at getting the balance right and carrying the public with us, we will get a reduction and we will get better.
We are lucky to be seeing better technology, but I would add a word of caution. Technology in cars is improving all the time. People are safer and safer, in the safest of cars, but it is the vulnerable road users—the pedestrians, the cyclists, and those on little motorised two-wheelers most of all—who are being killed all over the world. This is a United Nations sustainable development goal, and it is as important here as it is all around the world.
We have 10 minutes now for each of the Front-Bench spokespeople, and a short time for the mover of the motion to respond. I call Stuart McDonald for the Scottish National party.
It is good to see you in the Chair, Mr Betts. I congratulate the hon. Members for Brentford and Isleworth (Ruth Cadbury) and for Berwickshire, Roxburgh and Selkirk (John Lamont) on securing the debate, and thank all hon. Members for their contributions. It is clear that we have some long-standing road safety campaigners in the Chamber today.
This debate has clearly struck a chord with my constituents, if my inbox is anything to go by. Like many others, they are concerned that the legal system is not quite operating in a manner that is fair, just and consistent between different types of road users. We heard some tragic stories from hon. Members about families who have been affected by dangerous and careless driving through the loss of loved ones, and that of course reminds us what this debate is ultimately all about.
A number of consultations and initiatives have been announced by the Government, although, as the hon. Member for Brentford and Isleworth flagged up, they have tended to proceed in a rather slow, piecemeal fashion. This debate allows us to look at a number of the issues in the round.
Ultimately, as the hon. Member for Birmingham, Edgbaston (Preet Kaur Gill) said, what we want to see is a country where there are no fatalities on the road and where road users are as safe as we can make them. Clearly the legal framework has an important role to play. As the hon. Member for Berwickshire, Roxburgh and Selkirk rightly pointed out, this is not about drivers against cyclists or any other road users. The emails that I have received highlight that, as he pointed out, 99.4% of pedestrian deaths in the UK involve a motor vehicle. The key challenge that we have is to answer the question of how we protect other road users against cars and other motor vehicles.
A number of Members made compelling arguments for some of the reforms that are suggested in the report of the all-party parliamentary group on cycling, “Cycling and the Justice System”. From my reading of the report, it contains a lot of sensible ideas. Prevention is clearly better than a cure, and I have no difficulty in supporting revisions to The Highway Code to address ambiguities about the responsibilities of road users—for example, in situations where cars are turning into side roads. I welcome some of the Government announcements on that.
The hon. Member for St Ives (Derek Thomas) was absolutely right to mention horse riders’ safety, which constituents have contacted me about. He set out some of the alarming statistics about deaths—both of riders and horses—on the roads. Some 85% of such incidents are caused by drivers passing too fast or too close to horses. Campaigners argue that The Highway Code should include, at the very least, a strengthening of section 215 to include the British Horse Society’s “Dead Slow” advice to drivers on how to pass horses safely.
Among the other APPG suggestions, I would be happy to see changes to the format of driver testing to encourage better behaviour towards cyclists and pedestrians. I certainly would be sympathetic to, and supportive of, increased retesting of those who have committed offences. I am quite surprised that graduated driver licensing has not been brought up today, because I think there is still a strong argument for it. There is strong evidence that the benefits of such schemes outweigh any problems they might cause.
To come to the crux of the matter, the most difficult area of the debate is probably the adequacy of the offences that are applied to bad driving. I suppose that we aim to ensure that offences and the available punishments reflect both the level of blame or culpability in a driver’s behaviour and the impact that that culpable action has. A patchwork of offences seems to have developed over the years, and it is probably now time to consolidate them and ensure that they are comprehensive and fair.
It is absolutely true that there has to be a distinction between careless and dangerous driving, but perhaps those terms are not perfect. After all, careless driving is, very often, dangerous driving. The hon. Member for South West Bedfordshire (Andrew Selous) made the point that the term “careless” tends to sound trivial; perhaps words such as “negligent” or “reckless” would better reflect the legal distinction in driver behaviour. He also made some good points about the provision of road haulage rest facilities—the statistics show that many people involved in road traffic accidents are driving in the course of employment, so it is imperative that we ensure that those who drive for a living are supported in any way possible to do that safely.
While motor vehicles are the biggest challenge that we face, and cyclists are infinitely more sinned against than they are sinners, there are questions about how the law should deal with careless, reckless and dangerous cycling, as the hon. Member for Berwickshire, Roxburgh and Selkirk acknowledged. Given that we deal with serious cases by relying on Victorian laws that were designed for horses and carriages, it is probably time for an update to deal with the rare occasions when cyclists cause serious accidents, especially for pedestrians. In Scotland, there are offences such as culpable homicide and culpable and reckless conduct, but it is questionable how appropriate and practical those would be. A new statutory regime appears to be justified, but it is important to clarify that this is about ensuring justice—it is absolutely not about punishing cyclists. As the hon. Member for Totnes (Dr Wollaston) said, we absolutely want more people to cycle.
On the stage at which offences have been proven, generally I would not seek ever-increasing sentences if education, technology or enforcement can provide an answer. However, it is alarming and surprising that we have on our roads more than 10,000 motor vehicle drivers with 12 or more penalty points on their licence, and that there has been a 60% drop in driver disqualifications in the past 10 years. It is essential that there is research on the reasons for those trends, because certainly they raise concerns that the current legal framework is at risk of being undermined by how it is implemented.
The hon. Member for Berwickshire, Roxburgh and Selkirk raised the issue of hit and run. I am surprised to hear that the maximum sentence is six months, because that offence is akin to perverting the course of justice. That is something that perhaps has to be looked at again. I also sympathise with what he said about making car-dooring a specific offence. As the hon. Member for Huddersfield (Mr Sheerman) reminded us, all of this has to be based on research.
Our roads are certainly safer than in past times, but there is still plenty of room for improvement, and the justice system has a role to play. I thank all Members for their contributions today.
It is a pleasure to serve under your chairmanship, Mr Betts. I thank my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) for securing the debate. I also thank Cycling UK, Brake and RoadPeace for the considerable campaigning that they have done in this area over the years.
I agree with the good doctor, the hon. Member for Totnes (Dr Wollaston): walking or cycling is clearly far better for people’s health than driving. From the contributions that we have heard today, it is clear that many aspects of our road traffic laws are uniquely problematic. I declare that I was a prosecutor for many years—one of those people who make a number of decisions about whether to charge somebody with reckless driving, driving without due care and attention, dangerous driving or other offences of that nature. I will explain some of the challenges that we faced as prosecutors.
We have heard that it is all too easy for someone who is not an inherently dangerous person to drive in a manner that none the less causes obvious and foreseeable danger, which explains the apparent reluctance of some jurors to convict drivers of offences that they can easily imagine committing themselves. That possibly also applies to justices of the peace and magistrates in the lower courts. Many colleagues have mentioned examples where it appears that the law has not been applied properly. The framework for dangerous and careless driving is unclear; more importantly, it is applied inconsistently. That obviously sends a poor message to people—it shows that our justice system is perhaps not operating effectively. As a result, it causes distress to the seriously injured and to bereaved road crash victims. It also reinforces the idea that road danger is to be tolerated rather than eliminated.
Cycling UK has highlighted a case of a driver seriously injuring a pedestrian outside east London’s Westfield shopping centre in February 2017, for which he received just nine points on his licence after pleading guilty to careless driving. He then sent his friends a bragging WhatsApp video saying, “Nine points ain’t stopping me from driving.” Nine months later, he was swerving in and out of traffic at 68 mph on a 30 mph south London street, killing a 19-year-old woman who had crossed the road in front of him. Other videos found on his phone included one captioned “ripping the road at 146 mph”, suggesting that he enjoyed driving dangerously and illegally on a regular basis. The failure to treat his first offence as dangerous driving allowed him to keep his licence, with fatal consequences. Obviously not everyone is in that situation—we have to keep perspective on this—but it demonstrates one of the problems that occurs in courts.
We know that the current distinction between careless and dangerous driving depends largely on whether the court believes that the accused person’s actions fell below, or far below, what would be expected of a competent and careful driver or cyclist. As we know, those terms are highly subjective, and they allow for huge variation in interpretation by individual magistrates and jurors. The distinction is supposed also to relate to whether a defendant’s actions objectively caused danger that should have been
“obvious to a competent and careful driver”.
Evidently, however, prosecutors and courts continue to act as if the defendant’s state of mind were still relevant, despite the removal of reckless driving from the legal framework in the Road Traffic Act 1991. That suggests to me that there is a need for a review into the definitions of “dangerous” and “careless” offences in order to clarify whether the distinction relates to the level of danger caused by the defendant’s actions—an objective test—or to their state of mind, a subjective test.
I hope hon. Members will forgive me for being a bit technical with some examples. An objective test would be clarified by retaining “dangerous driving” but defining it as that which had caused danger that should have been obvious to a competent driver paying due care and attention, without depending on whether the defendant’s actions fell below or far below the standard expected of such a driver.
The lower-tier offence should perhaps be renamed “unsafe” or “negligent” driving, to clarify that the distinction has nothing to do with the driver’s state of mind. The need for that has been demonstrated in the car-dooring offences that hon. Members have mentioned. One example is cyclist Sam Harding, who was killed in August 2012 when a driver opened his car door into Sam’s path, knocking him under a bus. The driver had darkened his car windows with plastic tinting film, reducing their transparency to about 17% of normal levels. The CPS, concerned at the inadequate £1000 maximum penalty, charged him with manslaughter, but was unsuccessful. He received just a £200 fine.
That and several other fatal car-dooring cases, in which the drivers received fines of between £30 and £955, clearly indicate the need for tougher penalties and perhaps a review of legislation on the issue. It is shocking that between 2011 and 2015, 3,108 people—including 2,009 cyclists—were recorded as being injured by a vehicle door being opened or closed negligently. Eight of those incidents resulted in fatalities.
We must be serious about strengthening the role of the justice system in deterring irresponsible road use and removing unsafe drivers from the roads. It is only right that the Government set up a review of road traffic offences and penalties. I remind the Minister that in 2014, the Ministry of Justice promised a comprehensive review of road traffic offences and sentencing, largely in response to the representations of various road crash victims’ groups. After substantial delays, however, the scope of that review was later reduced to two proposals. The first was to increase the maximum penalty for causing death by dangerous driving, or for causing death by careless driving while under the influence of drink or drugs, from 14 years to lifetime imprisonment. The second proposal was to introduce a new sentence of causing serious injury by careless driving. Has the Minister considered the concerns about that? Has the new offence been created, or has anything been done in relation to that?
When the offence of causing death by careless driving came into effect in 2008, prosecutions and convictions for causing death by dangerous driving fell over the following five years by 46% and 51% respectively, as that charge was rapidly overtaken by the lesser new charge, even though the definitions of careless and dangerous driving remained unchanged. There are serious concerns that the proposed introduction of the offence of causing serious injury by careless driving would again lower the bar between dangerous and careless driving, with yet more inadequate sentences. In any case, the proposals would cause huge numbers of problems. We ask that the Law Commission look into this area properly.
I will give some background explaining one of the reasons why we have these anomalies. I remember that when I first started prosecuting a long time ago, in 1987, lawyers, prosecutors and judges—they and their sentencing guidelines were what the law was about—would not often look at the injuries, but would put the emphasis on the actions. There was the feeling that at a small lapse in judgment could cause fatalities, yet people who drive recklessly might cause no injuries or damage and would be dealt with in a very different way. That dynamic is what has caused some of the problems with traffic legislation since then. I know that things have changed and the laws are different now. As a prosecutor, I remember when the new legislation came in and we could look at fatalities and injuries caused. A number of new offences were introduced in order to deal with that matter.
Will the Minister support calls to launch a wide-ranging review of road traffic offences and penalties, as was promised in 2014? I suggest that some of that review be carried out by the Law Commission, so that it can clarify the definitions of dangerous and careless offences, or replace them entirely. It needs to be made clear whether the distinction is supposed to relate to the level of danger caused by the defendant’s actions—an objective test—or their state of mind, which is a subjective test.
The review should also consider the accompanying maximum sentences, and perhaps make greater use of driving bans for offences where danger has been caused by someone who is not obviously a dangerous person, while retaining custody as a sentencing option for more obviously reckless behaviour or for repeat offenders.
Does my hon. Friend agree that some unscrupulous members of her profession specialise in getting high-profile people—David Beckham, for example—off their driving charges, and does she think that is good or bad?
Order. The hon. Lady should know that she has only a minute or two remaining.
I will not comment on individual cases—the courts made their decisions, and it would be improper of me to comment on them.
Driving ban sentencing needs to be looked at again. Many hon. Members have referred to how the exceptional hardship plea is being used, and suggested that courts and magistrates have been granting it too readily. That clearly needs to be looked at. Maybe there needs to be a change in the sentencing guidelines that magistrates take into account when deciding whether to grant exceptional hardship. That area also needs to be revisited and reviewed. With respect to car-dooring offences, the Law Commission should perhaps consider whether there should be an accompanying offence that carries licence points.
I await the Minister’s response on a number of the issues I have raised, including the need for the Law Commission to look into these matters.
If the Minister could finish by 10.58 am, that would allow two minutes for the mover of the motion to sum up. Thank you.
I will do, Mr Betts; it is a great pleasure to serve under your chairmanship. It is also a pleasure to take part in the debate. It is extraordinary; some of our most active and fittest colleagues are gathered in the Chamber to debate something that is very close to their hearts, and close to the hearts of millions of people up and down the country.
I will begin by reflecting on the point made by my hon. Friend the Member for Totnes (Dr Wollaston), which was that, fundamentally, there is much more that we can do to protect cyclists, but we also need to reinforce the central message that immobility is much more dangerous for one’s health than walking or getting on a bicycle. In fact, the beginning of all this has to be our understanding of just how powerful and beneficial cycling and walking can be. Cycling is not only—as most of us who cycle know—the quickest way of getting to this place in the morning, it is also a way of moving that is much less damaging to the environment and much better for our health in the most astonishing range of ways. It is better for our weight, our bowels, our hearts, our skin, our sex lives—[Laughter.] Yes, much better for our sex lives; recent studies in the United States have shown that men who cycle regularly have the sex life of somebody five years younger than the average. Cycling is also much better for happiness. It should be greatly encouraged, and the more people we can get cycling and walking, the better.
The corollary is that if we are to encourage people to walk and cycle, we need to make sure that they can do so safely. Far too many people still are injured or killed while cycling. In any given year recently, more than 100 people on bicycles have been killed on the roads. We need to take that seriously, while also putting it in the context that, overall, we are making huge improvements in road safety.
Famously, for example, in 1926 when far fewer people owned motorcars, 5,000 people were killed on the roads. As recently as 1966, 8,000 people were killed in motor accidents in a year. Today, although still far too high, the number is 1,700—despite the fact that far more people own motorcars than in 1966 or, of course, 1926. We therefore should not be entirely gloomy. The second thing to put into context is that, as some right hon. and hon. Members have pointed out, it is not only cyclists whom we need to think about in terms of vulnerable road users.
My hon. Friend the Member for St Ives (Derek Thomas) pointed out that 40 people a year on horses are killed on the roads, and far fewer people ride horses than bicycles, so proportionately someone is much more likely to be killed on a horse. About 400 or 450 people are killed walking and, as the hon. Member for Huddersfield (Mr Sheerman) reminded us, a similar number are killed on motorcycles—people are extremely vulnerable on a motorcycle on the road. Finally, of course, the largest number of people are killed in a motor vehicle. We should not suggest that anyone killed in a motor vehicle somehow deserves it because many are innocent victims, including children and families, who just happen to be travelling in that vehicle when it is hit.
Any approach to the subject therefore has to be comprehensive. I want to pay particular tribute to the hon. Member for Brentford and Isleworth (Ruth Cadbury) and to my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont), the Member for the borders. They managed to provide a very comprehensive description of the range of things that need to happen if we are to protect cyclists. That begins right at the beginning in the way that we train people who drive motorcars, so with The Highway Code, and thinking about things such as the Dutch reach and how tests are conducted or professional drivers might be retested. It extends to road design and, as my hon. Friend the Member for Nuneaton (Mr Jones) pointed out, questions of enforcement, not only sentencing but how the police conduct themselves, how evidence is gathered and how prosecutions are brought. As my hon. Friend the Member for South West Bedfordshire (Andrew Selous) said, it also extends to thinking about rest periods for drivers, the potholes in the roads or, as the hon. Member for Warwick and Leamington (Matt Western) pointed out, questions of a changing gig economy and the kind of people travelling in our vehicles.
All of that needs to be the context, which is why we argue strongly that any real response must take into account not just us in the Ministry of Justice but the Department for Transport and the Home Office. Nevertheless, I am a Minister from the Ministry of Justice, so I will touch briefly on some of the legal issues raised by right hon. and hon. Members.
My hon. Friend the Member for Berwickshire, Roxburgh and Selkirk emphasised the serious issue of failure to stop. In examining it and making progress, we need to take into account the fact that there is a fundamental difference between the expectations of someone to report a driving offence, and of a burglar or murderer to report their offence: the premise, or presupposition, is that the driving offence is an accidental act. We therefore expect an individual of good will to have a duty of care and a responsibility to help the vulnerable victim in a way that the individual involved in other types of crime might not. That fundamental understanding of the difference between this type of crime and others should inform the approach that we take to the question of the failure to stop and the strong arguments made by my hon. Friend from the borders and others that we should increase the penalty.
The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) mentioned hardship, again a very serious point. There seems to be a serious discrepancy in the number of people able to claim extreme hardship. A small footnote to that, however, a caveat, is that it is important to remember that not all those claims of extreme hardship relate to the individual driving the motorcar; they often relate to the dependants of that individual—for example, a child with special needs who requires motorcar travel. Extreme hardship can therefore extend beyond the individual to the family. Nevertheless, I recognise that the number of people making such claims seems disproportionately large.
My hon. Friend the Member for Totnes mentioned restorative justice, but at the centre of everything is the question of careless or dangerous driving. That was discussed by the hon. Member for Brentford and Isleworth, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald), who reflected on those distinctions, and the hon. Member for Bolton South East (Yasmin Qureshi), who made some interesting jurisprudential points on culpability and consequence or, as she framed it, the objective test of the damage done compared with the subjective question of intent.
That is not something that should be trivialised or put aside—it is a fundamental principle of English law. On the one hand, we have the incredibly stark and horrifying impact on the victim and the victim’s family—the hon. Members for Birmingham, Edgbaston (Preet Kaur Gill) and for Strangford (Jim Shannon) talked about that eloquently and movingly. That death and its consequences are final, destroying a life and the families that surround it, with eddying ripples that extend into broader society. On the other hand, that has to be balanced, as the hon. Member for Huddersfield pointed out, with seriousness about the nature of what happened at that moment. Some situations are genuinely accidents, and in others some of us might feel, “There but for the grace of God go I.” There is an important distinction between a careless act and a dangerous act. All of that needs to be balanced with the impact on the victim.
We have therefore concluded that we must now extend the maximum penalty for causing death by dangerous driving to a life sentence, and the maximum penalty for causing death by careless driving under the influence of drink—alcohol—to a life sentence as well. That has been a difficult decision because of the question of balancing the impact on the victim with the culpability of the individual. However, in the end, the conclusion must be that someone who commits an extremely dangerous act in a vehicle is driving a weapon and committing an unlawful act. Ultimately, if a death results, that is morally equivalent to unlawful act manslaughter. Individuals under the influence of drink or drugs who get into a vehicle knowingly propel an extremely dangerous weapon, having consciously made a decision to incapacitate themselves. That is in direct contravention of their duty of care towards other road users and is therefore equivalent to gross negligence manslaughter. They should therefore face the penalty of a life sentence as a maximum.
In response to the questions asked by the hon. Member for Heywood and Middleton (Liz McInnes), therefore, we will be do that. I will not delay people or waste their time with explanations about why, particularly in the middle of Brexit, parliamentary time has been limited, or why we feel that we need to take a comprehensive approach that brings in the Department for Transport and the Home Office, but we are determined to do it. That is because cycling is incredibly important for our health, our environment and our connections with landscape and society. We have a particular duty of care and obligation to vulnerable road users. With that, I thank all right hon. and hon. Members for their contributions to an extremely stimulating and important debate, which will change the law.
I thank everyone for their co-operation on the timing. I ask Ruth Cadbury to wind up.
I, too, thank all Members who have spoken today. I will not have the chance to refer to everyone, so I will pick up on the issue of deterrence.
I am not a vindictive person and I am not generally into stiffer penalties, but driving is something we all do—most people drive—and we all want to avoid accidents. The deterrent of charges and penalties can be a factor in improving driver behaviour. I believe that that is why driver behaviour is better in Germany in my experience. A different kind of deterrence to do with civil litigation is, I think, behind the much better driving that I experienced in the United States. This area of law is one in which deterrence is useful. Many Members also picked up on the inconsistency between penalties and sanctions, in particular when talking about the distinction between careless and dangerous driving.
I thank those Members who mentioned their constituents and families who have been affected by such tragedy, because that is, after all, what we are dealing with today. I welcome the fact that the Minister has again announced the increase in the maximum sentences and that there will be a review. He also mentioned that the MOJ and the Department for Transport will work closely together so that there is consistency in message, approach, consultation and response.
Question put and agreed to.
That this House has considered road safety and the legal framework.
Royal Navy Base: Bahrain
I beg to move,
That this House has considered the strategic importance of the new Royal Navy base in Bahrain.
I am pleased to introduce this debate about the strategic importance of the new Royal Navy base in Bahrain, HMS Juffair. I draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests, which shows that I have a long-standing and significant interest in the Kingdom of Bahrain. I have been going there for a number of years, most recently in October to look at the new naval base.
Let me explain briefly what the base is and what it does. It is a small but perfectly formed facility that, in simple terms, allows ships to be tendered, administered and maintained more efficiently. Up to a company group of people can live on the base—there are around 500 bed spaces. I was honoured to receive tremendous hospitality on my interesting visit in October, which was led by Commodore Steve Dainton, commander of the UK maritime component. I was pleased to go aboard the mine countermeasures vessel HMS Blyth and to discuss its role with Captain Drewett and the ship’s company. I would also like to put on the record the tremendous work that is being done by the defence attaché, Commander Paul Windsar, and of course the overall leadership that is provided by our ambassador in Bahrain, Simon Martin.
Most importantly, the base will allow our fleet of mine countermeasures vessels to make their contribution to the Combined Maritime Forces. Type 23 frigates will be able to use the base, too—it is my understanding that a Type 23 will soon be based there permanently—and destroyers and other vessels will also be able to take advantage of what it offers. The base is a huge step forward. It is the first new naval base in the middle east since 1971, and we should all wholeheartedly welcome it.
The base is hugely important to our bilateral relationship with the Kingdom of Bahrain. Many of us know that we have a long-standing relationship of at least two centuries with the kingdom. Because of the pressures it faces due to its location vis-à-vis Iran, the Bahraini state feels a sense of existential insecurity. It therefore relies on its allies to stand with it through thick and thin, and I am proud that this country has done that. Our tangible, permanent commitment to having a Royal Navy presence in the kingdom is of huge importance to our Bahraini friends. In fact, it is so important that they have been prepared to pay most of the costs of the base. That is of huge advantage to us—it allows us merely to man the facility. The reassurance the base provides our ally should not be understated.
That reassurance has a regional element, too. I mentioned that the mine countermeasure vessels contribute to the Combined Maritime Forces. Not many people know about that, but it is hugely important. It is a multinational force of some 33 nations that promotes the free flow of commerce over a huge area of the ocean—3.2 million square miles of international waters, not just in the Gulf but in the Red sea, the gulf of Aden, the Somali basin and the Indian ocean. The mine countermeasures vessels that Commodore Dainton commands make a hugely important contribution to that, in one of the most important areas for global trade.
My hon. Friend is bringing to the House’s attention an important part of the Royal Navy’s expanding programme. Does he agree that, in a post-Brexit world, we will continue to be a global maritime nation? Geography and the way our trade works dictate that. The work that we will be able to start from Bahrain to keep those difficult waters open is critical to the UK’s future economic growth.
Indeed. Our contribution to global free trade and the free flow of commerce around the world will be more important than ever, and we are uniquely well placed, along with our allies—the United States and others—to play a key role in that.
I believe we are the only European country with such a base in the Arabian Gulf. Will my hon. Friend use his expertise in the region to continue to probe the Government about what steps are being taken to work with other Gulf Co-operation Council countries to ensure that the base is supported and expanded, given that more than 60% of the world’s oil flows through the Arabian Gulf?
My hon. Friend makes a very good point. I will mention that shortly, but absolutely, we should see this base as a model for the way we work with other GCC allies. I know there is significant appetite in Oman and Kuwait, for example, for greater co-operation between our militaries.
As my hon. Friend points out, we must remember that some 20% of the world’s oil flows through the strait of Hormuz. That is astonishing. The area of operations of the Combined Maritime Forces is at the epicentre of global trade, and we have a disproportionately positive impact on that. We have four mine countermeasures vessels, whose value and contribution is out of all proportion to what they cost us.
The base represents a significant defence engagement win. I am pleased that the Government have a defence engagement strategy, which was published in 2017. Of course the naval base has been in gestation since 2014, but it is good to see these themes and intent formalised in that document. The strategy is just a reminder—what we see in Bahrain is an illustration of the fact—that defence can be a tremendously positive agent of foreign policy and is intertwined with our foreign policy objectives. Defence is not just about kinetic war-fighting operations; it can lead to tremendously important diplomatic and commercial outcomes.
I agree with what my hon. Friend is saying. Does he agree that we must remember that if we, as a western democracy, do not engage, others will be only too happy to fill the void, as we see with the Chinese military base in Djibouti?
My hon. Friend makes an extremely good point that runs to the heart of the matter. If we wish to project our global influence on a basis that suits us and represents the values we stand for, we must do so. If we do not, others will, and they will do it less well and the outcome for everyone in the region will be worse. The national security objectives are clearly laid out. They are to protect our people, promote prosperity, and project our global influence. I am confident that all those objectives are met by us having our base in Bahrain.
Many people will be disturbed to hear the hon. Gentleman refer to a close friendship with a country that has such a dismal human rights record. Will he use his relationship and experience with the Bahraini authorities to press them? If we are talking about our global influence, we should press those authorities to review their human rights record.
The influence and close relationships that we have allow us to do exactly that, and I encourage the hon. Lady to visit the Kingdom of Bahrain at the earliest opportunity to see the reality for herself.
My hon. Friend is being gracious with his time. I served in Bahrain and the Gulf in operations in 2009 on HMS Kent, and I agree with everything he says about our influence in the region. He ran through the practical opportunities that having a base in Bahrain gives us, but does he agree that it is also a physical embodiment of what we are all talking about, namely global Britain? As we leave the European Union, such things demonstrate that we are not retreating from the global stage, and they are a demonstration of our intent not just east of Suez but around the world.
My hon. Friend is right. This is a demonstration of a model that perhaps we should use in other places in future. This is not just about the Royal Navy, because the capacity for the Army to stay as a company group at the UK naval facility in Juffair presents tremendous training and partnership opportunities with the Bahraini army, which would be to its benefit and to ours. That spirit of enduring partnership is the driver behind all this.
Will the Minister give us his judgment on the success of the establishment of the UK naval facility, perhaps say whether he agrees that we should use this model in other Gulf Co-operation Council states, and say whether on a global basis we can perhaps do such things in other parts of the world? I conclude by reiterating my gratitude to all those currently serving in the UK naval service, not just the ship’s company of HMS Blyth, but those serving in the Combined Maritime Forces and the UK maritime component in Bahrain. Their daily vigilance contributes significantly to the freedom and prosperity that we in this country enjoy.
It is a pleasure to serve under your chairmanship, Mr Betts, and I am particularly grateful to my hon. Friend the Member for Aldershot (Leo Docherty) for securing this debate. As we have heard, he and other colleagues take a keen interest in defence and security developments in Bahrain and the wider Gulf region.
His Royal Highness the Duke of York officially opened the United Kingdom naval support facility in Bahrain on 5 April this year. It epitomises the importance that the UK places on its relationship with Bahrain and the security of the Gulf region, and the emphasis that the Ministry of Defence is placing on global Britain. It is the first permanent overseas Royal Navy establishment operating east of Suez in almost half a century, and part of the commitment to the Gulf region that the Prime Minister promised in Manama in December 2016, when she underlined her undertaking that:
“Gulf security is our security”.
The UK NSF, which was a gracious gift of His Majesty King Hamad to mark the 200th anniversary in 2016 of our strong and enduring bilateral relationship, has increased the capabilities that already existed in Bahrain. It will allow the Royal Navy to provide better support for its vessels, including new aircraft carriers, and it has enabled the UK to permanently assign a Type 23 frigate to the Gulf from next spring. The UK NSF has been planned for long-term utility, strategically situated alongside the US navy 5th fleet, and it is one of our most advanced naval facilities. I stress that the complex is not a naval base as such because there are no dry docks, but we more recently opened a joint logistical support base at Duqm in Oman—I was honoured to be there for that opening—which will have dry docking capability for all Royal Navy ships.
The UK NSF is a joint asset and operates under Permanent Joint Headquarters command within the Operation Kipion joint operational area. The facility’s primary function is to provide appropriate levels of real-life support to personnel deployed to Bahrain, whether permanently shore-based, on contingent operations, on a deployed maritime unit or on short-term theatre visits. After PJHQ operational requirements have been met, UK NSF still has additional capacity to host around 100 visitors, with a surge capacity of an additional 300, up to a maximum site capacity of 549. It also provides engineering and logistics support to maritime units, and can host contingent forces for short periods. The capability is split into three broad categories: accommodation, welfare, and technical. Primarily, it supports our deployed naval force in the Gulf, providing maritime security for Bahrain, the wider region and the global economy.
As my hon. Friend said, the most important aspect of the UK NSF is what it enables our ships and people to deliver on operations. As I speak, five Royal Navy warships and two Royal Fleet Auxiliaries are deployed in the region, operated and supported by more than 1,500 personnel. They include our mine countermeasures force, which has been permanently based in Bahrain since 2006 and, as my hon. Friend said, is very much considered the jewel in the crown of the force by the Americans. The MCM force is made up of five ships—four mine countermeasures vessels supported by a Royal Fleet Auxiliary ship. That force conducts route survey and clears mines from the sea bed, as it did after the 2003 Iraq war, enabling the safe navigation of the waterways.
The Combined Maritime Forces, headquartered in Bahrain, is a coalition of 33 nations aligned in common purpose to conduct maritime security operations and provide security and stability. HMS Dragon, one of the UK’s Type 45 destroyers, is currently operating under the command of the CMF, as the latest example of the UK’s enduring commitment to the coalition. The CMF conducts operations to counter a broad range of threats to maritime security, from piracy to the transport of narcotics, weapons and other illicit cargoes that fund and fuel terrorism and criminal networks. It has had a great deal of success—this year alone it has seized more than 46 metric tonnes of heroin and hashish, with a combined estimated value in excess of £43 million at wholesale destination ports in the Gulf region. The street value in the UK would be many times that figure. The CMF has helped to bring about a significant reduction in piracy incidents since they peaked in 2010. The UK NSF provides the UK with a maritime centre in the region from which to respond to future humanitarian crises or natural disasters, and to conduct operations to protect the waterways and ensure the continued free flow of commerce. It makes possible our commitment to the enduring task of maritime security operations in the region.
Reinforcing the Prime Minister’s undertaking in 2016 that Gulf security is our security, the then Foreign Secretary announced that the UK would be spending £3 billion on defence commitments in the region over the next 10 years. It is clear that we cannot afford not to do so—as has been said, 40% of global oil production is shipped through the strait of Hormuz between our close ally Oman on one side and Iran, which is a challenge, on the other. It is the world’s most important maritime choke point. The wider Gulf contains two more of the world’s eight recognised maritime choke points, with the Bab-el-Mandeb at risk of miscalculation emanating from the persistent and tragic conflict in Yemen.
The Minister has outlined the important practical aspects of the base, and he referred to Iran as a “challenge”. Does he agree that the base also has an important political symbolic aspect, which is that the United Kingdom will never tolerate any interference in the sovereignty of Bahrain?
Indeed. My hon. Friend makes a valuable point that returns to the Prime Minister’s statement that Gulf security is our security. We have a long-standing relationship with Bahrain. This facility is part of that historic relationship, and we will continue to play our part in the region, as I am demonstrating. The political statement is there for all to see.
The facility is of great importance to the Royal Navy, but I should be grateful if the Minister would touch on how it shapes changing deployments, and in particular how there can be greater crew rotation on ships when they are permanently forward-deployed in the Gulf rather than having to steam from Britain, including from such fantastic ports as Devonport, off to the Gulf and back again.
That is a valuable point. Of course, historically, in the deployment of frigates and destroyers much time has been lost in transit to the region, and the time taken affects their ability to be on operations. The naval support facility will, as I mentioned earlier, enable us to forward-deploy in the first instance a Type 23 frigate for a sustained period—far longer than the initial six months, because the vessel itself will stay in the region, getting rid of those transit times. Because of the facilities that we have there, we shall simply be able to rotate the crew through by aircraft. That means that the facility is far better for the crews. The accommodation is far superior to that on a ship. Equally, there is more predictability about the deployment; from a family perspective deployments are more set, as they come without some of the challenges of having to move the ship around the world. All in all, not only is the facility great for our persistent presence in the region; it is of major benefit to crews and families, so I am grateful to the hon. Gentleman for making that point.
On 7 July 2015, the National Security Council agreed a Gulf strategy to protect and promote the UK’s interests in the six Gulf Co-operation Council states, recognising their importance in addressing direct threats to the UK from terrorism, extremism and organised crime, for our energy security and for wider regional stability. The NSC Gulf strategy is delivered through increased and integrated cross-Government engagement and activity, including working with partners, allies and international organisations. Aligned with the strategy, the MOD has a leading role in promoting regional security and stability, not least by its contribution to multinational forces engaged against Daesh and other violent extremist organisations and malign influences, thereby deterring aggression and combating transnational crime in the Gulf and beyond. We are working more often and more closely to build the capability of Gulf states’ security forces, promoting our high standards of operational effectiveness and conduct.
The UK’s commitment to Gulf security has been epitomised by the exercise Saif Sareea 3 in Oman, which I was privileged to open last month. It finished on 5 November with an impressive firepower demonstration attended by all GCC countries along with wider middle east and global partners. It was the UK’s largest bilateral exercise for 17 years, since Saif Sareea 2, with 5,500 UK troops deployed alongside 70,000 Omanis. Elements of the UK force are now conducting defence engagement activity with our other GCC partners. Saif Sareea 3 has been a tremendous success, not only as a military exercise but also in view of the fact that it has involved cross-Government Ministries in Oman working in close co-operation with counterparts from Her Majesty’s Government on crisis response and resilience activity. It has been an exemplar of HMG fusion activity, underpinned by a detailed strategic communications campaign that has seen the exercise dominate Omani print and social media for almost its entire month-long duration, with extensive exposure across the Gulf.
I want to underline why the base has such an impact across the region, including with other nations. During his visit at the beginning of November the Secretary of State for Defence announced the Oman-British joint training base, further delivering on the Prime Minister’s Manama commitment. That relates to the point that my hon. Friend the Member for Aldershot made about how we can continue the process. The new training facility will be tested with its first joint exercise with the Omanis in March next year. It will be supported by the joint logistics support base at Duqm, which, as I mentioned, I had the honour of opening at the beginning of Saif Sareea 3 in October.
Saif Sareea 3 has been far more than just a bilateral military exercise. It has been a demonstration of our commitment to Oman and the wider Gulf region and will leave behind a legacy for decades to come. The Secretary of State for Defence underlined our commitment to the region when the UK NSF was opened in April:
“Our Armed Forces are the face of Global Britain and our presence in Bahrain will play a vital role in keeping Britain safe as well as underpinning security in the Gulf.”
He went on to say—and I agree wholeheartedly:
“Britain is a major player on the world stage and this new Naval Support Facility will help us tackle the growing threats to our nation wherever they are across the globe and protecting our way of life.”
That is exactly the point that many of my hon. Friends have made during the debate. Furthermore, in the context of global Britain, the UK NSF will be the hub of our naval operations across the Indian ocean and potentially further afield for decades to come. I hope I have given Members the assurance of the strategic importance of the Royal Navy’s new facility in Bahrain.
Question put and agreed to.
2019 Loan Charge
[Mr Charles Walker in the Chair]
I beg to move,
That this House has considered the effect of the 2019 loan charge.
I will take a moment to say how glad I am to serve once again under your chairmanship from the Back Benches, Mr Walker.
It is right that everyone, both individuals and corporations, should pay the correct amount of tax, and I welcome the Government’s commitment to a fairer tax system. I was pleased to see that the UK’s tax gap has fallen to a record low of 5.7% in recent months.
I should start by explaining what the loan charge is. The gov.uk website explains:
“Loan schemes—otherwise known as ‘disguised remuneration’ schemes—are used to avoid paying Income Tax and National Insurance.”
The loan charge was announced at the 2016 Budget. The policy ensures that users of tax avoidance loan schemes pay their share of tax and is expected to protect £3.2 billion for the UK’s vital public services. The website also says:
“The loan charge works by adding together all outstanding loans and taxing them as income in one year.”
Therein lies the difficulty and the fundamental cause of the impact on individuals and families.
In 2005, my right hon. Friend the Chancellor said:
“Certainty and transparency are the hallmarks of a fair, effective and competitive tax system. A taxpayer is entitled to know with certainty…what he may or may not do in planning his tax affairs.”—[Official Report, 7 June 2005; Vol. 434, c. 1139.]
That is why I object to retrospective legislation that undermines the rule of law.
The introduction of the 2019 loan charge has been beset by challenges, confusion and complications. Over 100 MPs have signed early day motion 1239 calling on the Government to significantly revise this piece of legislation. I am glad we are meeting today in this well-attended debate to consider the impact of the loan charge.
In the 2016 Budget, the Government announced that they would introduce legislation to tackle disguised remuneration schemes. Statutory provision was included in the Finance (No. 2) Act 2017, with further provisions included in the Finance Bill introduced after the autumn Budget last November, now the Finance Act 2018. The Government say they will protect £3.2 billion by taking action to tackle both historic and continued use of these schemes. That is a not inconsiderable sum. It will include a new charge on loans paid through disguised remuneration schemes that have not been taxed and are still outstanding on 5 April 2019.
Her Majesty’s Revenue and Customs states that the schemes affected by the 2019 loan charge were not and never have been legal. However, that is disputed by the Loan Charge Action Group. I refer to a letter by the Chancellor of the 19th of this month, published today on the Treasury Committee website. The Chancellor writes:
“Finally, I would like to clarify my comments to the Committee in reference to the use of disguised remuneration (DR) schemes which I described as ‘tax evasion’. I should have said ‘tax avoidance,’ and that in the Government’s view, tax was always due.”
That is a very important distinction, because evasion is illegal, while avoidance is an undesirable and unintended use of Parliament’s legislation. In drawing that distinction and correcting the record to say “avoidance”, the Chancellor has made an important concession.
My hon. Friend is making an interesting speech, and I congratulate him on securing this important debate. As a former personal finance editor before entering this place, I used to have many inquiries from readers about these schemes as they were offered to them. My advice was always, “Steer clear, because eventually the price will be paid.” Does he agree that there is a role for regulators to look at the poor and potentially dangerous advice given by accountants about these schemes?
It is my intention in my concluding remarks to stridently condemn the promoters of these schemes, who have ended up luring people into misery through what they have done.
Before closing with this letter, I want to mention that the Chancellor also wrote:
“It is not normal, or indeed reasonable, to be paid in loans that are not repaid in practice. It is not fair to the vast majority of taxpayers who pay their taxes in full and on time for anyone to benefit from contrived avoidance of this sort and that is why this government has legislated the charge on DR loans.”
I agree with the Chancellor that it is not normal or reasonable, but I make it very clear that I place the blame on the promoters of these schemes.
HMRC initially expected 40,000 people to be affected, although in a recent parliamentary question, my right hon. Friend the Financial Secretary to the Treasury gave a new figure of 50,000. HMRC’s impact note stated:
“The government anticipates that some of these individuals will become insolvent as a result.”
The Loan Charge Action Group suggests that the loan charge will end up affecting probably upwards of 100,000 people and their families.
The hon. Member for Eastbourne (Stephen Lloyd) has tabled an EDM criticising the measure, arguing that
“retrospectively taxing something that was technically allowed at the time, is unfair”.
Of course, I would agree. HMRC has argued that the loan charge is a new tax on a new source, and described it as retroactive rather than retrospective. I would like the Minister, if he can, to explain both terms and any difference that the Treasury is implying.
The hon. Gentleman deserves a lot of credit for bringing this issue to the House. Does he agree that we should be working cross-party ahead of the Report stage of this year’s Finance Bill to put together a new clause that deals with the problem, under which any loan charge would come into effect only after Royal Assent of the Finance (No. 2) Act 2017?
I certainly agree with the right hon. Gentleman that there is a job of work to be done across parties to uphold the rule of law, in particular the principle that legislation should not apply retrospectively. That is a subject on which I have made speeches over the years. We end up in a hideous cycle of undesired action, in particular to avoid taxation, followed by the injustice of retrospective action to protect other taxpayers and the misery that causes to large numbers of people. It must be brought to an end, but underpinning that we must be committed to the rule of law.
I am grateful to my hon. Friend for bringing this debate to the Chamber. Can I ask him about retrospection? My constituent, Alan Williams FCA, points out that HMRC already had sufficient power to recover tax from individuals, so it is rather its own convenience and its unwillingness to apply its existing powers that have led to this legislation. My constituent Andy Pocock points out that in his case, he has procedures under the existing legislation whereby he is allowed to appeal, but all that will be cut off retrospectively by the new legislation and he will not have a chance to fight and defend his corner.
One of Parliament’s duties is to restrain the Executive and ensure that their powers are reasonable. We should look carefully at the subject that my right hon. Friend has just raised. It is important that HMRC treats people in a decent and civilised way, and certainly more powers ought not to be taken than are strictly necessary.
My hon. Friend is to be congratulated on securing a debate on this subject. One of the iniquities, in addition to the issue of retrospectivity, is that at least four of the constituents who have been to see me have said that they were told by their companies that unless they signed these new forms of contractual relationships, they would not continue to work for those companies. Given that, should not HMRC be pursuing the companies and not the individuals?
I entirely agree with my hon. Friend. Toward the end of my remarks I will come on to the solutions that I propose, but I entirely agree with him that if any company insisted on people engaging in these arrangements it certainly should share the responsibility for what they did.
Will the hon. Gentleman give way?
I will take one or two more interventions, and then I will move on. It is not quite like being a Minister, but very nearly.
The hon. Gentleman is being very generous with his time and I thank him for securing this debate. On that last point, my constituent was a civil servant for 37 years. In 2010, his team was TUPE-ed from the Ministry of Defence to Hewlett Packard. He retired in 2013. In 2014, they asked him back to oversee a Ministry of Defence contract, but refused to take him back on pay-as-you-earn and said they would only do it through one of these vehicles. Should my constituent not have had some comfort from the fact that this was an MOD contract? Surely the Government and Government Departments should look at who they are contracting with, to ensure that a man such as this, in his retirement years, is not stung by this charge?
I obviously cannot comment on individual circumstances. However, this is a good opportunity to draw a distinction between taking people on as contractors and insisting that they join schemes that could end up with their using disguised remuneration arrangements. On the one hand, contracting is a legitimate way of going about business; on the other, engaging in disguised remuneration schemes—an aggressive form of tax avoidance—is not desirable.
My hon. Friend is doing a sterling job of raising this matter in this place. On that basis, will he challenge the Minister on how many firms have been investigated, how many promoters have been pursued and prosecuted, and how many of those had some connection to Government contracts or payments?
I join my right hon. Friend’s call for the Minister to set that out, which my hon. Friend the Minister will have heard. I will now make some progress.
The Loan Charge Action Group says that the human impact of receiving a bill for up to 10 years’ worth of tax will have a catastrophic effect on individuals and their families. On whom among us would it not have a catastrophic effect? It goes on to say that we are looking at thousands of bankruptcies, family break-ups and suicide attempts, as well as mental illness, unemployment, loss of abode and more. That is a catalogue of human suffering and misery.
HMRC’s impact assessment of the measure says:
“This package is not expected to have a material impact on family formation, stability or breakdown.”
However, that looks at aggregates, not the impact on individuals, which it seems to me is a common mistake of Government. As a Conservative, I wish to focus first and foremost on the individual, not the collective.
I will foreshorten my remarks, given the interventions I have taken. One specific complaint is the lack of warning. A freedom of information request revealed that HMRC has issued about 23,000 loan charge awareness letters, which were only issued from the second quarter of 2018. HMRC says that 50,000 individuals may be affected, so many will be unaware of the impending charge. The Loan Charge Action Group points out that the opportunities to settle new tax affairs with HMRC ahead of the charge were similarly not widely publicised, nor was the deadline of 31 May 2018, leaving people in a terrible fix, although I understand that the deadline has been quietly dropped.
The Loan Charge Action Group suggests that historical users of schemes who left many years ago are probably completely ignorant of this new legislation and will only hear of it after receiving a large bill some time in 2020. This is a dreadful risk that the Government should forestall.
I am keen to conclude, so I will come to some solutions that I ask the Minister to consider. As I outlined in a letter to the Chancellor in September, there should be clarity about what DOTAS—disclosure of tax avoidance schemes—registration means. There should be a legally mandated text accompanying every advertisement of a DOTAS-registered scheme that explains that the purpose of registration is to enable HMRC to identify tax liabilities and to recover them when such schemes are proven not to work. It does not imply any kind of legitimacy, and registration with HMRC is not for the purpose of endorsing the schemes. When HMRC becomes aware that a taxpayer has subscribed to a DOTAS-registered scheme, it should contact the taxpayer and make them aware that registration has the purpose of enforcement and does not convey legitimacy. HMRC must take into account people’s circumstances, and the threat of insolvency should never be used as a kind of extrajudicial punishment.
On treating individuals fairly, it is pretty evident that the people who have been selling these questionable products are not being pursued in the way that they should be. In view of that, does my hon. Friend agree that the Government should start looking at mitigation, so that certain individuals—I know of a couple in my constituency—are not bankrupted by this whole sorry affair?
The Minister will have heard my hon. Friend’s point, which I endorse.
The loan charge should apply from Royal Assent onwards. In other words, it should be prospective—a case I have made many times—not retroactive or retrospective. HMRC should be more proactive in advising that such schemes are likely to end in tax charges in the future, and perhaps far into the future. More steps should be taken against promoters and introducers of such schemes. They are the ones profiting from this misery. Finally, the issue of employment status and IR35 requires action at last, to bring the uncertainty to an end.
My hon. Friend wants further action taken against the promoters of these schemes. Does he agree that we also need to take action against the Queen’s counsel who peddled rinky-dink advice that encouraged many of our constituents—including some of mine—to participate in these schemes, in the belief that a QC’s opinion rendered them beyond the reach of HMRC?
My hon. Friend makes a very good point. I hesitate to trespass far beyond my expertise, but I make the point that it is often thought that the opinion of a QC determines the truth. That is not the case. QCs and barristers argue among themselves in court, and the court determines the facts. I am often struck by people relying on the opinions of lawyers when what they actually need is the judgment of a court.
On the judgment of courts, does my hon. Friend share my concern that individuals are sometimes effectively left without a remedy, because the person who gave them that advice so many years ago no longer continues to trade? There is then effectively no remedy for the individual and no ability for them to claw back their significant losses.
My hon. Friend raises an important point. In concluding my remarks, I shall allow what he says to stand.
I really think that it is perfectly natural for people to want to pay less tax, but I would be failing in my duty if I did not say to all those paying attention to the debate that, when something seems too good to be true, it probably is. We ought not ever to allow ourselves to be lured into schemes that offer absurdly low rates of tax. However, I save my strident condemnation for the promoters of these schemes, who, in their advertisements, seek to persuade people that this is legitimate activity and to create the impression that DOTAS registration conveys some kind of legitimacy or endorsement by the state. That is an outrage, because of course it encourages people to participate. These promoters are, frankly, wicked. It is a great evil to encourage people into these schemes and to leave them in misery afterwards.
Finally, we must insist on the rule of law. Notwithstanding the wicked conduct of promoters, the greater wickedness in the end is to undermine the rule of law—the certainty that comes from someone knowing that, if their actions were lawful at the time they were carried out, they will not subsequently be challenged through retrospective legislation. I feel most strongly about that, as I have throughout my time in Parliament. I urge the Government, whatever evils have been done by the promoters of these schemes, to abandon the practice of retrospective legislation.
A number of colleagues wish to speak. If colleagues can restrict themselves to speaking for no more than five minutes each, I will not put a timer on. However, if colleagues go over five minutes, I will have to start reducing other colleagues’ time.
On behalf of all Members here, I congratulate the Loan Charge Action Group on its effective lobbying of so many MPs. I would not wish its members to think that this number of MPs normally turn up to such a debate. It has done very well and has clearly done its members proud.
I start by emphasising that I cannot defend tax avoidance in any form. I strongly believe that everyone should pay their fair share and that there should be repercussions for those who do not. However, the case at hand is not quite so simple. This loan charge will affect up to 100,000 people, many of whom acted in good faith and were acutely unaware that they were ever doing anything wrong. Several of those impacted were forced into schemes as prerequisites of taking up a job, following guidance given in good faith rather than attempting to avoid their tax responsibility. They are being taxed retrospectively for something that was technically allowed at the time.
What is more, the proposed 20-year range is usually reserved for blatant acts of criminality. We are talking about life-changing amounts of money. For some people, the sums involved run into hundreds of thousands of pounds. This will lead to bankruptcy. This will lead to mental breakdown. This will lead, and has led, to suicide. I will quote directly from the letters and emails sent to me by my constituents, so that the Minister can hear the reality behind these excessive measures.
Mr M describes a dark cloud hanging over his head. He says:
“It has been hell and I have at times considered suicide. It will affect my kids’ entire lives, in that I will be unable to support them as they grow older and I may be unable to buy a property for the rest of my life.”
Mr M argues that governing with life-changing force and 20 years in the past is nothing short of grossly unfair and that it sets a dangerous precedent that HMRC can, where it suits its need, change or create laws and retroactively and aggressively enforce them.
Mr C says that bankruptcy is his only option. He says that he took and followed professional advice and declared his arrangements at the time to HMRC, which did not act. Mr L describes the impact of the stress levels on his health since he was made aware of the legislation, particularly as he believed the scheme to be legitimate. He claims that these schemes are still freely available for contractors to sign up to.
My constituents are not alone. The Loan Charge Action Group has conducted analysis of those affected. It highlights the fact that 68% describe depression, 71% fear bankruptcy, 31% fear relationship breakdown and 39% have suicidal thoughts. The policy will cost lives.
Would it not be more sensible for HMRC to pursue the enablers of the schemes? I am talking about the client organisations, agencies and umbrella companies, all of which have benefited and which, I believe, hold the most responsibility. Perhaps HMRC does not do that because even HMRC itself was using and paying contracts now subject to the loan charge, working through arrangements that HMRC now declares to be tax avoidance schemes.
Let me re-emphasise that if and when an individual or organisation has purposely dodged tax, they must be penalised. But what strikes me is that HMRC is ruthlessly pursuing hard-working contractors, while rolling over in the face of obvious and aggressive tax avoidance by so many of the UK’s largest corporations. Why did Amazon pay just £1.7 million in taxes last year, despite profits almost trebling to £72.3 million? Why did Facebook pay just £15.8 million in taxes last year, despite collecting a record £1.3 billion in British sales? Why did Google pay just £49 million on UK sales of £7.6 billion? Richard Murphy, a professor of practice in international political economy, estimates that such tax avoidance costs the UK about £7 billion each year. That is enough to pay for 180,000 nurses or 150,000 secondary school teachers.
Tax avoidance in any form must not be tolerated. While the Government bankrupt unknowing individuals across the country, multibillion-pound corporations make a laughing stock of their tax collection efforts. It is high time that those organisations and those who have enabled the schemes described today were made to pay their fair share once and for all.
It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend the Member for Wycombe (Mr Baker) on securing this debate, which gives us the opportunity to highlight the devastating impact that the 2019 loan charge is having on many individuals.
My constituent who has been affected by the loan charge is at his wits’ end. His family life has been turned upside down and, as he sees it, he has no alternative but to declare himself bankrupt. He is not a wealthy man. He is not a professional footballer, he is an IT contractor. When he and others were made redundant by BT, they were introduced to financial advisers who set up these schemes for them. He and they acted in good faith, only following the advice given so as to be IR35 compliant.
I want to highlight two issues. My first concern is that HMRC is pursuing the easy targets—individuals who have acted in good faith, are not well off and do not have their own bespoke financial advisers and accountants. My understanding is that the Glasgow Rangers Football Club case, on which the 2019 loan charge is based, concluded that the tax liability fell on the employers. That raises the question why HMRC is not pursuing the client organisations, agencies and umbrella groups that have benefited significantly from setting up these arrangements.
I agree with my hon. Friend’s focus on the individuals involved. Does he agree that the retrospective nature of the measure is not just a matter for the rule of law in the abstract, but that it undermines the trust of those people and their families and communities in our Government and our legal system, and will do so for generations to come?
I thank my hon. Friend for his intervention—he has a crystal ball, because he has foretold the next item in my speech.
The people affected have become a target. They are vulnerable people. They are not well paid and do not receive many of the benefits and protections that payroll employees do: sick pay, holiday pay and maternity and paternity leave. I would be grateful if my hon. Friend the Minister could advise us when he sums up the debate of whether the impact assessment has looked at the personal circumstances of the individuals who are being pursued, whether they are able to pay and what the impact will be on their lives.
My second point, which my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) foretold, is that the basis on which the 2019 loan charge has been introduced and many individuals are now being pursued is that it is retrospective. It undermines the cornerstone of taxation, which is that a Government should not seek to impose or increase a tax charge on income earned, gains realised or transactions concluded at a time before the legislation was announced.
Will my hon. Friend give way?
I sense that I should plough on, Mr Walker, so as to give others an opportunity to make a speech.
It is vital that any taxation system is equitable and progressive and that those with the broadest shoulders pay their fair share.
Order. I will not hold it against the hon. Gentleman if he would like to be generous to Mr Goldsmith.
Then I will allow my hon. Friend the Member for Richmond Park (Zac Goldsmith) to intervene before I continue.
I thank my hon. Friend for giving way and you, Mr Walker, for intervening in such a magnanimous way.
It is not just right hon. and hon. Members in this Chamber who take the view that my hon. Friend has just expressed in relation to retrospective taxation. The current Chancellor of the Exchequer said in 2005:
“A taxpayer…is entitled to be protected from retrospective or retroactive legislation.”—[Official Report, 7 June 2005; Vol. 434, c. 1139.]
And of course he was right. The measure that we are seeing and debating today is retrospective taxation, and it is abhorrent.
I thank my hon. Friend for that intervention: he reinforces what is the fundamental, fatal flaw of this injustice. What I and, I believe, all hon. Members in the Chamber are concerned about is that a group of people—often vulnerable people—who have acted in good faith are now being asked to bear an excessive burden, which will have a devastating impact on their lives and their families’ lives. For that reason, it is very important that we air these concerns to the Minister.
It is a pleasure to see you in the Chair, Mr Walker. I am delighted to follow the hon. Member for Waveney (Peter Aldous). I offer my congratulations to the hon. Member for Wycombe (Mr Baker) on setting up this important debate. I, too, am grateful to the Loan Charge Action Group for its briefing and, in particular, to our former colleague in the House, Greg Mulholland, for his assistance in preparing for the debate.
A number of constituents have contacted me about this issue, and I will focus on the questions that they wish me to put to the Minister at the end of my remarks. I will make a few comments beforehand, though, first on the numbers of people affected, which seem to be in dispute. There has already been mention of several figures: 40,000, 50,000 and 100,000. If I read the Library briefing correctly, Mr David Richardson, director of customer strategy at HMRC, said to the Treasury Committee that there were 105,000 cases, 80,000 of which were unresolved. I would be grateful if the Minister could clarify exactly what the numbers are.
The second issue is the jobs that some of the victims have. The Loan Charge Action Group says:
“The Loan Charge affects many tens of thousands of professionals—contractors, freelancers, agency workers including social workers, supply teachers, locum nurses and doctors who were recommended to use umbrella companies by employers, professional advisers and employment agencies.
For many people the sums involved run into hundreds of thousands of pounds”.
The group goes on to say:
“Schemes were, and still are, legal and in most cases the motivation behind their use was not to reduce tax but simply to comply with the poorly drafted IR35 legislation, which”,
18 years on, “remains unclear.” It is misunderstood, and certainly the origin of this issue does seem to be the IR35 regulations. I have been dealing with cases for constituents about that for the past 18 years.
My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) made reference, as did the hon. Member for Wycombe, to the Loan Charge Action Group’s analysis of the impact. She quoted the figures about those who are affected. Some 68% were affected by depression or mental impact, 71% by bankruptcy, 49% by loss of resident home, 30% by divorce and relationship breakdown, 30% by loss of career, and 39% by suicide or self-harm thoughts. The biggest issue for all my constituents and the action group is the retrospective nature of the legislation, which the hon. Member for Wycombe focused on. That has been raised many times already, and the key question remains about the transparent unfairness of this decision.
My constituents have requested that I have put a number of questions to the Minister. I recognise that he is not directly responsible for this policy, but I am sure he has a briefing that will cover at least some of the questions that my constituents have asked me to raise, because they are quite predictable.
Why did it take HMRC 20 years to take official action? Why did HMRC not email or write to loan users over the past 20 years, to ask them to come out of these schemes and the associated risks, when it had the relevant information on the yearly individual self-assessment tax returns? Why ask for 20 years’ retrospective payment for something that was and is legal? Why has an appeal format been refused to loan scheme users, leaving costly judicial review as the only alternative, which single individuals cannot afford by themselves?
Why cannot HMRC just admit that it did not perform due diligence on the loan schemes? Why, when public sector contractors were asked to move into IR35 in 2018 so that they could pay the right amount of tax, did they not get retroactive tax to pay? Why did PricewaterhouseCoopers get away with 35% early discount on a £10 million fine in 2017 for a failed BHS audit? Apart from going bankrupt or committing suicide, how does HMRC expect most individuals to be able to repay such sums at short notice?
My hon. Friend the Member for Mitcham and Morden also mentioned a letter the action group received saying that HMRC contractors are now being pursued by HMRC due to the loan charge. The Loan Charge Action Group has now discovered that HMRC itself was using and paying contractors who are now subject to the loan charge. The LCAG has been contacted by people in that situation reporting that they are working on important IT projects for HMRC, were security-cleared by HMRC, and were working through arrangements that HMRC has now declared to be tax avoidance schemes. In effect, that means that HMRC was itself involved in arrangements that it now says “never worked.” The action group commented:
“This turns this from fiasco into farce.”
Perhaps the Minister could comment on that.
More than 100 colleagues have signed the early-day motion. This is clearly an issue that the Government have to address. There is a massive impact on the lives of those affected, including my constituents. They look to HMRC for fairness, and I trust that the Minister’s response will indicate that that is a possibility. If it is not, I look forward to a cross-party, Back-Bench new clause to the Finance Bill, which, based on the numbers here today, would stand a good chance of passing through the House.
It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend the Member for Wycombe (Mr Baker) on introducing the debate and being such a champion on this issue. My inbox and my surgeries have been inundated.
I represent Aberdeen South, which is the energy capital of Europe and the hub of our oil and gas industry. Many who worked in oil and gas were actively encouraged by their companies to get involved with such schemes, to set up a personal limited company and to get off the company books. Many did so for many years. Many felt assured that they were being advised by chartered accountants and tax advisers. Everything was above board. It was their belief that their professional accountant could not advise anything illegal, otherwise their chartered status would be revoked.
Of course it is a failure of successive Governments, but in 2011 the Government actually looked at this. They did not come up with a definitive answer and, as a result, these schemes proliferated.
My hon. Friend is absolutely right and I could not agree with him more. For many, this option seemed to be the obvious choice. The retrospective nature of this decision is causing great distress. As has been said, there is a huge human cost. I want to take this opportunity to share with the Minister and hon. Members the stories of my constituents.
One constituent wrote to me and said:
“It’s been going on for a few years now and taking its toll on my family. As we are unsure where we’ll get the money to pay any outstanding tax, their bullying tactics in getting you to sign up to pay and the fact they demand you to reach a settlement with them, even though when we have done everything they ask, they have still not come back with any settlement figures.
Not only that, they are saying even if you settle or pay back the loans, there’s a strong possibility it won’t end there, so we go back to their scaremongering tactics they’ve deployed for you to pay up front and ask questions later, it’s totally unjust for our future as being a democratic society”.
Another constituent said:
“I like to think I understood the risk I was taking and had every confidence in the scheme I was using, I did not entertain the prospect that the Government would be prepared to violate the core principle of the rule of ‘legal certainty’ by introducing retrospective legislation going back 20 years… This weekend I have received my settlement ‘offer’ under HMRC’s settlement offer and am currently in the process of deciding whether or not to accept their terms. Whilst I sincerely would like to settle and move on, I am deeply concerned that their CLSO2 is extremely unfair and punitive.”
My hon. Friend is making a powerful point. Does he agree that the fundamental unfairness is that HMRC is going after the easiest of targets, namely the individuals, rather than those who may be the most culpable?
I could not agree more. It seems to be easy pickings for HMRC. It is not going after those who are truly culpable. That is why such great distress is being expressed in our surgeries.
My constituent continued:
“This whole sorry affair has imposed life changing levels of stress on both me and my family, especially with the backdrop of the recent downturn in the oil and gas industry where I have been out of work for about 50% of the past two years.”
Another constituent wrote:
“This is a complicated situation, however fundamentally, HMRC have closed down the opportunity to use these ‘loan’ schemes.”
My constituent accepts that it is a positive move to end ambiguity.
“The retrospective nature of this legislation is going to place a large number of contractors under extreme financial duress. Bearing in mind HMRC’s failure to sort this situation out sooner”.
Another constituent—this is the last example I will give—emailed me to say that he was emailed by a company stating that he could retain 78% to 80% of his salary legally. He wrote:
“The scheme was QC approved and top tax counsel advised it was sound… I learnt during the latter part of last week that my retrospective tax charge is very likely to exceed £230,000. As for HMRC’s so-called ‘Impact Assessment’ apparently finding that such sums would lead to few, if any issues for those being expected to pay such, I can only comment that they must assume that we are all multi-millionaires. Of course, they know full well that we aren’t.
It’s very daunting when the full weight of government makes demands with threats of the law being brought to bear when, according to the law, no law has been broken. I doubt very much that I can simply ignore threats, be taken to court and stand there and say such. Thus individuals are placed in the position of hiring lawyers with costs running into six-figures and this will be beyond the means of most, if not all of us.”
This particular constituent says that he is single and has
“never had a second income from a partner to assist with cost of living”.
He is facing serious financial distress.
It is right that we condemn those who sold on and encouraged such schemes. It is deeply unfair that we seek to do this retrospectively. It absolutely violates the core principles of the rule of law. I could not agree more with colleagues who have already expressed that frustration. I think that this particular measure is disgraceful. I will go further, I think it is dishonourable and should be stopped.
If colleagues could keep to five minutes, we might get everybody in.
This House has the chance and the opportunity to put this wrong right. As the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) said at the end of his speech, there will be a Report stage to the current Finance Bill. It will come to the Floor of the House and we—every Member here today of whatever party, whoever signed the early-day motion—have the power to come together, cross-party, and pass a new clause to right this wrong. Frankly, words in a Westminster Hall debate and signatures on an EDM mean nothing unless we are prepared to go through the Lobby to vote this tyrannous legislation down. Constituents, the Loan Charge Action Group and all the people affected will expect their Members of Parliament to vote and act and not simply talk. Today gives us a platform to make sure we send a powerful message to Treasury Ministers that this is a catalyst for the action that was not taken two years ago, but will be taken, I believe, when we get to the Report stage of the Finance Bill.
As has been said by the hon. Member for Wycombe (Mr Baker), there is a fundamental principle here that he and I can agree on: the rule of law. When we talk about British values, about which he and I agree, the rule of law is something the Department for Education says should be taught in every school up and down our country. Well, this is the test. Either Members of Parliament believe in the rule of law and what our children are taught, or they do not. When we vote on the new clause in the Finance Bill, as I am sure we will be asked to, we will see whether we really do believe in the rule of law.
As one liberal to another, it is a delight to agree with the right hon. Gentleman. I hope members of the public will not think I am engaging in too much levity if I say that some of us are engaged in enough rebellion already. I should be very grateful indeed if the Government tabled their own amendment to deal with this matter so that we do not find ourselves engaged in any sort of rebellion on the Finance Bill.
It was a pleasure to allow that intervention. I have no objection to the way in which the wrong is righted, as long as it is righted properly. If we stick to the principle of the rule of law, as I said in my intervention on the hon. Gentleman, ending retrospection in this tax change means that any charge prior to Royal Assent of the Finance (No. 2) Act 2017 must end. There can be no charges before Royal Assent of that Act, otherwise we are in the area of retrospection.
Like other colleagues, I have had constituents contacting me. Sixteen have contacted me directly, and in my experience that means there are many more out there who have not contacted me. I will read from just one, from Mr Garry Taylor, who talks about the “devastating consequences” that will destroy the finances of “me and my family”. I do not know about other colleagues, but I have had people almost in tears in my surgery over a tax matter, which has never happened before in 20 years.
Does the right hon. Gentleman agree that people are living in genuine fear of bankruptcy and losing their homes and it is not acceptable that the Government have handled the matter in that way?
I could not agree more. I have never seen people so distressed and distraught by one particular measure, which appears to target pain on just a few people. Those people work hard in our NHS, our industry, our schools and our civil service. Why do the Government want to target so much pain on so relatively few people? The charges involved are massive: hundreds of thousands of pounds. It is completely iniquitous. I believe the Minister knows that and I hope he will therefore put it right. Everyone in this House is clearly against tax scams. We want to close them down, but as other hon. and right hon. Gentlemen have said, people were advised by professional accountants and HMRC appeared to be happy. It was notified of the tax schemes and did nothing. Yes, let us crack down on tax avoidance, but let us not go after victims, the people simply trying to earn a living for them and their families.
Will the right hon. Gentleman give way?
I will in a second.
I might be the only veteran of the 1999 Finance Bill Standing Committee. I am happy for colleagues to correct me, but in those early days of my parliamentary career, I had the pleasure of sitting on nine consecutive Finance Bills that dealt with the early history of IR35. We had huge arguments then that that was wrong. There is an inherent issue that needs to be tackled, but what is proposed is absolutely not the way. HMRC has got to learn from history. It appears to me to be acting vindictively because it did not get its way a few years ago on IR35. Because people found legitimate ways around it, it is coming back and acting in an outrageously draconian way, and this House has to say no.
It is a pleasure to serve under your chairmanship, Mr Walker. I must begin with a little grovelling and apologise in advance for having to leave this debate for a statutory instrument Committee. I am grateful to you for allowing me to speak, and to my hon. Friend the Member for Wycombe (Mr Baker), who secured this debate. It is of great importance not only to my constituents, but to those of many other hon. Members.
My constituents are concerned about the 2019 loan charge. They have tended to work as contractors or freelancers in the IT and professional services sphere, and they are now deeply concerned that HMRC’s actions over the loan charge will place them in serious financial hardship, if not outright bankruptcy. They suggest to me that they were encouraged by professional advisers or the contracting companies themselves to enter special payment schemes, which were deemed legal and allowed for scheme users to be paid in the form of a loan rather than ordinary remuneration. Resulting from poorly drafted IR35 legislation, such schemes are now deemed by HMRC to be disguised remuneration that amounts to aggressive tax avoidance. HMRC is pursuing affected constituents at a time when many are cannot easily recover their earnings.
My constituents fear that this action represents retrospective taxation, thereby undermining legal certainty and confidence in the tax system. They are also angry that the charge is being levied on contracting employees, despite a legal case involving Rangers, which judged the employer liable for any unpaid tax and national insurance. Given that for nearly two decades HMRC appeared to permit tax advisers and accountants to recommend the schemes without penalty, my constituents believe they have been let down by a system that should have alerted them to problems in a timely manner.
I have had a one-to-one meeting with the Financial Secretary on this issue in which he set out the Government’s position with clarity. I understand that scheme users will now be able to spread any payments to HMRC over five years should their taxable income this year be under £50,000. However, my constituents want to know why HMRC is not apparently being more robust in pursuing the tax advisers, accountants and contracting companies who took freelancers and contractors down this route in the first place.
One constituent told me:
“I decided to contract having been made redundant 3 times from what I considered safe and stable jobs. I have never in my life taken any state benefit. The only and main reason I signed up to a..scheme was because I felt that after a year as a self-employed person...the rewards did not justify the risks and with IR35...insisted upon by my employers”,
“the only route open for me to improve my take home pay”.
He goes on:
“I am not justifying any shortfall in the tax...that I maybe should or could have paid, but Government and HMRC”
“schemes to flourish for years without redress...HMRC have chosen to inflict regular PAYE/NI rates, apply penalties and interest for open years and take no account of holidays, sickness benefits, pensions, training and out of contract time that freelancers have to finance themselves. Surely, even a concession on the rate being charged under the Loan Charge would be a fair and reasonable compromise?”
I must confess that without having access to the precise details of individual tax paid and the specifics of the schemes entered into, I have found myself caught between the concerns of constituents and the assurances of Ministers, who believe very strongly that the loan schemes clearly represented an illegitimate attempt to avoid tax. I fear, therefore, that the fairness and legality of HMRC’s actions will end up being determined in the courts by those with the tax expertise to look dispassionately at these matters. None the less, I wanted to raise these concerns in this afternoon’s debate in my role as a constituency MP, and I would be grateful if the Minister addressed the specific concerns that my residents have raised with me: namely, the apparent lack of action against culpable financial and legal advisers and employers, the calculation of tax owed, and retrospection in the tax system, which risks undermining wider confidence in the system.
I call Janet Daby. You have four minutes, I am afraid.
Thank you for allowing me to speak in this debate, Mr Walker.
In 2000, the Government introduced legislation called IR35, which sought to class many freelancers as employees. It was designed to target “disguised employment” and the Government wanted to close a loophole that allowed companies to employ people without collecting NICs or paying other associated taxes. Unfortunately, “disguised employment” was not well defined. When people were engaged on very different terms to permanent employees, it was not clear whether they were subject to IR35. In that grey area, third-party scheme providers began to offer a service whereby contractors became employees of a third-party company, which was then engaged by the agency or client company. Remuneration was paid in the form of loans, which were often made by an offshore third party.
Those arrangements were marketed as HMRC-compliant and seemed to offer the certainty that many were looking for. The Government now claim that the arrangements did not work and, although they were within the law, were not in tune with what Parliament intended. That has led to a series of measures designed to recover the funds, which were not originally deemed taxable, in spite of the fact that the people affected legitimately completed tax returns, paid their dues and disclosed the arrangements to HMRC.
Many within the schemes have yet to be informed of the amount that they are due to pay, including my constituent Nick, who was involved in one of them. To say that Nick is worried about that is an understatement. I have met him, and he said that he is
“facing personal ruin, most likely bankruptcy with the loss of the family home”.
He feels that that will affect him and his family. He continued:
“While I have recently moved out of financial services…bankruptcy would make me ineligible to work for any financial services company again therefore severely limiting my potential employers”
and employment. To say that causes a great deal of stress is an understatement. Although he is grateful to have the support of his wife and family, there are days when he feels hopelessly overwhelmed by that looming over him.
Given the vast sums of money involved, and the various reasons and backgrounds behind people becoming involved in such schemes, we need a sense of the role of the companies who provided the contracts. They clearly played a role. I would also like to know from the Minister whether the time-to-pay arrangements will provide the people affected with any kind of practical support.
The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) made it clear that the genesis of the matter was the change to IR35 in 2000, which led to many freelance, contracted and itinerant workers ordering their financial affairs, notably for the purpose of paying tax, in a way that they believed and were told was completely proper and in line with the new regulatory environment. Subsequently, umbrella schemes developed as some of those people’s tax and financial affairs led them to the point where they became liable for employer’s national insurance contributions. Those umbrella schemes have become mainstream in the subsequent 18 years.
The people concerned were largely acting in good faith, whether or not the people who were advising and promoting the schemes were. The architects and advocates of the schemes are the people who the Treasury should be pursuing with vigour and determination.
Will my right hon. Friend give way?
Will the right hon. Gentleman give way?
I happily give way to my hon. Friend first.
Is my right hon. Friend aware that many of the organisations and advisers that encouraged our constituents, who are now suffering so much grief, to go into the schemes are the self-same ones putting themselves forward to give our constituents advice to address the challenges from HMRC? Does that not add insult to injury?
That should be a further part of the invitation that I made via my hon. Friend the Member for Wycombe (Mr Baker), whom I congratulate on securing the debate, to the Minister. We look forward to the Minister confirming that when he responds.
Will the right hon. Gentleman give way?
I will briefly, but I want to move on, because I appreciate the lack of time.
I am grateful, because I concur entirely with the point that the real villains are the companies that mis-sold the schemes in the first place—at times, for fees that can only be considered usurious. My constituent paid £138,000 in fees over three years to a company called AM Limited, which has changed its name but is still trading and registered in Panama. If HMRC were to assist my constituent in trying to recover that money, he would be much better able to pay his retrospective tax liability.
I have answered many debates in this Chamber as a Minister of various Departments, and I tell the Minister, who is a good and honourable man, that when this many hon. Members from both sides of the House come together in a single cause, he had better take action. The writing is on the wall and he has to respond. I know he will take that piece of sound advice in the spirit that it is offered to him.
I will briefly make three recommendations and then draw my remarks to a rapid conclusion. First, I would like the Minister to tell us what further impact assessment has been made by scale and detail on the families affected by the measures. Secondly, I would like him to give us an estimate of how many people who cannot or will not pay will be driven to bankruptcy, and what effect that will have on the Treasury’s revenue calculations on the matter. Thirdly, as I have already said twice—I make no apology for amplifying it—I would like him to tell us what steps he is taking in respect of the architects and advocates of the schemes, who have done so much damage.
I have no doubt that being a Treasury Minister is about churning figures, but it is also about changing lives. This matter affects the wellbeing of large numbers of our constituents. Families will be blighted and faith in fairness will be ruined. The Minister—an honourable gentleman, a good Treasury Minister, a valued colleague and friend—needs to see the writing on the wall and take action. Woe betide those who do not. They will rue the day that they failed to listen to the voices that have been aired today.
I thank Mr Hayes for his generous and succinct contribution. Last but not least, I call Justin Madders.
It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate the hon. Member for Wycombe (Mr Baker) on securing the debate. It is clear from what we have heard that the issue has caused much consternation and anguish for many people, so it is right that those concerns have been aired here.
As much as the next person, I believe that if tax is due, it should be collected. Without the ability to raise funds, our public services would grind to a halt. I am sure there is unanimous agreement about that. My concern, and that of many hon. Members, lies in the way the recovery of the 2019 loan charge has been handled. It raises questions about whether HMRC can say, hand on heart, that all those who are subject to it have had what I would call a fair hearing. I want to make it absolutely clear that if, following due process, the money is owed, it should be paid, but what I have heard from a constituent does not give me confidence that that will be the case.
My constituent, Mr Crook, was working as a geologist in the oil industry when the agreements that are being scrutinised were set up. His work has dried up and he is now unemployed. He tells me that he is not in a position to repay everything he owes—not that he has been told how much that is—and that because of the uncertainty and the failure of HMRC to engage with him, he is concerned about the risk of bankruptcy.
I have corresponded with Ministers and officials to ask someone to look into Mr Crook’s case but I have had nothing back but the standard response. With Mr Crook understandably anxious to resolve matters, he has contacted HMRC at the email address provided on 9 April, 8 May, 30 August, 31 August and 28 September, and by post on 2 July. His emails have had an automated response and he has had no response to his letter at all.
My hon. Friend is making a powerful argument on his constituent’s behalf. I have a constituent much like his who has been told that he may have to pay back more than £100,000 over the five years, which could cost him as much as £2,500 a month. Does my hon. Friend accept that even when people are still in work, if they are trying to provide for their families, those sorts of sums are simply unobtainable for most of our constituents and will lead to bankruptcy, whether that is what the Government intend or not?
There is a lack of reality and a lack of genuine engagement with the individuals affected. As I said, my constituent has not had a discussion of the sort that my hon. Friend refers to, and until he does, he is in no position to know whether he will be able to repay anything at all. Will there be genuine discussions before the loan charges become due? Is the Minister confident that the Department has sufficient staff and resources to deal with all the inquiries that we have heard about?
My constituent tells me that although he submitted his tax returns each year when he was working they were never queried, and because of that HMRC has at the very least implicitly, if not explicitly, accepted that the moneys he received as a loan were indeed just that. He is concerned by the retrospective nature and long reach of the loan charge, and states:
“We really are normal people, who operated within the law at the time, itemising everything on our tax returns, paying benefits in kind tax on the loans and operating under a registered scheme with a reference number lodged with HMRC at the time.”
I contrast those words with what my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) said earlier about the string of multinational companies that are clearly paying less tax than they ought. When individuals are being driven to despair by the sort of hectoring we have heard about, it is perhaps right if they conclude that there seems to be one rule for the big corporations, and another rule for the man on the street. If individuals are made bankrupt we will all lose, but it looks as if we could end up in that situation by default because of a lack of resources and engagement by HMRC. Will the Minister look carefully at how the recovery operation is working so that we avoid that? Finally, I ask that HMRC acts with competence and compassion.
I appreciate being called in this debate, Mr Walker, and I thank the hon. Member for Wycombe (Mr Baker) for securing it.
In previous years, the SNP has raised concerns about the implementation of IR35 legislation, and during discussions on the Finance Bill I suggested a review into the way that it was being implemented. It was not necessarily that the legislation was a bad idea, but the way it was implemented did not work for people because they could not navigate the system appropriately. I raised that issue in 2016, just as my colleagues did previously.
I have been approached by many constituents about the loan charge. Some were recommended to join these schemes by the companies they worked for, which wanted them to move on and become contractors. One person told me that a presentation was given in the company’s boardroom by another company running one of the schemes. Individuals were encouraged to go to that presentation and transfer into one of the schemes rather than being employees of the company. That is a real concern.
I am concerned about the way that this measure is being implemented. I have a constituent who filled in his details before 30 September, as he was requested to do, but has not yet received a settlement figure from HMRC. Another constituent in the same boat has been told that they will receive a settlement figure by 5 April next year, although the Treasury promised that those figures would arrive by 30 November this year. People are being told that the settlement figures will not be calculated until 5 April, but they have also been told that they will need a payment plan in place by then in order to be compliant. If that settlement figure is not calculated until April and the payment plan will be required immediately, people do not have enough time to make the decisions they need to make on any settlement figure.
Clarity about timelines would be hugely appreciated. This has been a moveable feast, and the Treasury and HMRC have regularly changed the dates and times by which people have been required to submit information. It is important to have clarity so that people know when they need to have a payment plan in place.
It is important that people pay the tax they owe. At least one of my constituents is disputing the calculation made by HMRC. They have not been given a breakdown of the calculation and cannot work out why HMRC has come to that figure. There needs to be transparency so that people understand why HMRC thinks they owe what it says they owe, and they can then make rational and reasonable decisions about payment plans.
I have been clear with any constituent who has approached me, and with HMRC, that we need a mutually beneficial payment arrangement. We cannot have people being made bankrupt as a result of these payments. The change from 12 months to a five-year period for repayments is welcome, but if someone is being asked to pay back hundreds of thousands of pounds when they are existing on jobseeker’s allowance, it is not possible to pay that money back over five years.
I am also concerned about individuals who are being asked to sell or move out of their family home and have it repossessed. That causes problems for local councils as well as for the family involved, and just passes the buck. If HMRC wants to recoup the money, it would be sensible to do that in a way that means people can pay it, rather than having to be made bankrupt. We need give and take by HMRC, as well as transparency and clarity about dates.
Does my hon. Friend agree that one of the biggest problems facing people in this position is the uncertainty of not knowing how they will cope with paying these large amounts back over a period of time, when no assistance or guidance has been provided as to how they might make those payments?
As I said, this has been an incredibly movable feast and HMRC keeps moving the goalposts. It is important to have clarity about the future timeline. Constituents need to understand what they will need to pay back, the timescale involved, and why they are being asked to pay back the amount requested.
It is a pleasure to serve under your chairmanship, Mr Walker. Today we have heard some awful stories from my hon. Friends the Members for Mitcham and Morden (Siobhain McDonagh), for Poplar and Limehouse (Jim Fitzpatrick), for Lewisham East (Janet Daby), and for Ellesmere Port and Neston (Justin Madders), and others, and I am grateful to everybody who has contributed to the debate and put the case so clearly.
There is no doubt that small business owners, contractors, and others who have used these schemes will be significantly affected by the charge next year. Many are not wealthy people. They did not intend to avoid tax, and until recently many were not aware that there was even an issue. In some cases, the schemes were presented by agencies or employers as part of a standard contract. Some people could lose their livelihoods; some could lose their homes. The schemes we are talking about are a form of tax avoidance, and it is right that tax owed is collected. Avoidance should not pay—that is the principle. However, those who will be negatively affected by these schemes deserve our empathy and understanding, and many of the stories we have heard confirm that some of those affected are vulnerable and became caught up in these schemes without initially comprehending what they were all about.
If what is being reported is correct, it is an absolute disgrace that hospital cleaners, locum doctors, nurses, council workers, social workers and other people who work hard for the public on low or moderate pay were recruited into these schemes by tax advisers and bogus umbrella companies. It is an absolute disgrace that the Government are determined just to take on those individuals, rather than those who facilitated this avoidance for profit—those who fully knew what they were doing, and did it anyway.
If the reports are right, in some cases nurses or other public servants were made redundant by public sector organisations, only to be hired immediately as contractors through agencies who then facilitated these tax avoidance schemes. What action have the Government taken against those agencies? Some might say that this was fraud, because the schemes were not a genuine way to reduce tax liability. I have some sympathy with that view, because the schemes seem to have harmed many “clients”, and in my head I cannot justify a professional tax expert setting up such a scheme and getting a nurse, a social worker, or someone else on a low or moderate wage involved in it. If it is not illegal for those tax experts to do that, it bally well should be.
Let me ask the Minister a direct question: if his Government maintain that these arrangements were illegal when entered into, why have they done nothing about the advisers who recommended them? Does he agree that when advisers promoted these schemes, they were promoting something illegal? The advisers get off scot-free while those who can ill afford it carry the can.
One of the employee benefit trust schemes we are talking about was created by Deloitte, which is one of the largest business services companies. It was put in place by Deutsche Bank, working with offshore entities in the Cayman Islands that were set up for this specific purpose. That was confirmed by the Supreme Court in 2016 following court rulings in 2014 and earlier. Two years on, however, there has been no investigation or prosecution, and no penalty for mass marketing unlawful schemes. No accountancy firm has been disciplined by the professional body, the Institute of Chartered Accountants in England and Wales, and the Government did not even attempt to recover the legal costs spent fighting those cases. Why?
The Government’s priorities seem clear: they will not go after the enablers. We appear to be talking about advisers and employers who have exploited public service workers—workers who will see no benefit themselves—and at the same time directly reduced the tax that pays for those self-same public services. It is simply wrong, and it goes to show yet again how absurd, short-termist and unfair the outsourcing and privatisation policies have been.
We believe that clemency should be considered when businesses or people are at risk. As hon. Friends and other hon. Members have said today, if the loan charge causes businesses to go under next year, that will not help the Treasury recoup losses in the longer term. As the hon. Member for Aberdeen North (Kirsty Blackman) said, it will cost the public sector more if we have to evict people from their homes and rehouse them. I hope the Minister will tell us what the Government will do to treat everyone involved with compassion and care, particularly those who unintentionally fell foul of the schemes, including vulnerable people and those on low incomes. Campaigners say that the exact opposite is happening: people are being treated with little understanding or compassion by HMRC.
The impending deadline of April next year and the potentially severe consequences for anyone on a low wage who does not meet that deadline justify concerted outreach to those who have loan balances outstanding. We cannot let vulnerable people who have been exploited end up with massive tax debts hanging over their heads for many years to come. If we see bankruptcies, failing businesses, repossessions and even suicide, that will be because this Government have not done the outreach needed and not invested in adequate training. It will also be because the context for the charge is a cut to the HMRC workforce of 17% since 2010, even while they are rightly being asked to do more to tackle such complex problems.
We should not let the Government’s approach to loan schemes distract us from their absolute failure to deal with large-scale tax avoidance. Loan schemes are far from the only form that avoidance has taken in recent years, and are small in comparison with the tax avoidance methods used by the ultra-rich. Labour supports strong measures against tax avoidance. We want the Government to go much further. We want them to go after the enablers, those who knew that the schemes were tax avoidance and illegal, but who peddled them anyway. Thank you.
And thank you, shadow Minister. This gives the Minister extra time to answer all the questions he has been asked. He will leave two minutes, because he is generous, for Mr Baker to wrap up at 3.58 pm.
Thank you, Mr Walker. It is a pleasure to serve under your chairmanship.
I congratulate my hon. Friend the Member for Wycombe (Mr Baker) on bringing this debate to the Chamber. I acknowledge the 12 speeches from colleagues across the House, who raised some very important issues on behalf of their constituents. Only last Friday, some of my constituents too came to raise the matter with me.
In the course of my response, I hope to address the significant issues discussed: time to pay; retrospection; whether HMRC is going after the promoters; what my hon. Friend said about the disclosure of tax avoidance schemes; the numbers involved; and the difference between retroactive and retrospective. I will also give some detail on the sums of money that we anticipate will be raised through the measure.
The responsibility of Government is to assess critically the impact of any tax reform, and to ensure that it is structured and implemented in the best possible way.
The Government say not only that the loan charge is designed to treat loans as income but that if the loans—now income—are written off, they will be subject to inheritance tax because the loan will not be repaid. Numerous court and tribunal findings agree that the loans were loans, not income, yet the Government press ahead regardless. Does the Minister agree that that is completely wrong and unfair?
In the course of my speech, I will address that point. I am happy for the hon. Gentleman to come back to me later if he feels that I have not done so.
To be clear, I am the Economic Secretary; the Financial Secretary wanted to be here but he is in the main Chamber for the Finance Bill, so I am here in his place.
I acknowledge the early-day motion tabled by Members. It has attracted 103 signatures, and I also acknowledge the concern throughout the House on this matter. The concerns expressed are for people who have used a disguised remuneration scheme, who expect to have outstanding loans in April 2019, and who will be subject to the charge. I recognise that the Government need to be clear about why we legislated for this charge, which received Royal Assent following a full debate during the Finance Bill process in 2016-17. I will outline the steps that the Government have taken to help those individuals who may be affected.
The Government believe that it is not fair to ordinary taxpayers, who pay their tax on time and in full, to allow people who have used tax avoidance schemes to get away with it. Disguised remuneration tax avoidance schemes are contrived arrangements that use loans, often paid through offshore trusts, to avoid paying income tax and national insurance contributions. The schemes may have involved provision of a loan with no intention whatever to repay it. I spoke to the Financial Secretary this morning, while preparing for the debate, and he said, “Earnings are earnings, and a loan is a loan”, and that is what the issue boils down to.
I understand the Minister’s point, but before he progresses with his speech, will he clarify whether he accepts what many Members have asked this afternoon, that those who undertook the scheme did so in good faith, and therefore that the people ultimately in trouble for this system are those who perpetrated it, not those who signed up to it?
I am happy to concede that for the 50,000 indivi-duals affected, there are obviously responsibilities for those who promoted this. It is absolutely the case that HMRC is pursuing those individuals. They often promoted the scheme to large numbers of individuals. Five cases are before the courts—that seems a small number, but each one covers a large number of individuals—and there has been a judgment in one, with the other four cases still moving through the courts. It is not right to say that HMRC is not engaged with those who promoted the scheme.
Others set it up.
Others did, I appreciate that—that is fair. I take on board the sentiment of the Chamber with respect to ensuring that HMRC is engaged with those who promoted the scheme, as well as the other individuals.
I will be gentle, because the Minister knows, as I do, the peope who are really responsible in our respective parties for this particular piece of legislation. I would, however, be grateful if he takes on the responsibility to ensure that we are written to about the actions that the Government take against the enablers.
I am very happy to engage with HMRC to get a letter setting out the action taken. I suspect that there might be some constraints on revealing details of individual live cases, but where data are available, I will make them available to hon. Members.
Will the Minister confirm, either now or in any such letter, the Treasury’s objectives in pursuing those companies? Is it to take retrospective action against them to try to recover the great volume of money they received from selling those schemes?
HMRC’s objective will be to secure the money owed, as per the rules of the tax system. HMRC has enormous power to levy charges of up to £1 million on those individuals who are not complying.
The schemes may have involved provision of a loan with no intention to repay it. The recipients of such payments enjoyed them no differently from the way any of us use our normal income. As such, in the eyes of HMRC, the payments have always been taxable.
I have acknowledged the comments of colleagues who said that the charge on disguised remuneration loans will apply to loans that were made as far back as 1999. It is fair to say that the schemes were never permitted. They were defective, going back to then.
We now learn from the Minister that HMRC knew that the schemes were inappropriate from the outset. So is he saying that HMRC is not malevolent but indiligent, inefficient and ineffective? If HMRC knew that, and the schemes were mainstream for 20 years, why is it acting only now?
I thank my right hon. Friend for his point. Every scheme will be taken individually. They were not one single scheme that was developed. It is for HMRC to open cases on the disguised schemes, which it has done—going back many years on some of them—and it will take action as appropriate. A concern has been raised in the debate about not determining an outcome, and my hon. Friend the Member for Wycombe raised the concern about the implication that, when a tax avoidance scheme has been disclosed, that is somehow a verification or an endorsement of it. That is a misleading perception that has been left, and something for which HMRC should be accountable.
Forgive me. I will not intervene more than twice on the Minister, because I know he wants to make progress. I have always regarded HMRC as an efficient organisation that goes about its business properly. Is this not about the Government? The Government took a view about all this and I suspect that, although it may be true that HMRC is implementing Government policy, this is really about the Government changing their mind. That is what we are asking for.
The Government that my right hon. Friend was part of and, I believe, a Minister in at the time the legislation was passed. [Interruption.] Let me make some progress.
Although the measure subjects the loans to a tax charge, that 2019 charge applies only to current loan balances and does not arise until April 2019. Recipients of loans can still repay outstanding balances in full or settle with HMRC. The legislation is not retrospective because it sets out Parliament’s intention: payments subject to the loan charge should always have been, and will be, subject to tax. The announcement in the 2016 spring Budget by the former Member for Tatton provided scheme users with a three-year period in which to repay disguised remuneration loans or agree a settlement with HMRC to avoid the charge.
Nearly 50% of those who are liable for the loan charge have not had any communication with HMRC since June 2016. Some of them are my constituents. Does the Minister agree that HMRC must accelerate its communications, to take that cloud of uncertainty away from those who are affected?
I thank my hon. Friend for that point. There have been 24,000 contacts with HMRC. The number of telephone calls has increased from 2,000 to 4,000 a week and extra resources have been made available by HMRC, but I am happy to take up any individual cases that my hon. Friend may wish to bring to me.
In the view of the Government and of HMRC, the payments were always taxable as income, and the new legislation reiterates and formalises that stance.
The Minister is being very generous with his time. That final point reiterates the issue here. I have constituents who are employed in the construction industry and when they were taken on by the agencies—the umbrella companies—through which they had to go to access the work, they simply were not aware of their liabilities and were not made aware of them. This is a natural justice issue. The policy is harming people who are not particularly well paid, have done everything right and are being unfairly punished.
The responsibility to settle tax affairs is on an individual basis. If an employer forced an individual into a tax arrangement of this sort, the employer would be in a liable position.
Let me make some more progress otherwise, despite the time I have, I will not get to the end of my speech and I want to address the points raised.
Anyone who has been involved in legal action will be well aware that it can be protracted and expensive for all concerned. Agreeing a settlement with HMRC allows taxpayers to move on, and out of avoidance for good. In most cases, any users of schemes will be better off approaching HMRC and agreeing a settlement rather than waiting for the charge next April, and HMRC is encouraging anyone worried about being able to pay to get in touch as soon as possible.
On the point about taxpayers wanting to move on, several of my constituents have requested settlement sums from HMRC but have not received a response, notwithstanding the passage of several months. That is prolonging their uncertainty and anxiety. Will the Minister take steps to ensure that HMRC responds to those requests for settlement as rapidly as possible?
I certainly will. I took the precaution of speaking to the Financial Secretary again this morning, and I would like to clarify that, with the time-to-pay arrangements, the five-year period will automatically be put in place for those with incomes of less than £50,000. For those with larger incomes, there is an opportunity for dialogue with HMRC. With respect to individuals who have not had that settlement made known, I will be happy, as we all will as constituency MPs, to take those cases up with HMRC.
HMRC is helping thousands of scheme users to get out of avoidance for good.
Just one moment. It will consider all personal circumstances to agree a manageable and sustainable payment plan wherever possible, and it has recently announced simplified payment terms for individuals looking to settle their tax affairs before 2019.
I want to address another issue of the debate. Those who oppose the legislation have made claims that the loan charge will bankrupt public sector workers, including teachers, nurses and social workers. It is my understanding that 1,500, or 3%, of individuals will be involved in the health and education sectors but that most of the scheme users worked in professional services. The average salary of the scheme users was £66,000, which is considerably higher than the average annual wage.
In fairness, I should allow the hon. Member for Aberdeen North (Kirsty Blackman) to intervene.
There is no time, Minister. You have 40 seconds.
I have contacted HMRC on behalf of constituents and have been told that it cannot talk to me about those individuals and that they will get an answer by 5 April. That is not helpful.
I obviously cannot respond on an individual’s situation, but what I will say is that disguised remuneration schemes are complex and contrived and, as my hon. Friend the Member for Wycombe said, fail the “too good to be true” test.
Although the Financial Secretary and I have tremendous sympathy for those facing large tax bills, it is unfair to let people get away with not paying the tax they owe. There is support for people who have used the schemes and now find themselves in difficult situations, which require those affected to approach HMRC and bring the matter to a close. I will now allow my hon. Friend the Member for Wycombe to make some concluding remarks.
I am grateful to everyone who has come to the debate and participated. The debate has overwhelmingly avoided straying into the partisan, for which I am grateful. I listened carefully to all the speeches and I do not think anyone stood up and sided with those who think it is legitimate to be paid through loans that have been made with no intention of repayment—no one stood on that side of the argument. What we have seen is how people have been drawn, or even driven, into such schemes, and that is the heart of the injustice.
We have heard stories of human suffering that would melt any heart, which brings us on to the heart of the matter—the rule of law. Once again, my hon. Friend the Minister has earned my admiration, because he seems to get all the Treasury’s toughest gigs. I sometimes wonder whether he should have been promoted to the Department for Exiting the European Union for a little break.
He will have heard the response of people present when he explained that the measure is not retrospective, and I really hope that the Treasury goes away, looks at the measure again and eliminates retrospection. When people have acted in good faith under advice and end up subject to injustice, we must uphold the principle of the rule of law. Some might then say that they had got away with it, but sometimes we have to say, “While we don’t stand on their side and we accept that it was not Parliament’s intent, we respect that there is a price to be paid for upholding the rule of law so that in the end we can preserve human liberty and justice”.
Motion lapsed (Standing Order No. 10(6)).
Housing Bodies: Accountability
[Mr Philip Hollobone in the Chair]
I beg to move,
That this House has considered the accountability of housing bodies.
You and I have known each other for a long time, Mr Hollobone, and I am not sure whether this is the first debate I have been at that you have chaired, but nevertheless, it is welcome to see you in the Chair.
I want to examine a number of core issues in this debate before giving some recommendations to the Government. First, I want to look at the adequacy of the assessment that is currently in place to examine the quality of the design and build of new houses. I also want to consider the accountability of housing organisations when they have made mistakes or are mistreating customers, as it is my opinion that currently, they are not adequately held to account. Lastly, I want to address the way in which data regulations apply to Members of Parliament. That issue has arisen in relation to a housing organisation through my casework, and I know that many other Members have encountered similar problems in their own casework.
We have had numerous debates on the urgent need for more, and better-quality, housing. I support efforts to increase the number of houses being built, and that should be happening at a faster rate. It is also vital that those homes are council-owned—I have always believed in that, and the privatisation of housing since 1980 has contributed to the issues that I will be addressing.
In Coventry, we have had several problems with housing organisations’ unhelpfulness when responding to their residents’ concerns. A quick search of our casework database has shown that dozens of constituents have contacted me this year about their housing situation. Housing organisations seem to be particularly unhelpful when responding to complaints, and the same names of problematic housing organisations keep coming up.
I thank my hon. Friend for bringing this important debate before the House. Many of the concerns that he has cited, and those I am sure he will be citing later, have been represented to me by my constituents who face similar issues, especially Robert Taylor from the Camden Federation of Private Tenants. Does my hon. Friend agree that it is high time that a Select Committee inquiry takes place, examining the accountability of housing associations and their lack of oversight by both tenants and Members?
I could not agree more. Such a review is long overdue, as even the data protection people do not give us clear answers about what information we are entitled to. They seem to forget that at the end of the day, we are the last line of defence for tenants—and anybody else who has problems, for that matter.
Does my hon. Friend agree that one of the major problems is the transparency of housing associations? We had a notorious case in Orchard Village in South Hornchurch, which was raised in a debate in this place. One of the big problems was that housing associations were departing from their historical, ethical role of filling gaps in the market and becoming housing developers themselves, lacking oversight and transparency, and therefore no comeback was possible on behalf of our constituents.
My hon. Friend has highlighted another major problem: at times, housing organisations hide behind the Data Protection Act 1998 to obscure the fact that they are bad managers of housing estates. That suggests that there is a wider issue with competition in the market, allowing poorer customer service to go unchallenged. Like most parts of the country, Coventry has recently seen some new, small-scale housing developments, and issues have arisen in a significant number of those developments as a result of the quality of the build. One recent example in Coventry has been the Philmont Court development in Tile Hill. That development of 48 flats is actually in my neighbouring constituency, that of my hon. Friend the Member for Coventry North West (Mr Robinson), who cannot be here today because he has other business.
My hon. Friend is making some powerful comments, and I thank him for securing the debate. Over the past few years, I have had considerable issues in my constituency, particularly with A2Dominion and FirstPort. Does he agree that the quality of build requires stronger regulation? I have had issues with letterboxes where mail can be taken from outside, and with residents saying that poor-quality materials are being used, particularly in areas where there is shared ownership rather than private ownership. All of that reduces confidence, particularly among first-time buyers, and those who are struggling and making ends meet in order to get on to the housing ladder and feel proud of the home they live in.
That is why I mentioned the Philmont estate in the constituency of my hon. Friend the Member for Coventry North West. There, there has been bad workmanship—to say the least—and a bad build. Residents have been moved out of their houses for a period of about 40 weeks, and cannot get any compensation. They have to rent privately to get accommodation; who is going to compensate them? My hon. Friend the Member for Feltham and Heston (Seema Malhotra) has highlighted similar problems to those we have in Coventry. The builders, Persimmon, have particularly let down residents by refusing to take any responsibility or pay compensation.
Of course, there are sometimes unforeseen issues with the quality of the design and building of a house. However, there seem to be widespread problems with new builds due to rushed building and substandard resources. I also hear from an increasing number of constituents about delays in moving into their new-build houses. I have one constituent who has had a seven-month delay in the building of her new home this year, which has made her and her children homeless: they are having to get by in a friend’s spare room. I am certain that that is the case across the country, as my hon. Friend touched on. I am also sure that there are many more people out there who are affected by delays, but who never contact us because they do not think they will get anywhere.
I would like the Government to review the checks that are currently in place regarding the design and build of houses. They should also look at the support offered to customers by housing organisations when issues arise. We must make sure that mistakes and errors are found early in the process, and that delays are lessened as much as possible.
Can we please note that the things that are wrong with these houses are not simply minor issues? I spoke to a woman on Saturday whose staircase had twice collapsed. Another constituent had the roof of their new home collapse. These problems are really serious; they are not just little things that need to be put right after someone has moved in.
I fully agree with my hon. Friend. Given local government cuts, trading standards officers cannot police this sector any more—it is as simple as that. That is one reason why these housing organisations are getting away with it, but the law should be tightened up as well.
Does my hon. Friend agree that poor-quality materials can have other impacts, not just on the benefit of the asset if it is in shared ownership, but by creating situations where the quality of the ceilings or the walls results in greater noise going through from one property to another—people being able to hear each other’s toilets flush, for example? That impacts on neighbourly relations and puts residents in a difficult position. Finally, regarding the architecture of how blocks are built, there have been cases where bin storage areas have been built on the ground floor of flats. That has resulted in rats running riot through those properties, causing tremendous damage and requiring expense on the part of residents to put it right.
I agree with my hon. Friend. We are building up health problems among future generations, particularly the young children who are growing up in these properties. We had thought we had moved away from the type of housing that people used to experience in the 1930s.
I now want to discuss the accountability that Members offer when we work on behalf of constituents through our casework.
I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing the debate. He is making some very good points, but on the wider issue of accountability, rather than accountability just to Members, we are talking about a comprehensive public service that is offered to residents, including those with disabilities, older residents and people recovering from illness. Do we not need more oversight and more joined-up thinking between housing providers and other parts of the public sector? The current lack of oversight and lack of integration with the housing associations makes things very difficult. We end up further marginalising some very vulnerable people as a result.
I agree with the hon. Gentleman, but I would add that we need the resources, too. We cannot have joined-up thinking without providing them. We have to provide the resources for resolution of the problems, even if we have joined-up thinking. I do not necessarily disagree with him, but it is a question of resources.
I recently had a piece of casework where a constituent had an issue with his housing association, Orbit Housing, in Coventry. Without going into too much detail, the constituent had a concern that Orbit Housing was not adequately dealing with. I wrote to Orbit Housing, and we had the usual initial exchange of correspondence before it investigated the matter further. However, the correspondence I was receiving soon stopped, and I had to chase it for what was an undetailed response. We have all had experiences of delayed and undetailed responses to casework correspondence—I would like to see an improvement in the speed and helpfulness of responses—but that is not the main issue arising from this case. When I eventually received a final letter from Orbit Housing, it was highly unsatisfactory after such a delay.
Orbit Housing said that it could not tell me what steps it was taking because of data regulations. I make it clear that I do not want to know what people have in their bank account or when they got married. We do not want that information; we want to know that the issues we are raising are being pursued, and the details of how they are being pursued.
I congratulate my hon. Friend on securing the debate. He is making an important point about how public bodies are using the General Data Protection Regulation to obstruct Members of Parliament seeking to represent their constituents. On a housing-related issue involving someone with disabilities, I had to table some written parliamentary questions, and I asked the Ministry of Justice to establish an MP hotline for the tribunals service due to the difficulties I have been experiencing in getting satisfactory answers. I have had to get in the habit of copying tribunal inquiries directly to the Minister in order to obtain a response. Does my hon. Friend believe that the Government should issue guidance to public bodies, explaining what implicit consent means and stopping them obstructing Members of Parliament in carrying out their duties on behalf of constituents?
I could not agree more with my hon. Friend. In fact, on occasions when we have been dealing with constituency correspondence with outside organisations, we have also asked the constituent to sign a form giving us permission. We should not have to go to those lengths. When we talk about trust in politicians, that is a good example of where we are not being trusted. Our constituents trust us because we are the last line of defence. Where do they go after us, whatever the problem might be?
I have had the problem of organisations refusing to give me information on a constituent’s case many times. It used to happen a lot after the passing of the Data Protection Act 1998, before being somewhat dealt with by the Data Protection (Processing of Sensitive Personal Data) (Elected Representatives) Order 2002. However, it seems that more and more organisations are using the new data regulations to avoid responding to casework. I am clear that I do not consider the case closed with Orbit Housing, and today is a good chance for us all to recognise that we need to be bloody difficult people on behalf of our constituents to get results.
As I have already said, the problem I had with Orbit Housing is not unique. I have asked other Members whether they have had similar problems in conducting their constituency casework. Members have made clear through their interventions today that they have, as have many Members who cannot be here today. The vast majority of Members who replied to me said that they had faced some form of obstruction. That ranged from delays to a complete refusal to share information with Members due to the data regulations—at least, that was the excuse. After receiving the response from Orbit Housing, I started looking at how data regulations apply to Members. I also wrote to the Information Commissioner and the Leader of the House to request clarification.
The EU’s General Data Protection Regulation and the UK’s Data Protection Act 2018 are our core data regulations. According to the legislation, we are data processers when we are handling a constituent’s casework. Data processors have to make sure they have a specific reason to process someone’s information. We are covered in our casework by two of the reasons outlined in the legislation: consent and public task. When a constituent writes asking for us to take action on an issue, it constitutes them giving us consent to discuss their personal data with a third party. Some organisations, however, do not always accept a letter from a constituent. That is the whole point.
However, consent is not necessarily always required, as we have a good second legitimate reason. Public task is when data processing is necessary to perform a task in the public interest or for official functions. The 2018 Act outlines that that covers elected representatives fulfilling their parliamentary functions. Conducting casework is one of our core functions and therefore falls under public task. We are therefore usually covered by two clear reasons when discussing a constituent’s information with a third party. That is the case regardless of whether we are discussing someone’s name or email, or a special category of protected data such as health or sexual orientation data.
Ultimately, the legislation is clear that we can discuss a constituent’s details with third parties. However, the issue I encountered comes from how the legislation applies to the third party in the casework. When we write to an organisation, we expect them to respond saying how they will fix the issue, but the data regulations add a layer of complication. As the organisation is itself a data controller, it needs to judge whether it can give a constituent’s information to us. Despite the fact that Members of Parliament are completely entitled to act on their constituent’s behalf, the organisation in question can still decide that it cannot give us the information we need. The constituent’s case is then forced shut, with no room to challenge the decision. That is exactly what happened to me with Orbit Housing, and it has happened to many other Members.
In this instance, data legislation is actually weakening our constituents’ rights and empowering the organisations that hold their data. Members cannot solve every issue, but we should be able to advance a case more than a constituent could alone. If third-party organisations can refuse to share information on a constituent’s case with us, our constituents suffer and we are left failing them due to legislation.
In summary, I would like to see several things from the Government as a result of this debate. First, they should assess the effectiveness of the current methods used to judge whether a building has been designed and built adequately. The Government started to look at that in the aftermath of the tragedy of Grenfell. I implore them to renew their efforts, considering their stated aim of radically increasing the number of homes being built each year. It is important that their rush to build does not lead to substandard homes being built, as Members have mentioned and as has happened too many times recently.
Secondly, the Government should conduct a review of the accountability of organisations, especially large house builders and housing associations, as my hon. Friend the Member for Dagenham and Rainham (Jon Cruddas) mentioned. The Government’s stated aim to soon increase the number of homes being built will mean hugely increased business for the larger housing companies in the UK. It is right that they are held to account if they build inferior housing or ignore customers. Just last month, the chief executive of Persimmon Homes ignored questions about his record bonus of £75 million—quite a salary. It is wrong that in an industry where so much money is made by those at the top there is little accountability when customers or residents are let down.
Lastly, I ask that the Government consult Members to evaluate whether we are stifled by data regulations in our ability to conduct casework effectively. It is my opinion that the regulations give organisations a loophole to ignore accountability. Some organisations might do it innocently, but there are definitely organisations out there using that loophole inappropriately. That represents a serious threat to our ability to progress casework and to hold organisations to account. The law must be tightened up to empower us and, in turn, to empower our constituents.
It is a pleasure to appear once again before your wise and well-tempered supervision, Mr Hollobone. I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this important debate on a number of housing issues, which I will seek to address.
First, I thank the hon. Gentleman and other Members for assisting their constituents with numerous housing issues. I know from my own experience that housing can form a large part of an MP’s postbag, and I am grateful for the liaison with landlords and the resolution that is brought about by the actions of Members when something has gone wrong and when a service has not been as expected.
Let me start with complaints. A good complaints process must start with landlords. The regulator of social housing expects all registered providers of social housing to have in place a complaints process that is clear, simple and accessible. Landlords are also expected to publish their performance against those standards through an annual report. The regulator does not proactively enforce standards on complaint handling. The onus is on individual landlords, working with residents, to set their approach and timescales for handling residents’ complaints. However, the regulator considers every referral made to it, signposting those not within its remit to other organisations, including the housing ombudsman service.
I stress that if any hon. Member acting on a constituent’s behalf is unhappy with the response provided by a registered provider of social housing, once the landlord’s complaints process has been exhausted, that hon. Member may take the matter further. Social housing residents can approach the housing ombudsman service at any time to seek advice. However, currently they must pass the democratic filter, either referring a complaint to a designated person—a local councillor, Member of Parliament or tenant panel—or waiting eight weeks after their landlord’s investigation has concluded before a complaint can be formally investigated by the housing ombudsman.
The Government’s social housing Green Paper consultation, “A new deal for social housing”, which closed on 6 November, sought views on how to improve the system for seeking redress for social housing residents. We engaged extensively with residents to inform and shape the Green Paper. We heard that residents want redress quickly when things go wrong, and for processes to be clearer and simpler. We want to ensure that residents receive the help that they need to put things right when they have a housing problem. The Green Paper asked a range of questions on how we could deliver that, including questions about the future of the democratic filter, which can delay the complaints process.
Alongside those questions, the Green Paper set out proposals better to hold landlords to account. We consider that stronger action is required against landlords who consistently fail their residents. Part of the solution is to enable residents to understand and compare the performance of landlords. We have proposed a limited number of key performance indicators to achieve that, including a potential indicator on the effective handling of complaints.
Following publication of the Green Paper, we continued our face-to-face engagement with landlords and residents across the country. We wanted to give them an opportunity to input into and influence the consultation outcome. I assure hon. Members that they had some strong views about the handling of complaints, both positive and negative, which I heard myself, having visited six such events across the country. We are currently analysing the findings of those events alongside the other consultation responses, and we aim to publish our response in the spring.
As Members will know, the General Data Protection Regulation, also known as GDPR, imposes new rules on controlling and processing personally identifiable information. In addition, the regulator of social housing is clear that registered providers of social housing should accept complaints made by advocates, including Members of Parliament authorised to act on behalf of a social housing resident. I am not aware of the specific circumstances that the hon. Member for Coventry South mentioned, but I reassure him and other Members that nothing in GDPR or in the Data Protection Act 2018 prevents us from acting on behalf of our constituents in discussions with a registered provider of social housing.
It would be helpful if the Minister circulated that advice on data protection to all concerned, so that the situation is perfectly clear. We often get conflicting views about it.
That is a good suggestion. I have to stress that the hon. Gentleman, and other hon. Members who wish to act on their constituents’ behalf, must be instructed by the constituent before they can do so. That is no different from the arrangements that existed before the GDPR was introduced. In requesting assistance from their Member of Parliament, any resident is effectively giving consent for that MP to process their personal data. A housing association should normally accept a Member of Parliament’s word. However, I appreciate that a housing association or local authority landlord might, if the case is particularly sensitive or other individuals are involved, double-check with the tenant. I stress that that should not be used as a delaying or obstructive mechanism; it is merely an extra protection for the tenant in specific circumstances.
Of course, if the constituent or their MP considers that the processing of the concerned resident’s data goes beyond what the resident might have expected, they should be consulted first. Let me make it crystal clear to all landlords that they should co-operate and engage constructively with Members of Parliament when they act as advocates, within the constraints of data protection. I am pleased that the Information Commissioner has issued the following guidance:
“Consent can be implied from a relevant action, in this case the raising of the matter by a constituent with the Member in the expectation that his or her personal data will be further processed by the Member and relevant third party organisations.”
I can circulate the commissioner’s guidance after the debate.
Finally, I will talk about checks on the quality of building and design—an important issue, given the scale of house building that we are experiencing, and hopefully will in increased numbers in the years to come. As a Department, we are focusing on the quality of build and design as a critical issue for the future expansion of house building. I hope that the hon. Member for Coventry South accepts, though, that when it comes to a new building, the person carrying out the building work is responsible for complying with the requirements of the building regulations. That person remains legally liable for non-compliance.
All new buildings are subject to building control supervision, either by the local authority or an approved inspector. Both are required by law to take all reasonable steps to check on the compliance of building work. Where work is found not to comply, the building control body will require it to be put right before giving a compliance certificate. We are sending a clear message that if something goes wrong with a newly built home, house builders and warranty providers, including the National House Building Council, should fulfil their obligations to put things right.
In addition, on 1 October, the Government announced a new homes ombudsman to champion the rights of homebuyers and to hold developers to account. Once a building is occupied, social housing landlords are required to comply with the regulator’s home standard, which sets two clear outcomes. First, homes must be of good quality through meeting the decent homes standard. Secondly, landlords must provide a cost-effective service to homes and communal areas that responds to the needs of, and offers choice to tenants, and aims to complete repairs and improvements first time.
Once again, I thank the hon. Gentleman for securing this valuable debate. I hope that he and other Members will continue to support all residents, including those living in social housing, in dealing with housing complaints. We are committed to ensuring that social housing residents can seek timely and effective solutions when they have a housing problem. I also hope that in future all landlords ensure that issues such as those raised today do not hinder or delay their residents seeking effective and efficient redress.
Question put and agreed to.
UK Sovereign Capability
I beg to move,
That this House has considered UK sovereign capability.
This is a subject that I have spoken about frequently since my election and is close to my heart. I grew up in a shipbuilding family, so from a very early age I became acquainted with the concept of feast and famine orders in shipbuilding in this country. I also developed an awareness of what we need to do to maintain a sovereign capability, not just in shipbuilding but across the full spectrum of defence.
I will be 30 years old in January. Britain’s defence industry landscape has diminished considerably since I was born. Look at shipbuilding. I attended my first ship launch—of HMS Lancaster—when I was one year old. There were a number of shipyards around the UK that built surface vessels, including Swan Hunter in Tyneside and Cammell Laird—
In Birkenhead, as my right hon. Friend says. We also had Vosper Thornycroft in Southampton, and Harland and Wolff in Belfast, to name just a few, but today the landscape is much diminished. The Clyde is the only UK location capable of building complex warships, and even its capabilities have been significantly downsized. In 2013, when I was working in that very shipyard, more than 1,500 jobs in the shipbuilding industry were lost, and the BAE Systems shipyard in Portsmouth—formerly Vosper Thornycroft—closed.
Some 75% of shipbuilding jobs in the UK have been lost since the 1980s. That downsizing was predicated on a realisation that Britain did not have a naval fleet big enough to sustain the industrial base that existed at the time. Rather than drip-feeding orders to yards that would never be at full enough capacity to invest in world-class infrastructure, the idea was to cut our cloth accordingly, so in 2009 the then Labour Government signed a terms of business agreement with BAE Systems. The concept was to introduce a proper and rigorous strategy for shipbuilding in the UK. In return for rationalisation and transformation, the industry would be guaranteed a certain drumbeat of industrial capacity that would give it the confidence to invest in reaching the upper quartile of the world.
When I started working in the shipyards as a young graduate, one of my jobs was to study every other shipyard in the world that was building complex warships, benchmark us against them, determine what they were doing right and develop a prescription that would allow us to design a world-class shipyard in the UK. That seemed a laudable aspiration, because if we could build an infrastructure in the certainty of a pipeline of orders, we could build ships that achieved world-class performance, saving the taxpayer money. It was such a great idea that other countries followed the same model—most notably Canada, which developed its own national shipbuilding strategy and, indeed, employed the very same person from the Royal Navy who developed our strategy under the terms of business agreement.
Sadly, when I corresponded with the Minister for defence people and veterans last November, he informed me that the terms of business agreement had been extinguished in return for the signature of the Type 26 manufacture phase 1 contract. It was then superseded by the national shipbuilding strategy, which in the meantime was used as cover to significantly reduce the scope of ships that the UK had been qualified to build and that had given certainty to UK industry. The very first page of the strategy document states:
“It is only by building ships that we will once again become good at building ships”.
Well, quite. That seems like a laudable aspiration and exactly what we all want to achieve, but unfortunately the strategy itself undermines that effort, restricting the scope of orders that can go through UK shipyards by limiting the exclusivity of UK build to frigates, destroyers and aircraft carriers.
The 2009 terms of business agreement made very clear the range of ships that were to be built exclusively in the UK without competition, including aircraft carriers; amphibious vessels; all forms of frigates and destroyers; mine countermeasure vessels, including all design and major subcontracted work; all minor naval vessels, including patrol ships; and complex auxiliary ships, which at the time meant the vessels for joint sea-based logistics and joint casualty treatment. That certainty would have enabled British industry to invest in world-class facilities that delivered world-class performance for UK shipyards, achieving the competitive advantage that we had so long striven for. Given that other countries are successfully employing the very same model—Canada now plans to build 15 Type 26 frigates, as opposed to Britain’s much diminished effort of just eight, if we even get them—it is self-evident that we are doing something very wrong by undermining that effort.
It seems to me that the national shipbuilding strategy, particularly the Type 31e frigate project, is a classic example of the Government misidentifying the root cause of the problem that they are trying to solve. The UK prosperity agenda and the effort to make our industry better would be much better served by providing certainty for industry to invest in being world class. That would achieve the opening gambit set out in the strategy document.
Does the hon. Gentleman agree that one of the challenges for the prosperity agenda, and for the Royal Navy’s aspiration to be part of making us a global maritime nation again post Brexit, is that the Treasury does not have a model that helps the Ministry of Defence to plan for that or values the impact that building in the UK rather than abroad would have on the coffers of UK plc?
I thank the hon. Lady for that pertinent intervention, which drives home the point that I am trying to make. I am highlighting the landscape as I see it now, which is not what we want to achieve and is not optimal. That is not necessarily the fault of the Ministry of Defence, but of what Sir John Parker’s report refers to as the “total enterprise” of shipbuilding, which very much includes the Treasury as financial controller.
Further to the point raised by the hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), the MOD is at fault. It takes no account whatever, either in shipbuilding or in other procurement contracts, of the value added to the UK economy, not just in skills but in the money that the Treasury gets back through tax and national insurance.
The Minister might have been hopeful that I was absolving him of all blame in the matter, but I did not quite mean that; I meant that it was not entirely the fault of the Ministry of Defence, because there is a combined silo mentality across Government. My right hon. Friend makes the important point that in shipbuilding and in major defence procurement programmes, there has been a failure to understand the total prosperity effort across the UK. Royal Caribbean would never approach financing the building of a cruise ship in the way that the Ministry of Defence finances its frigates. The MOD does not achieve anywhere near the sort of efficiencies that commercial operators such as Cunard or Royal Caribbean achieve.
The MOD and the UK Government’s considerations ought to be about what maximises industrial and economic benefit to the UK as a whole, but they have failed to incorporate that into their processes for making these critical decisions. To give a classic example, modelling done by the Confederation of Shipbuilding and Engineering Unions makes it clear that if major shipbuilding programmes were procured in the UK, the return of wage and supplier payments to the Exchequer would effectively achieve a 20% net material discount. The prosperity of those programmes would flow back into the UK economy instead of being bled out into another country.
The hon. Gentleman described the order for eight frigates earlier. Before the first world war, there was the great cry for dreadnoughts—“we want eight and we can’t wait.” Whatever the size of the Government’s programme, is not one of the problems the reliability of the dates for when they start commissioning the programme, which is very important for the longer term future of shipbuilding? Is it not also about, with this phase, the confirmation that they will give a role in bidding—and therefore a chance of winning—to yards such as Cammell Laird’s, which has done so well recently in helping to build defence orders, but also in winning a major merchant contract, which I think is the first for a British yard in 20 or 30 years?
The right hon. Gentleman makes a very important point. Britain became a pre-eminent naval power because its industry was pre-eminent and because it was an innovator. That is what we need to get back to. The national shipbuilding strategy is trying to achieve that, but it falls short on how it will deliver it, because it militates against the very objectives it is trying to achieve. Industry needs certainty of capacity, so that it can invest with a degree of vigour in shipbuilding.
I talked about HMS Lancaster and the launch of the Type 23 frigate, which was my first ship launch, as a babe in arms, at Yarrow’s in Scotstoun. Sir Bob Easton was chairman of Yarrow’s at that time and made it quite clear that the Type 23 frigate was being bid in batches of three. It was Swan Hunter versus Yarrow. In 1990, Bob Easton said, “I am currently employing 2,500 people in my shipyard. I can employ them until the end of 1991. If I don’t get an order next year, I am making 1,000 of those people redundant, and that is the stark reality of what I am facing. It is not just about the jobs. I would like to invest in a new covered shipbuilding facility. I would like to invest in modernised plant machinery, but the business case does not stack up, unless I know for sure that I am going to be building all of those Type 23 frigates.”
The same issue is playing out today. The national shipbuilding strategy harks back to the same mentality, driving the same behaviours. Whether it is Cammell Laird or BAE Systems, they will not be able to say that they have a prescription for a world-class frigate factory, as it was dubbed, or a modern dock hall covered facility. They will not be able to make that business case stack up. They will not be able to put their shareholders’ money into that and to finance it, unless there is the certainty on the horizon that they will be building the entire programme, and unless there is legal certainty that that will happen. Without that certainty, companies cannnot make the investment and we therefore cannot get the operational efficiencies that deliver the savings and the cost reductions that would enable the Royal Navy, ultimately, to build a larger fleet. That is the virtuous cycle that we ought to be striving towards. Unfortunately, the strategy document undermines it.
When it comes to Type 31, the same point is still an excellent one. By bidding it in blocks and spreading it around the country, we lose the critical mass and do not get the certainty that would allow a shipyard such as Cammell Laird’s to invest in building a production line of Type 31 frigates, in parallel with a production line of Type 26 frigates. Ultimately, we want to get to exactly what the Americans do. They have been building Arleigh Burke cruisers since the 1980s; they have built the exact same ship in a consistent way for the last 30 years or more.
The hon. Gentleman is making a very good point. Does he agree that we were promised 13 frigates in 2014, not eight plus five general purpose ships? The shipyard workers in both Scotstoun and Govan have been hugely let down by those broken promises.
I thank the hon. Lady for Glasgow—
Glasgow North West. It was much better when we had the proper place names for constituencies.
Yes, Anniesland. I was one of those shipyard workers at the time. I agree that certain understandings were given about investment. Indeed, the bulk of Scotstoun shipyard was demolished on the premise that it was going to be rebuilt as a new modern dock hall. I was personally involved in the project to design it; my personal investment in that project is second to none. However, it has to be recognised that the Clyde has certainty to the 2030s, although we need to go further in making the most of the opportunity we have.
I understand from the MOD that its ultimate aspiration would be to build Type 26 frigates in perpetuity if it could—if it had certainty of financing and planning. Then we could be certain that the Clyde would always be the centre of production for those larger frigates. That would mean that other yards around the UK, such as Birkenhead, could focus on smaller projects, such as the Type 31, which could form a critical mass of a learning curve and a productivity enhancement, and secure the investment that would make it excellent at building those ships and more likely to win overseas orders as a result.
A strategy like that, with unit costs coming down, would allow us to compete seriously in the export market.
Unit costs ought to come down but the problem is that the way that the shipbuilding strategy is defined makes it more likely that the cost reductions will not be maximised. That is a great shame, because it undermines the aspirations of the strategy.
I am a vice-chair of the all-party parliamentary group on shipbuilding and ship repair, and we hope to bring forward a report on the strategy very soon. It will highlight some of the opportunities to improve it, because we all share the same aspiration. We want to see a world-class industry in the UK that has the certainty to invest. We want a world-class product that is cost effective enough to grow the size of the Royal Navy.
My hon. Friend rightly focuses on warships, but it is also about the civilian ships for the Ministry of Defence. Unlike every one of our European competitors, the Ministry of Defence stubbornly insists on advertising abroad. There is a point about maintaining a competent workforce and the drumbeat of production, as well as the supply chain and the supply ecosystem, which is so important for sustaining all the yards. Can my hon. Friend find a logical, rational explanation for why the Ministry of Defence refuses to behave like every other European naval country?
My right hon. Friend’s point goes back to that made earlier about the Treasury’s behaviour. I feel that this is almost about an economic orthodoxy that drives behaviour and says that we must maximise competitive tendering for the sake of it, because there is some sort of axiom that it works because it does. That approach does not bear scrutiny. Shipbuilding has the highest barriers to entry of any major industry in the world. It is a hugely capital intensive industry and the only way to make it work, and the only way to get to a world-class, market-dominant position—much like with aerospace, where, as we know, the Americans and Europeans built their own champions in the form of Airbus and Boeing—is by having that synergy between Government, industry and the research and development base that makes it work. That is what we ought to have with shipbuilding in the UK. Fragmenting it in the way proposed in the national shipbuilding strategy serves only to undermine the UK’s long-term sovereign capability in shipbuilding. It is the primary sovereign interest of the UK to have that capability. We are an island nation, a nation of islanders and shipbuilders, and we ought to maintain that capability.
There are critical issues at stake here. We have already heard that Appledore, owned by Babcock, is due to close in March, which will be a devastating blow to the local community and to the UK’s wider defence manufacturing base. It is yet another shipyard to fall. Once it falls, it will not recover and be reopened—that is a simple fact. Once it is gone, it is gone. Despite the recent contract announcement at Cammell Laird, it is also completing an HR1 notification form and making significant redundancies. That is very unfortunate, and speaks to the point about feast and famine. We cannot have these cycles in capacity anymore; we need to smooth the cycle as much as possible.
In the context of major shipyard closures and significant downsizing, whether that is at Rosyth or Appledore, it is bizarre that the Government are quite happy to tender contracts overseas in international open competition. Under article 346 of the treaty on the functioning of the European Union, the Government could quite easily designate the industry as UK protected. It is entirely at their discretion. Any notion that their hands are tied is bogus. They could do that, smooth the production cycles and build a firm and stable footprint for UK shipyards, which would enable them to get match fit and then go out into the world and compete effectively for other orders. That is exactly what they do in Italy with Fincantieri, and what they do in France with DCNS. It is exactly what happens in Germany.
I do not understand why other European Union member states can achieve the same objectives much more effectively than us, but we are so holier than thou that it hurts when it comes to the zealous application of these EU rules and we seem to undermine our own industrial base and our prosperity as a result, meaning that communities are broken and skills are lost. Ultimately, we undermine our objective of building a more resilient and effective industrial base to serve our defence industry and, potentially, commercial spin-offs.
Barrow-in-Furness is another example. The gap between the end of the Vanguard programme in the 1990s and the beginning of the Astute programme meant that the shipyard was essentially unable to build a submarine and they had to go to General Dynamics in the United States to be retaught how to build them. That is what we risk losing again if we are not careful.
It was surely not just the design capability and the managerial capability, but the actual day-to-day work experience and the work teams that have been created and then broken up. It took 12 to 24 months to rebuild that capability and was hugely expensive. The Ministry of Defence and the Treasury have still not learnt that lesson.
My right hon. Friend makes a very prescient point. There is no calculation of the opportunity cost when those skills are lost or of how much it costs to build them back up. The feast and famine cycle is hugely costly and inefficient, and the national shipbuilding strategy risks going back to that pattern. I think that is a critical point that the Minister really ought to address in his remarks about the national shipbuilding strategy.
Let me make it clear that we are all here to try to deliver the best outcome for defence infrastructure in the UK—we are trying to get to the same end goal. We are trying to offer the best of our understanding and experience of these issues to inform this document and improve it as much as we can, and it is fair to say that we want to achieve the same objectives.
We have also seen the development of a combat air strategy—the Tempest programme—which is laudable and looks promising, but there is a lack of an overarching objective on defence. We have already lost the capacity to build large, fixed-wing aircraft through the cancellation of the Nimrod programme, which was done hastily by the disastrous 2010 strategic defence and security review and means that we have permanently lost that capability in the UK. Similarly, we have lost the capacity to build main battle tanks.
What else is at risk, and where is the risk profile of the sovereign capabilities that will be lost? What is expendable and what is indispensable? That is not defined in the national shipbuilding strategy, where there is talk of potentially putting the Type 31e combat management system out to international tender. Why do we not define what the key sovereign capability is—not just in the shipbuilding programme, but in aspects of its critical supply chain, including gearboxes, gas turbines, combat management systems, weapons systems and so forth? We need to have that granularity of detail in the national shipbuilding strategy, but it is not there. That leaves it open to interpretation and extreme gerrymandering by the Ministry of Defence.
Those are the key issues that we have to highlight, whether they are across land, maritime—I am biased towards maritime, which I have focused on heavily—or aerospace. I am sure that other Members are willing to contribute and add their own thoughts to this debate, but essentially that is an overview of my main concerns about our UK sovereign capability and the risks to sustaining it.
The debate can last until 5.30 pm, and I am obliged to call the first of the Front-Bench spokespeople at 5.7 pm. The guidelines limits are five minutes for the Scottish National party, five minutes for Her Majesty’s Opposition, and 10 minutes for the Minister. We will then have time at the end for Mr Sweeney to sum up the debate. Two Members are seeking to catch my eye, and there has to be a time limit of six minutes and 30 seconds each. I first call Kevan Jones.
I congratulate my hon. Friend the Member for Glasgow North East (Mr Sweeney) on securing this debate. He emphasised the lack of strategy on maritime sovereign capability, but we need to ask the broader question of why we are in this mess today.
Since 2010, this Government have had no industrial strategy on defence. Some of the short-term decisions that were taken in 2010, when the Government slashed the defence budget by 16%, have resulted in capability gaps. A revolving door has been put on the office of the Minister for defence procurement, which means that they have a life expectancy a bit longer than a mayfly. That is not helpful when we need a champion in that role who can argue against the Treasury.
Why is sovereign capability important? If we want to have certain capabilities for the defence of our nation, we need to invest in them. The right hon. Member for Birkenhead (Frank Field) has raised the issue of defence exports. He is right to say that if we are to nourish that industry, there is a defence export role to it. The Ministry of Defence and the Treasury have adopted Donald Trump’s mantra of “Make America great again”, because the procurements that have taken place are suggestive of an “America first” strategy. In the past few years, they have procured more than $8 billion-worth of contracts from the United States.
As my hon. Friend the Member for Glasgow North East and my right hon. Friend the Member for Warley (John Spellar) both said, those procurements were not put out to contract; they were simply awarded. There were no competitions. We have the Apache contract and the P-8 contract—direct foreign military sales—and we have the scandalous situation of the airborne warning and control system, or AWACS, and I understand the Department is now going down the Wedgetail route. From talking to colleagues in NATO, I know that the Ministry of Defence has had no role, and nor is it interested, in partnering the programme that is replacing the 15 AWACS NATO aircraft. It is going down the Boeing route again. I am not sure whether soon we will have a sign at the Ministry of Defence’s Main Building saying “Sponsored by Boeing”, but that seems to be the way it is going.
We also have the joint light tactical vehicle contract that was awarded to Oshkosh, with £1 billion of sales to replace armoured vehicles. There was no competition at all. At the same time, the Ministry of Defence and the Treasury are saying that the contract has to go out to competition. This is dangerous for our capability. It is not just about jobs, which are important, but about our supply chain and investment in research and development in our technology. My hon. Friend the Member for Glasgow North East will not remember the Falklands war, where we faced the issue of kit procurement from abroad. It reached a situation where we wanted to use the kit independently but were told that we could not.
I have serious concerns about this off-the-shelf approach to defence strategy, because there is no commitment at all. It would not happen in any other country—it would certainly not happen in the United States. If we were to sell equipment to the United States, there would have to be some offset in terms of jobs or investment there. This Government have not even tried. They trumpet the £100 million going into Lossiemouth, but that would have had to go anywhere. Boeing is going round on a public relations exercise, with glossy adverts that say it is now a British company, but it is not. There is very little evidence of real investment going into jobs and technology. That is not just today; our technology in this important sector is in long-term decline.
The hon. Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who is no longer in her place, said that there is no indication that the Treasury or the Ministry of Defence recognises that if a contract is awarded in this country, the money will come back straight away. That is a serious problem for them. Short-term decisions taken now will have long-term implications for our effectiveness not just at maintaining our sovereign capability in a whole host of areas including shipbuilding, which has been outlined by my hon. Friend the Member for Glasgow North East, but at maintaining our capability to use that kit in certain situations. For example, will we be able to get the upgrades on Apaches if a future US Government determine that we should not? That is why we need sovereign capability.
I hate to use the phrase “go back to basics”, but that is what the Treasury and the Ministry of Defence need to do. They need to make it clear that we need to procure and manufacture in the UK under sovereign capability, which should be the starting point for the defence industrial strategy. We have been promised it by the revolving door of Ministers for defence procurement, but it has never been put in place. It has to be a joined-up approach across Government that includes the prosperity agenda, which does not seem to matter when it comes to those huge contracts that have been awarded without competition. When there is a situation such as the fleet solid support ship contract, where we could have investment in UK jobs and prosperity, we put it out to foreign competition. My right hon. Friend the Member for Warley is right: no other nation in Europe would do such a thing.
Will my hon. Friend give way?
I am sorry; I am running out of time.
This scandal needs to be highlighted. I hope the Minister, in the time he has got in his new role, stands up to the knee-jerk “America first” reaction.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Glasgow North East (Mr Sweeney) on his superb oratory.
We are back here again: the same people are largely in the same chairs making the same arguments, although we have a different person in the Chair—you are very welcome, Mr Hollobone—and a different defence procurement Minister. I think he is the third since I was elected. We made effectively the same speeches to the previous Ministers, but he should not worry: these are good speeches with good arguments, and I am sure he will enjoy hearing them.
I think that we have a good Minister now. His freshness to defence means that he will bring a new approach to procurement decisions, and I hope that that will yield different results. We need different results, because our sovereign defence capability is at risk. I do not say that lightly, because I know that people who wish our country ill listen to these debates. We must present a strong and forthright position, and we must ensure that our military has the best equipment, the best training and, importantly, a supply chain and support structure that enables it to continue to operate at a high level. Russia is on the rise—it is increasing its threat to our country and making incursions into our airspace and waters—and China is growing its ambitions in the far east. The risk of state and non-state actors threatening the UK’s interests and those of our allies is high.
I will focus my remarks on the Royal Navy, about which much has been said. As the MP for Devonport, I would perhaps be expected to do that. The Royal Navy has suffered the greatest ill done to our sovereign defence capability. It could be said that that is also true of fixed and rotary-wing aircraft, and to Army equipment, but the Royal Navy has suffered the biggest impact. The shipyards that support our Royal Navy are not just about concrete, steel, bricks and mortar; they are about the people and skills, which must be invested in and grown over time. We have had holes in our procurement exercises in the past because there has not been a constant stream of investment in our shipyards. Although we do not build ships in Devonport, we refit them, and we need a constant stream of ships to be refitted to ensure we keep up our skills. That is why it is so important to get the Type 26 and Type 31 right.
I congratulate the Government on what they have done in supporting the industry to sell the Type 26 overseas. I hope the Americans adopt the Type 26 as a platform for their future frigate procurement, which they are struggling with at the moment. The Type 31 is an example of what we need to get better at. There was great potential for it in the national shipbuilding strategy. We need more hulls that can do defence engagement work, station keeping, and the forward deployment roles that are so important in our Royal Navy, while maintaining the high-end capability of the Type 26.
As hon. Members know, I have a problem with calling a Type 31 a frigate. I would much prefer it to be a world-class corvette, rather than a rather poor frigate. I normally use more colourful language, but I will mind my p’s and q’s in this Chamber. We need to sell the Type 31 as the best in class. That would make our international allies want to buy it, rather than one of the plentiful array of small frigates and corvettes that are on the market. The Type 26 shows that people want to buy high-end British technology. The procurement delays and the disruption in the procurement process over the summer do not give us much confidence in the procurement of the Type 31s.
We also need to look ahead. Over the past year, since I and many others in this House were elected, we have been fighting to save HMS Albion and HMS Bulwark. Other Members who would have been here if they had turned up might have claimed the success of the campaign to save those vital capabilities from being cut. Now that we have done that, we must ensure that we plan for suitable replacements for them. If Albion and Bulwark will go out of service in 2033 and 2034 respectively, we need a plan to build their replacements in UK shipyards. That is important, because it builds on the battle to ensure our Royal Fleet Auxiliary ships are built in UK shipyards, too.
We must maintain our sovereign defence capability to build such complex warships. I regard a RFA fleet solid support ship as a complex warship—the Government may stick it in a different column of their spreadsheet, but given that it has the roles and the capability of the RFA, I think it is a complex warship, and it should be built exclusively in UK shipyards.
Will my hon. Friend give way?
Order. I cannot stop the hon. Gentleman intervening, but, including his summary at the end, he will have had 26 minutes of a 60-minute debate. I have to call the Front Benchers at 5.7 pm.
My hon. Friend the Member for Glasgow North East is very enthusiastic, Mr Hollobone, and I know that he will make a speedy reply in his two minutes at the end.
We must support the trade unions. I am a proud GMB member, and it is important that its “Making It” campaign is heard loud and clear, not only by Labour Members but by Conservatives. Building the RFAs in UK shipyards is good for British business. It is good for those regions’ economies, the cities in which the shipyards are based, the supply chain and, perhaps most importantly of all, the Exchequer. Why are we exporting that money? If we do not invest in our shipyards, what happened to Appledore will happen again. Appledore is not in my constituency, but workers that came from it are working in Devonport now because Appledore ran out of orders. Without orders, shipyards cannot stay open, which means they cannot hire new apprentices and support the local supply chain. Ultimately, we lose that capability.
We need to talk louder about sovereign defence capability, because we need to preserve it. We need a discrete strategy to preserve our sovereign defence capability. I encourage the new Minister, for whom I have high hopes, to ensure sovereign defence capability runs like a golden thread through all the procurement decisions he and his Department take. It needs to be there if we are to secure jobs and our future capabilities.
I congratulate the hon. Member for Glasgow North East (Mr Sweeney) on securing this debate. If the UK aspires to be strong, global and influential, as the 2015 national security strategy announced, it needs access to a capable and resilient supply chain for its armed forces. The hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) talked about the provocations of certain nations, and we must be alert to the threats they pose.
Defence spending should not exist in a silo. Defence contracts have a series of economic consequences, the most obvious of which is the tax revenues that are generated. It is disappointing that, until now, the Government seem reluctant to take account of that. They receive an estimated 37% of the money spent on contracts in tax revenues, and that is not taking into account the multiplier effect of employees’ spending. That raises a question about their definition of value for money. When bids are considered in the future, we must take into account their impact on tax revenue and employment.
The ability to develop and maintain equipment depends on a rich research landscape and a skilled workforce, so it is critical that there is a commitment to increase science and technology funding, especially in the pure research phases of the development cycle. Most hardware requires after-sales service. We saw that in the equipment plan, which shows that in 2018-19 the MOD spent about £7.8 billion on new equipment and nearly £8.1 billion on support.
Once the capability to develop and produce complex systems has been given up, rebuilding it is difficult, time-consuming and risky. The hon. Member for Glasgow North East raised the issues with the Astute submarine programme. The excessive running-down of the Barrow workforce after the completion of the Trident programme is a classic illustration of that. As the hon. Member for Plymouth, Sutton and Devonport said, those workers are highly skilled and sought-after. There are plenty of industries ready to snap them up if our defence industry does not have opportunities for them.
We must be able to operate independently, so our capability should not be linked to the foreign policy of a supplier, as the right hon. Member for North Durham (Mr Jones) said. There are no guarantees that the UK will only ever conduct military operations that the US recognises and supports. We may have to—or wish to—operate independently.
The contracts for the fleet solid support ships have been problematic for a long time. The idea of putting them out to international competition is short-sighted and reflects our siloed thinking. We know that other Governments subsidise their shipbuilding industries, thus allowing bids to appear competitive, and effectively buying industrial contracts. I wrote to the Minister’s predecessor earlier this year about that. He responded:
“We are confident in the measures we have in place to ensure the integrity of the FSS procurement process, including measures to ensure it is conducted strictly in accordance with the EU rules on state aid. Although these rules do not apply to non-EU companies, the MOD will make no such distinction in their application and all bids will be judged against the same standards.”
I would like some assurance from the Minister that those measures are still in place.
Many nations have shipbuilding capability, including many small nations. Denmark has been able to build all nine of its frigates, three arctic patrol vessels and seven large patrol craft, all in Danish shipyards. The Norwegian navy’s fleet is built in Norwegian yards. We must have the ambition—beyond 2030—to build not just our frigates and warships, but our fleet support ships, in yards here in the UK.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I offer my warmest congratulations to my hon. Friend the Member for Glasgow North East (Mr Sweeney) on securing such an important debate.
The defence industry is vital to the British economy, with a planned spend of £180 billion in the almost 10 years leading to 2026-27. That is a huge opportunity for the country’s economy, but one that has been lost because the Government have clearly rejected—despite their recent rhetoric—the idea of developing a sovereign capability for this country. Sadly, as we have heard this afternoon, the Government are increasingly buying kit off the shelf, principally from the United States of America. That is one reason why the Ministry of Defence has a deficit of £14.8 billion according to the National Audit Office. Many MOD contracts are given without competition or openness, according to the single source process, as my right hon. Friend the Member for North Durham (Mr Jones) made clear. The mechanised infantry vehicle contract was recently given to the Boxer without any competition or openness, and it seems that the AWACS replacement will go the same way.
Where there is competition, we see international tenders, as my right hon. Friend the Member for Warley (John Spellar) highlighted with the example of fleet solid support ships. We will be up against tenders from state-subsidised shipyards throughout the world, particularly in Korea, so it is not a level playing field. We could be ensuring that British industry and shipyards benefit from the investment coming from those contracts, but what do we see? Recently there was the announcement that Babcock was going to close Appledore shipyard in Devon, at a loss of nearly 200 skilled jobs. That shipyard has been open since 1885 and has the proud record of producing 350 vessels, but this Government are allowing it to be shut through inactivity. As the right hon. Member for Birkenhead (Frank Field) knows full well, nearly 300 workers at Cammell Laird are going to lose their jobs on the Mersey. There has also been a process of casualisation of the workforce, which will drive costs down but erode both employment and the skills of the workforce.
As the debate has demonstrated, we clearly need a sovereign industrial strategy for the defence industry. We need an industry that ensures a drumbeat of orders and provides jobs in all sectors of the defence economy, and as has been mentioned, we need to make particularly sure that our shipyards are fully provided with work and sufficient investment. We also need to think ahead and invest in technology as well as the skills of workers, and to be mindful of this country’s capacity to export, which sadly the Government are not.
I firmly believe that the shipyards and their workers should be at the very heart of this country’s industrial strategy. I believe that opportunities would present themselves if the Government decided, through the exercise of their political will, to bring forward a Type 31e frigate programme. If they decided, even at this late stage, to withdraw the international tender in order to ensure that the fleet solid support ships were built in British shipyards, there would be marvellous opportunities. That requires not just political will but an overarching perspective that looks beyond the short-term costs of the Ministry of Defence and instead at a holistic industrial strategy for the country, of which our industrial defence capability should be a central part.
In short, we need a Government who put the national interest first and do not look at pounds, shillings and pence in the short term, but have a long-term perspective that places British workers at the heart of an industrial strategy.
Order. If the Minister could conclude his remarks no later than 5.27 pm, that would allow Mr Sweeney time to sum up. I call the Minister.
Thank you very much, Mr Hollobone; it is a pleasure to serve under your chairmanship. I too offer my congratulations to the hon. Member for Glasgow North East (Mr Sweeney) for securing this important debate. I know that this a matter close to his heart and an issue of great importance to him. I was somewhat depressed, however, by the fact that he said he will be 30 in January, given that I will be 47 next weekend, but there you go.
The right hon. Member for North Durham (Mr Jones) wondered how long I would be in post, and I am afraid that is one question on which I am not prepared even to speculate. I hope that I have proved, in few months I have been in the role, that I am prepared to listen to all arguments—I will agree with some and disagree with others—and will take the time to absorb all the information. That is why I have spent a lot of time going around the country to listen to industry, the people working within it, and of course, the armed forces, to whom we are trying to supply important equipment. As the Minister, I am clearly responsible for procuring that equipment to ensure that we get the best value for our armed forces. It is also important to maintain the relationship with the UK industry and to promote exports and prosperity. Those issues are close to my heart. The debate has been informed by a clear recognition of the importance of the UK industry to our national security.
The debate has also given us an opportunity to remind ourselves of the extensive work that has already taken place to foster innovations and a competitive defence sector. The UK defence industry, working alongside our armed forces, plays a crucial role in delivering UK national security objectives. It is crucial to protect our people, project our influence around the world and promote national prosperity.
Every day since I took office, it has been a privilege to see the difference that the UK defence industry makes, whether that be the people, the equipment being provided, the training, the support, the infrastructure or the technology. Those elements are all there to help our nation’s defence. I think we are all proud to have a world-leading defence sector. The figures speak for themselves: in 2017 alone its turnover was £22 billion, with £9 billion of exports, and it supports over 140,000 jobs.
The report by my hon. Friend the Member for Ludlow (Mr Dunne) showed that defence plays an important part in our economy. It is crucial to strong manufacturing technology and has a broad footprint in every corner of the United Kingdom. As a customer, we are always aware of the need to get the right capability for our armed forces, while ensuring value for money for the taxpayer. The key to that is a thriving and globally competitive defence sector that is an important part of a wider industrial base.
Helping that industry to grow and compete in a global market is a key objective of the defence industrial policy refresh that was published last year. The three strands to our approach are, first, to improve the way defence delivers wider economic and international value and national security objectives; secondly, to help industry be internationally competitive, innovative and secure; and thirdly, to ensure that it is easier to do business with Ministry of Defence, which is an issue I have heard about particularly from small and medium-sized businesses.
We are committed to maximising value for the UK by taking into account potential economic impacts, strategic international interests and national security objectives. In the defence industrial policy refresh, we committed to a more systematic approach to considering prosperity and international and industrial security and ensuring that we are early in developing high-value business cases. Earlier, more holistic decisions will improve how we inform choices for military requirements and ensure that the acquisition strategy and commercial engagement support a full range of desired outcomes.
Hon. Members made a number of points; I will try to go through them all, but I suspect I will run out of time. If I do, I commit to write to each Member with an answer. First, I note the comment of the right hon. Member for Birkenhead (Frank Field) about the merchant contract that was secured. If we can make our shipyards as competitive as possible across the globe, they will be more likely to secure more of those contracts. That is precisely why we have the national shipbuilding strategy. The hon. Member for Glasgow North West (Carol Monaghan) mentioned in an intervention that we had let down some shipyards. I want to emphasise that we have committed to 20 years’-worth of work for those shipyards. We are in the first batch of the three frigates, costing around £3.7 billion. The commitment to the remaining ones is there; we want to follow a process so that we learn from the first three and get the advantage of a better ship and better value for the taxpayer.
The hon. Member for Plymouth, Sutton and Devonport (Luke Pollard), whose constituency I was pleased to visit, talked about the Type 26s. Hopefully America is listening. I had the privilege of being in America recently, where we tried to push the point he made. We need to push wherever we have the opportunities. We should recognise the successes we have had with Australia and Canada. There is a still a bit of time to go, but we are working hard on that. I hope industry will be given the confidence to look for contracts all over the globe, so that we can provide security.
The hon. Member for Glasgow North West asked for reassurance about state aid. The response that my predecessor gave her stands for the future contracts—I hope that reassures her. My hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), who has left her place, mentioned tax and prosperity. We have to take into account the recently refreshed Treasury Green Book guidelines as part of our procurement process. The forward plan is exactly what the national shipbuilding strategy is about; it sets out the 30-year forecast of what the Royal Navy’s requirements will be, so we can give the industry the greater clarity it needs.
Appledore shipyard was an issue that arrived on my desk fairly early on. We engaged with Babcock and looked at all sorts of possibilities and options, but the timescales for the Type 31e and the FSS build would not have sustained the jobs at Appledore—or Cammell Laird, in fact.
The Minister mentioned the Type 31e. Let us not forget that the Government deliberately delayed the programme and put it out to tender again, having withdrawn the initial programme.
There were issues with the start of the procurement process. We have reset that, and I reassure the hon. Gentleman that we are sticking to delivery of the first one by the end of 2023. We have made that commitment; this is an ambitious project, and we are determined and working incredibly hard to ensure that we catch up any time that may have been lost. Each time I have updates, I get more optimistic about how we are progressing.
Many Members have talked about the FSS. It is not quite true to say that the Norwegians are building theirs—they are not, actually. They are being put out to international competition and are being built in South Korea. Australia and New Zealand have taken the same approach as us. We have been clear that a warship is as characterised in the national shipbuilding strategy.
You are hardly making a warship, though.
It is not a warship by definition, for the simple reason that the definition is based on the UK’s requirement to retain the ability to design, build and integrate frigates, destroyers and aircraft carriers for reasons of national security, ensuring that the complex nature of the construct is an important part of it from the very beginning. We will continue to have this argument—unions are coming to meet me very soon to discuss it.
I congratulate the hon. Member for Glasgow North East again on securing the debate. I will constantly review this matter and take it on board, but the Ministry of Defence has made a decision. I assure him that we are doing everything we can to ensure that our industry, whether in maritime, on land or in the air, is there to compete on the global stage, to secure the jobs we need and the expertise we have in the UK.
I thank the Minister for his reply and right hon. and hon. Members who have contributed so effectively to the debate. In reply to the Minister’s last remark about the need to maintain the UK’s sovereign capability to build complex warships being arbitrarily restricted to frigates, destroyers and aircraft carriers, the only reason we can build those ships in the UK today is that the last Labour Government placed an order for an auxiliary ship, the RFA Wave Ruler, at Govan shipyard in 1999, which enabled that yard to continue in operation. Also, there are five River class batch 2 patrol vessels being built at Govan to sustain production there until the Type 26 kicks in. By utilising those less complex, but none the less complex, warships to smooth the build cycle, we can retain the skills, infrastructure and critical mass we need to build complex warships including frigates, destroyers and aircraft carriers. We must look beyond that arbitrary restriction and maximise the purchasing power of the Ministry of Defence to deliver UK sovereign capability in the long term. We should broaden our horizons.
Question put and agreed to.
That this House has considered UK sovereign capability.