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Westminster Hall
Wednesday 7 December 2011
[Albert Owen in the Chair]
Sudan and South Sudan
Motion made, and Question proposed , That the sitting be now adjourned.—( Jeremy Wright .)
9.30 am
Mr William Bain (Glasgow North East) (Lab): It is a pleasure to serve under your chairmanship again, Mr Owen. I declare an interest as the new chair of the all-party group on Sudan and South Sudan, and I pay tribute to the work of my predecessor, my noble Friend Baroness Kinnock, for her commitment to alleviating poverty and hunger throughout the region.
This is a particularly timely debate, as it is nearly six months since South Sudan became the newest member of the international community. It is a new state with good natural resources, particularly in agriculture, but with genuine challenges as one of the least developed countries in the world. Chronic food insecurity in Sudan and South Sudan has been exacerbated by delayed rains in South Kordofan, the conflicts in that state and in Abyei and Blue Nile, and rising commodity prices linked to global factors and border restrictions and closures.
Conflict has meant that hundreds of thousands of people, those who were displaced and those who were not, have missed the planting season and remain unable to access their livelihoods. As of 4 September, some 4 million people in Sudan and as many as 3 million in South Sudan were at risk of food insecurity according to the UN’s Food and Agriculture Organisation, which is of particular concern because the Sudanese economy depends on agriculture for almost a third of its output.
There have been significant recent developments across the two nations. Negotiations resumed between Sudan and South Sudan on 21 November in Addis Ababa, on several issues outstanding since the secession of South Sudan and expiration of the mandate of the comprehensive peace agreement in July. The negotiations focused on the sharing of oil revenues and on debt, trade, citizenship and border demarcation. But violence continues across Blue Nile and South Kordofan states in Sudan, with new waves of conflict-displaced people heading into South Sudan. The Sudanese armed forces state that they have captured key rebel holdings in Taruje, South Kordofan, which rebel Sudan People’s Liberation Movement North forces deny. Médecins Sans Frontières states that new waves of refugees are reported to be fleeing the Blue Nile region for South Sudan, as the Government army have intensified air raids on the rebel SPLMN. That follows reports by the Satellite Sentinel Project of aerial bombardments of civilian areas between 11 and 27 November by the Sudanese armed forces in Blue Nile state. Thirteen thousand refugees have been reported thus far. Tens of thousands of southerners in the north attempting to return to South Sudan are left in limbo, unable to return home or reintegrate into life.
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They have sold their homes and possessions and are stuck in temporary camps with limited access to basic amenities.
Unresolved issues between Sudan and South Sudan continue to give rise to considerable tension, as the Government of Sudan continue to halt the south’s oil exports until a transit fee is arranged. Sudan is also confiscating 23% of the south’s oil entitlement as payment owed since independence. It is significant that China has sent senior official Liu Guijin to mediate between the two states. Catherine Ashton, the European Union’s High Representative of the Union for Foreign Affairs and Security Policy, has expressed deep concern about the fighting in Blue Nile state and South Kordofan. The EU made €40 million available for humanitarian action in Sudan and South Sudan throughout September, part of which was set aside for South Kordofan. As I mentioned earlier, in late November, the EU welcomed the resumption of crucial negotiations in Addis Ababa between Sudan and South Sudan under the auspices of the African Union high level implementation panel, led by Thabo Mbeki. It urged both parties to make every effort to resolve outstanding issues, including those related to oil, transitional financial arrangements, borders and Abyei, and to reach a negotiated settlement.
The EU has announced that it would provide funds for new early recovery projects in areas of Darfur where the security situation is stable and to where displaced people have voluntarily decided to return, with priority being given to health, education, food security and securing livelihoods. On 11 November, the EU Commissioner for Development, Andris Piebalgs, announced that the European Commission had pledged €200 million to South Sudan to address key sectors such as health, education, rule of law and infrastructural development, particularly in connection with the construction of feeder roads. But the EU has not been able to disburse the €294 million pledged to Sudan in 2008 for between then and 2013, as Sudan chose not to ratify the revised Cotonou agreement because it included clauses about co-operation with the International Criminal Court.
There are ongoing conflicts in Abyei, South Kordofan, Blue Nile state, and Darfur. In Abyei there are still flows of people crossing the Banton bridge from Agok and going to areas north of the Bahr al-Arab, or Kiir river. Some 60 people cross daily and fewer return. The UK’s Special Representative for Sudan, Michael Ryder, stated in Juba on 1 December that the deployment of UN troops from Ethiopia in the Abyei region has led to improvement in the stability of the area. He indicated that civilians are now able to return to their homes and that the remaining controversy is about the formation of the Abyei administrative council. The Government of Sudan have indicated that they will fully withdraw their troops once the council make-up has been agreed.
In South Kordofan, international non-governmental organisations estimate that 300,000 people have been displaced since the summer. A camp for refugees from South Kordofan in Yida, South Sudan, was bombed by the Sudanese armed forces on 10 November, an act that has met with international condemnation. The United Nations High Commissioner for Refugees now plans to facilitate the voluntary relocation of some Sudanese refugees from the Yida site to safer locations further south. Heavy shelling has been reported though, and
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the UNHCR reports that 80,000 people have now fled conflict in South Kordofan and Blue Nile state. Some 36,000 Sudanese refugees are estimated to be in Ethiopia, in three refugee camps—Sherkole, Tongo and Fugnido—as well as at Adimazin transit centre. Foreign aid workers and journalists are still prohibited from accessing the area to verify information and provide much needed humanitarian aid.
Mr Gregory Campbell (East Londonderry) (DUP): I congratulate the hon. Gentleman on securing this debate. He is turning now to international access and the lack thereof, particularly by journalists. He is eloquently outlining the problems, but does he agree that one of the big issues from now on will be the information to the west and the developed world about what exactly is happening in Sudan and South Sudan, so that we can more appropriately and better deploy the resources to help the people there?
Mr Bain: The hon. Gentleman makes a very interesting and accurate point. It is interesting that more than 35,000 refugees have been displaced from Blue Nile state into Ethiopia, but up to 13,000 new refugees are fleeing Blue Nile into South Sudan as the Sudanese armed forces’ air raids on rebel forces are reported to have intensified on 2 December. Information about what is happening on the ground will be critical to resolving the disputes.
Jim Shannon (Strangford) (DUP): Is the hon. Gentleman aware that some 700,000 southerners of Sudan have not had their nationality recognised? They are in a grey area—limbo-land. Does he feel that the Government should be doing more to address that issue, so that people know where they belong? Is it north, is it south—where are they?
Mr Bain: That is the issue to which I referred a few moments ago. I thank the hon. Gentleman for raising it once more. Clearly, the Government should use their influence to speak with Catherine Ashton and UN agencies to ensure that the issue is resolved in negotiations between the two states as urgently as possible.
To return to dislocation, a further 8,000 refugees are thought to be on the move towards South Sudan from Blue Nile state. Some are reported to have walked for more than a week to reach safety in Doro village in South Sudan, 40 km from the border between the two states. Satellite images captured in November indicated that war planes had attacked villages directly. Between 10,000 and 15,000 refugees are estimated to have fled to the border areas of Upper Nile state after infighting in Blue Nile state, according to UNHCR information.
The UN has reported new cases of displacement in both North Darfur and West Darfur as a result of continued offensives between the Government and rebels. Population movements have also been recorded in South Darfur due to ongoing military operations. Groups displaced before July continue to lack proper access to water, food, health care and sanitation, and humanitarian relief access to the area is also lacking. I hope that the Minister will address several issues in his closing remarks. Will the Government make representations at EU level
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so that all parties unite in calling for the two states to ensure the welfare of civilians by refraining from the use of explosive weapons in populated areas, agreeing an immediate ceasefire and allowing unimpeded humanitarian access? Will the Government engage in diplomatic efforts and encourage actors with leverage over both parties to seek a political solution to the crisis, including by completing post-comprehensive peace agreement negotiations with support from international or regional arbiters, and ensure that the promised popular consultations in South Kordofan and Blue Nile take place as part of broader efforts to include the concerns and priorities of civilians in peace negotiations?
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): I congratulate my hon. Friend on securing this debate. His point about encouraging all those with influence on both countries to exercise it to bring about peace is crucial. What role does he think the Arab nations in particular have to play in providing influence on the Sudan Government? I know that the Sudan Government were congratulated by the new Libyan Government on the support that they gave Libya. Maybe that influence could now be reciprocated to encourage progress in Sudan.
Mr Bain: My hon. Friend raises an interesting point. Where the Arab League and other actors in the Arab world can exercise positive influence, we should welcome that.
It is essential to support the efforts of the UN emergency relief co-ordinator to secure full and unimpeded humanitarian access. Will the Government encourage the EU to seek an end to any support for non-governmental armed groups operating on either side of the border, and support the establishment of a demilitarised zone monitored by the UN along the border?
The international community has been engaged fully in development issues since the signing of the comprehensive peace agreement in 2005, but one in eight children die before their fifth birthday, the maternal mortality rate is one of the highest in the world and more than half the population lives below the poverty line. More than 220,000 people were displaced by conflict last year, and more than 100,000 were affected by floods. Already this year, fighting in the disputed border areas, clashes between the Sudan People’s Liberation Army and militia groups, disputes over land and cattle and attacks by the Lord’s Resistance Army have forced nearly 300,000 people from their homes.
The 38 aid agencies working in South Sudan have made several recommendations: strengthen the capacity to deal with humanitarian crises; prioritise food security; strengthen the role of civic society; work with the Government of South Sudan to enhance social protection; encourage the development of smallholder agriculture as a means to improve women’s economic participation; address the land issue for returnees, internally displaced persons and vulnerable groups; and provide technical support for the Sudan-South Sudan border co-operation policy. The Sudan unit within the Foreign and Commonwealth Office has indicated that £150 million will be allocated for Sudan each year, with £90 million going to the Republic of South Sudan. To what priorities will that spending be devoted?
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The people of Sudan also suffer the plight of HIV/AIDS. An estimated 40,000 people in South Sudan are living with HIV, about 14,000 of whom are eligible for treatment. Of those, only about 3,500 are receiving the medication that they need to return to health and prevent further infections. Between now and 2014, at least 11,000 people living with HIV/AIDS in South Sudan who need antiretroviral treatment will not have access to it, and might die unless additional funding is found. I commend the work of Alliance South Sudan, which currently supports 92 community-based organisations across 23 counties in eight of South Sudan’s 10 states, on its efforts to build capacity for an integrated HIV response.
The Global Fund to Fight AIDS, Tuberculosis and Malaria was founded in 2002 in response to the devastating impact of those three diseases. It is the largest international financier of action against AIDS, TB and malaria and accounts for 80% of funding for TB, three quarters of malaria programmes worldwide, and half the global AIDS response. It is currently chaired by the United Kingdom. To date, it has disbursed more than $20 billion in 150 countries, saving an estimated 6.5 million lives. It was rated as a high-performing institution providing very good value for money in the multilateral aid review carried out last year by the Department for International Development.
At the board meeting two weeks ago in Accra, however, it became apparent that, for the first time in the fund’s history, its supporter countries lack available funds to sustain the next round of funding. The decision was taken to cancel round 11, delaying any expansion in programming until 2014 at the earliest. That means that the fund will not be able to put more people on vital TB treatment or provide additional bed nets to prevent the spread of malaria. It will also lead to rapidly growing waiting lists for life-saving HIV medicine over the next two and a half years.
The replenishment conference in October 2010 raised just $11.7 billion to cover programming between 2011 and 2013, rather than the $13 billion required to maintain programming and modest expansion, or the $20 billion needed to scale up towards universal access. In addition, donor countries have not paid the amounts pledged on time or in full. South Sudan is among those countries where the delay could have a devastating effect. South Sudan was depending on the fund’s round 11 disbursement to fill a significant funding gap within its health response. Although it has a fully costed national AIDS plan, the plan has a funding gap of 80%.
The UK pledged £384 million in October 2010, in line with the existing £l billion pledge to the fund between 2008 and 2015 made by the previous Government. The Government are paying in full and on time, and have advanced some payments to help ease the fund’s cash flow issues. The UK has also pledged a significant increase in its contribution dependent on implementation of reforms, following the multilateral aid review’s rating of the fund as very good value for money, but nine months after the intention to increase funding was announced, it has not been confirmed.
Will the Minister agree to liaise with DFID to discover whether we can expect an announcement before the fund’s mid-term replenishment, due by mid-2012? Will the Government consider making allocations from DFID’s budget to deal with important issues such as prevention, care and support and work with children affected by
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AIDS in South Sudan? Will the UK use its influence to encourage other contributor states, such as Belgium, Denmark, the Netherlands and the United States, to follow through the commitments to tackle HIV/AIDS—US Secretary of State Hillary Clinton made that commitment in her speech on world AIDS day last week—by offering more financial support to the global fund? Could such action involve the hosting of a special donor conference next year?
The challenges to alleviate poverty and suffering across the two nations are severe. In July, Save the Children reported that South Sudan has the world’s worst maternal mortality rate, that a fifth of all its children suffer from acute malnutrition, and that only 10% of children complete primary school. A hundred midwives and fewer than 500 doctors cover a population of 8.3 million people. This represents the biggest development challenge in the world, and our response to facilitating an end to the internal conflict that has scarred the region for too long is a test of leadership for the international community.
9.51 am
Martin Horwood (Cheltenham) (LD): It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate the hon. Member for Glasgow North East (Mr Bain) on securing this timely debate, which is a reminder, if one were needed, that the securing of comprehensive peace agreements and the achievement of independence do not in themselves deliver peace and security or the welfare of the people involved. The situation in Sudan and South Sudan is, if anything, more worrying today than it was only a few months ago.
The hon. Gentleman rightly referred to the interaction between armed conflict—some of it state sponsored—and the creation of refugee situations, which are making the development picture and the welfare, health and security of the people even worse. He referred specifically to the attack on 10 November, when it was reported that there was a bombing raid on a refugee camp in South Sudan, apparently carried out by north Sudanese forces.
On that same day, a US satellite monitoring group also reported that the north was building up and upgrading its air bases and air resources in what could be perceived as the precursor to an even wider aerial bombing campaign. Those are worrying signs, especially when put in the context of the truly appalling record of the Bashir regime in north Sudan. Mr Bashir has repeatedly stated that there is no room for cultural or ethnic diversity in the Sudanese state, and has predicted the fall of South Sudan as a failed state.
Clearly, it is possible that Mr Bashir is himself trying to make that prediction come true and make it self-fulfilling. His record clearly indicates support for terrorist organisations and a closeness to Iran; Sudan is Iran’s only Arab ally. A staggering number of deaths have been caused by the conflicts to date. It is possible that some 2 million people have died in Sudan during this present conflict—possibly as many as 300,000 in Darfur alone.
The International Criminal Court has warrants out for Mr Bashir’s arrest, not only for war crimes but for crimes against humanity and, since July, for genocide; a further two ICC arrest warrants are still outstanding. The list of outstanding issues between South Sudan and the north is lengthy and worrying. It covers citizenship,
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the border, debt, oil revenues, security and the status of arms. Sudan has still not implemented key parts of the comprehensive peace agreement. Critically, an independent national human rights commission has still not been established, and there are serious unresolved issues in the provinces of South Kordofan and Blue Nile.
The hon. Gentleman rightly outlined many of the effects of this kind of uncertainty and conflict, the attitude of the Sudanese Government in the north and the way in which they interact with the situation. I will not repeat some of the appalling statistics that he cited. The question is: what do we think can be done about this and what can the Government do?
I know that the Minister has himself visited the region, as has the Secretary of State for International Development, which is welcome, and we have raised both the implementation of the comprehensive peace agreement and the issues of human rights with the Foreign Minister, Ali Karti, only in the past month. The situation, however, needs to progress and that does not seem to be happening at the moment. Simply making representations to the Sudanese Government does not seem to be having a great effect.
I think that we have other levers at our disposal. It is right that the focus of the Government’s international development assistance programme for Sudan and South Sudan should be concentrated on the south, where the development indicators are truly appalling. The worst statistic that I have seen comes from the Christian charity World Vision, which states that a 15-year-old girl in South Sudan
“has a higher chance of dying in childbirth than completing school”.
“One out of every seven women who become pregnant will probably die from pregnancy-related causes”,
“While the under-five mortality rate has decreased, one out of every seven children will die before their fifth birthday (135 per 1,000 live births)”.
Nevertheless, some 35% of what I think is the £140 million a year committed to Sudan and South Sudan—some £50 million per annum—is committed to the north. Does the Minister have an assessment of how well that spending is going? Is it being targeted at measures that will help reduce conflict? The non-governmental organisation Saferworld has highlighted the need to control small arms in the north. Can our development assistance facilitate projects such as the Regional Centre on Small Arms, which will try to reduce the potential for conflict in small areas, at least in a small way?
It has been suggested that the role of the Arab League, which is now a very interesting organisation, might be stepped up. I think that, for many years, many people in this country and in the west wrote it off as a talking shop, but it has pursued a much more active policy over Libya and now over Syria. The potential for the Arab League to play a much more proactive role in trying to avert further conflict in Sudan and to put pressure on the Bashir regime is important.
There are other interesting forces in the region. I was at a symposium yesterday that involved members of the Muslim Brotherhood organisations and parties in the
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emerging democracies of Libya, Tunisia and Egypt. The Egyptian Muslim Brotherhood is, of course, located close to Sudan. Those parties are trying to prove their democratic credentials and to reassure potential western allies that, if they play a part in government in what we hope will be new democracies, they will respect human rights, have due respect for the rights of minorities and observe the democratic process.
If those parties are seeking connections with the British Government and positive and reassuring relationships with us, perhaps one of the tasks that we could set them, in a friendly way, would be to seek whatever influence they can over the regime and the Islamist movements in Sudan, and to point out that political Islam does not have to be synonymous with repression, the denial of human rights and a determination to exclude the rights of minorities.
There are other factors. The debt issue is important, because Mr Bashir would like to have access to support from everyone—from the International Monetary Fund, to the World Bank, to the African Development Bank. That seems to give us some international leverage. Has the Minister had any conversations with any of those multilateral institutions to see whether there are ways in which they can exert some influence on the Government in the north? War and conflict have been described as “development in reverse”, which I think is accurate. If funds are to be invested in these countries with a view to growth and to debt being written off, it is important that it is done in a context that means it is likely to succeed. The current context seems to provide exactly the reverse of that.
I will not speak for much longer because I am sure that other hon. Members want to contribute. Beyond the usual representations, expressions of regret and concern, and the commitment to facilitate a comprehensive peace agreement—although those are all welcome—I would like to hear from the Minister whether we will start to use other levers more imaginatively to try to resolve some of what is happening in Sudan and South Sudan. At the moment, the situation seems to be spiralling into an ever deeper conflict, which I am afraid seems to suit the purposes of the regime in the north. That may be a very bad omen indeed for the prospects of having a free, independent and prosperous South Sudan.
10 am
Jim Shannon (Strangford) (DUP): I congratulate the hon. Member for Glasgow North East (Mr Bain) on bringing this matter to Westminster Hall for debate. The debates that we have are not always on local matters. We need to be aware of the influence that we have as a country in other parts of the world. People in our constituencies have friends and relatives in that part of the world, and therefore we have an interest in the subject.
I will make a few quick comments because it is important that we register concern about some of the issues. I am pleased to be called to speak. I am not sure whether many other hon. Members will contribute after me but, none the less, this is an important debate. I have a particular interest in Sudan because some of my constituents are missionaries in the country and I have received feedback from them on what they do out there.
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When South Sudan was proclaimed and recognised as a state, it was very clear that the people who voted for it wanted that. I shall make a couple of comments in relation to South Sudan. By and large, a significant proportion of the people who live there are Christians. The country is rich in oil and its land is arable. It is productive for food production, which is good. However, China holds the oil leases and, as such, it controls what happens with the economy. All the oil in southern Sudan has to go north to get out to China, which is where two thirds of the oil goes. What discussions are the Government having with the Chinese about that? What influence can they put on them to relax the controls from north Sudan on those in the south?
It is of some concern that South Sudan is one of the least developed countries in the world. Are the Government sending people out to help train those Sudanese, so that they can do more for themselves, rather than their being dependent on grant aid from other countries?
South Sudan is a state recognised across the world, so although the following issue is perhaps not entirely relevant, it should perhaps be considered. The Olympic games are coming in 2012. Has any consideration been given to that? I know that there are issues surrounding health, food and all the important daily things that we take for granted, but have there been discussions with South Sudan about the Olympic games? Is it sending any representatives over? It is a new, virgin country. Is there any possibility that it will have representation in the London games next year? If it did have representation, that would be good. It is sometimes good for people to have some outside interest to look to and for people in Sudan to be able to say who their representative is. What is happening on that?
There are some 1 million Christians in Sudan—north and south—and I am sure that the Government are well aware that there has been persecution against some of them. Have the Government made any representations to the authorities, both north and south, on that? If they have, what feedback did they receive? Many of those 1 million Christians feel threatened by militant Muslim groups.
The hon. Member for Cheltenham (Martin Horwood), who spoke before me, mentioned human rights. I would like the Government to give me, and ultimately the people whom I represent and who have asked me to comment on the matter, some assurance that the human rights of Christians are being assured. What pressure has been put on Governments in the north and south of the country to ensure that such attacks stop? There is a bigger threat in the north than in the south.
In conclusion, I am ever mindful that China holds the oil leases and I have some concern that, whenever it comes to solving the problems, it is China that the area looks to. Is the influence of the west—the United Kingdom, Europe and the United States—being eroded by the greater elevation of China and the influence that it has in Africa? The United Kingdom and Great Britain has had traditional and historical influence in Sudan for many years and I want the Minister to assure me that that has not been eroded. I hope that he will take those matters on board.
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10.5 am
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): I shall make a few observations and ask a few questions, to which I hope the Minister can respond.
It is obviously important for the EU to do what it can to put pressure on the various parties involved and on the Government of Sudan in particular. It is also vital for UN initiatives to be supported and to continue—as, indeed, they are—in parts of the countries concerned. Ultimately, as I said in my intervention and as the hon. Member for Cheltenham (Martin Horwood) also mentioned, neighbouring countries and Arab and African organisations will play a crucial role in securing a long-term change in terms of stability, peace, democracy and human rights.
Will the Minister say what steps are being taken to encourage the type of action, from the Arab League and our Arab neighbours, that the hon. Gentleman outlined? Also, what is the Minister’s perspective on the role that the African Union can play in not only the short term, but the long term?
Ultimately, the solutions to these problems will require not only peacekeeping—perhaps military intervention—but development co-operation among African countries themselves. That is the crucial way in which such conflicts can be resolved on a long-term basis. I would be interested in hearing what the Minister considers the role of the British Government can be in encouraging initiatives and co-operation at an African level to bring about the type of pressure and support that the situation in these countries so desperately requires.
10.7 am
Mr John Spellar (Warley) (Lab): I congratulate my hon. Friend the Member for Glasgow North East (Mr Bain)—he has been congratulated before during the debate—on introducing this immensely important subject. As has been rightly said, the debate is very timely given the flashpoints of conflict, some of which are internal and some of which are external. Indeed, as I shall refer to later, there are also great concerns about the interruption of oil flow, which has an enormous effect on the economies, the budgetary position and, indeed, the solvency of both countries.
It is also important—this has come out substantially during the debate—to recognise that we must not simply focus on what these events mean for the countries concerned, for the ruling groups in those countries and, indeed, for those who are the participants in armed conflict. We need to highlight—I will refer to this later, but it has been mentioned several times during the debate—the impact that all this has had on the living standards and the opportunities for life of many of the people, particularly in South Sudan but, wider than that, in parts of Sudan itself.
During the conflict, which has rightly been referred to as one of the longest running conflicts, huge loss of life and devastation has been suffered by communities. It is absolutely right that tribute should be paid to a number of non-governmental organisations, several of which have been mentioned today—some are Church-based, but some are more secular, such as Saferworld. They have monitored the situation and ensured that the often unreported agony and misery of the people of South Sudan—not the sort of issue normally likely to
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be carried by television cameras, or where CNN is always likely to turn up—has been kept on the world agenda and has been the focus of international attention. That is important. The amount of oil is not hugely significant in terms of world oil supplies, and South Sudan is not an intrinsically strategic area, but it has some importance. It is not irrelevant because, as in so many areas of the world, there is a capacity for instability to spill across borders. We have already seen that to an extent in both this region and in the great lakes region. Conflicts continue in the border areas between Sudan and South Sudan.
According to reports, South Sudan is also witnessing the unwelcome attentions of the Lord’s Resistance Army. The LRA and other organisations have an impact on the Democratic Republic of the Congo and the wider region. In those areas, the outside world, including China, has significant mineral interests. China is involved in Sudan, quite properly, to obtain access to oil. We have to ensure that there is an equal bargain for the people of South Sudan and Sudan. We need to ensure that, given the huge importance of oil revenues to the budgets of both countries, there is an equitable distribution—I realise that that is not easy to calculate—to ensure a win-win situation. That will involve responsible behaviour by production and transportation companies, and by the final client.
It is undoubtedly true, however, that in spite of those revenues, the impact on society has been minimal. Hon. Members have mentioned the appalling figures on maternal mortality and infant mortality per capita income. Approximately 45% of people in Khartoum have access to water. In South Sudan, very few people have access to anything like clean water. We know the impact that that has on health, let alone on the ability to run any sort of modern society. My hon. Friend highlighted the huge impact of AIDS, which is not just confined to South Sudan, but to much of that area of central Africa. Efforts have been made, but it is an ongoing problem. Any breakdown in the provision of support and aid—indeed, any breakdown of society—can only hasten the spread of that disease and prevent the necessary relief, alleviation and medication.
We need to move on from the problems, which have been outlined in debates over a number of years, to the solutions. That requires us to look beyond the simple differences between Sudan and South Sudan. Not only is external reconciliation required between the two states—there is a number of issues still running between them—but some internal reconciliation. One problem is that for years Sudan fostered tribal divisions in the border areas and in South Sudan to undermine the independence movement in South Sudan. That is not unprecedented. British Governments often operated a policy of divide and rule, as did many other countries. However, its legacy might roll on for many years. We ought to be particularly concerned if division is ongoing, if various tribes are being armed and if ordinary criminal issues, such as cattle rustling, escalate into tribal inter-ethnic warfare. The whole cycle of violence and disruption could continue and ultimately affect the oil fields, which will be the basis of the two countries’ income.
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Where is the light in all of this? My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) highlighted the positive role being played by the African Union in hosting talks. In Somalia, the African Union is playing a more proactive role than it has in the past. It recognises that such instability can very easily spill over into other countries. In Somalia, problems have not been contained within its borders. We are only too well aware, for example, of the problems of piracy affecting international trade. Indeed, there was an announcement from the Under-Secretary of State for Transport, the hon. Member for Hemel Hempstead (Mike Penning), only this week regarding the UK response. The Kenyan Government are having to take action because of the disruption and enormous impact that banditry and piracy are having on the Kenyan economy. Many of its resorts are close to Somalia and the cruise-liner business uses the port of Mombasa. In the first half of 2010, approximately 60 cruise liners stopped at Mombasa; this year only one. That has a substantial impact on the local economy.
The idea, therefore, that such problems can just be contained in one area, and are only a problem for the unfortunate residents of that area, is no longer sustainable. The encouraging thing is that that is recognised as being no longer sustainable. That is why we see a more proactive position from the African Union. The Arab League was also mentioned. It has looked at countries in its region and the difficulties that can flow on. It has not taken the position that it should stand away from such difficulties and that such problems are problems only for the countries concerned. That is encouraging, and I hope there will be some interaction between the African Union and the Arab League. I hope that the Minister will comment on that.
The hon. Member for Strangford (Jim Shannon) mentioned the religious differences between South Sudan and Sudan. We know about the involvement of al-Qaeda in Sudan and how it was offered safe haven for a considerable period of time. Religious extremism is an additional concern to the mixture of various tribal and ethnic differences.
I have mentioned oil a number of times, because it is so significant: approximately 98% of the revenue of South Sudan. Arguably, oil was the driver for conflict in the past, with the desire of Sudan to keep control of South Sudan and the oil fields, the desire of the South Sudanese to have a greater share, and the vexed question of the transport of oil. It still has potential of course, with arguments about the price at which Sudan should be getting oil from South Sudan or the price of transiting oil through the pipeline, with Sudan wanting to charge what is estimated to be 15 or 20 times as much as transport on other pipelines in Africa, for example.
Ian Paisley (North Antrim) (DUP): Does the right hon. Gentleman agree that one of the greatest investments that the western nations could make in new South Sudan would be in helping it to have a pipeline of its own, so that it could determine its own prices, rather than having to rely on Sudan, or to help it go through Kenya and find a way out in that direction?
Mr Spellar:
As I used to say in ministerial times, I require notice of that question. However, if one already has a facility, which is a sunk cost, the most desirable outcome is to have a properly negotiated agreement to
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use that facility. One has to look at the distances, at which areas a pipeline would be running through and their safety and at the time scale involved, because constructing a new pipeline would be taken as an unfriendly act by Sudan. That might exacerbate tensions and could lead, for example, to cutting off the existing pipeline and therefore to no revenue at all—a potentially catastrophic situation for South Sudan. It is always worth examining alternatives—they might be viable—but they are not a real alternative to ensuring through whatever mechanisms, whether the UN, the African Union or the Arab League, that a modus vivendi is obtained between Sudan and South Sudan to ensure that oil, rather than a cause of contention, is a shared benefit.
Martin Horwood: Is the right hon. Gentleman concerned by the emergence of the so-called South Sudan Liberation Army in the relatively oil-rich states of Warrap and Unity, which the rebels are aiming to liberate—as they describe it—from the Government in Juba? They are advising civilians to evacuate towns and move to villages. Does that look like a deliberate campaign of destabilisation aimed at the oil revenues of the south?
Mr Spellar: I do not know what assessment has been made of the origins of that movement or who may or may not be supporting it, but it is absolutely clear that a continuation of the instability and fighting in those areas will not only disrupt the oilfields and revenue but, as we have seen so dramatically in South Sudan, southern Sudan and Darfur, completely disrupt all normal life, including agriculture, because of displaced populations. All that makes the area unviable and brings huge misery to the populations who, essentially, have to live in refugee camps, dependent on aid, and that is not a sustainable future.
A viable agreement between Sudan and South Sudan is therefore crucial. Sudan has a sizeable external debt—let us not argue about how it was acquired—which it has to service and South Sudan is totally dependent on oil for revenue, so both countries, for the viability of their Governments and their states, require a share of the oil revenue and a regular flow. It is argued that the interruptions to oil production have already led to sizeable reductions, with estimates of about a quarter, but I am not sure of the exact figure. Unless agreement is reached, those ongoing problems will continue; it is in both their interest to undertake an agreement. I referred to external and internal reconciliation, and no conflict between the two states is not alone in being hugely important. We have had worrying reports of attacks, although there are arguments that some are in response to guerrilla movements and attacks, but the facts need to be ascertained, and considerable international and regional pressure on the participants to lower the tension is needed.
One problem in so many areas of conflict once a peace agreement is signed, however, is the large number of people whose whole life had been bound up with military operations. I am pleased to see several colleagues from Northern Ireland in the Chamber, and a key factor is to create conditions of normalisation, in which arguments are settled in a normal fashion and become the norm or established practice. Year on year, people then gradually move away from their old way of life. Simply preventing people from shooting each other becomes important in establishing the norms of society;
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otherwise, the trouble could continue—a lot of it based on tribal differences running from generation to generation. However, tribal differences previously settled with traditional weapons are now settled with AK47s, causing huge devastation and the mass migration of populations, which become dependent populations. That is why it is so important for a real effort, using the experience from work in other areas of conflict, gradually to reintegrate groups who have been involved in guerrilla movements or in over-extended armies back into the population and for them to assume civilian roles. Again, that is why the reconstruction of agriculture, which my hon. Friend the Member for Glasgow North East mentioned, is so important, to provide alternative occupations and a security environment.
One of the difficulties on which I hope the Minister can comment is to do with those who did not participate in the violence or become involved in the various guerrilla movements and armed gangs if they are seeing all the benefits go to the people who were involved. That is not an unfamiliar story in many parts of the world. Getting the balance right is enormously difficult, but also enormously important and significant. So any programme must be community-based, as well as involving the participants, important though they are.
Another feature of the development of agriculture is, as has been mentioned, the appalling transport infrastructure. In many parts of the developing world, one of the key constraints on developing agriculture is access to market—the ability, when the harvest comes in, to get large quantities of produce to market and not to have it rot in the fields or during transport to market. We are all very much aware of the state of the infrastructure in South Sudan, and a significant priority in improving living standards and creating opportunities for people is the development of transport.
What is key and what I hope the Minister will report on in his contribution is that the effort has to be sustained. If the area descends once again into feuding civil war, I recognise the danger that the interest and, indeed, patience of the public in the wider world will start to run out. That is a key message that the Foreign Office must convey to the countries in the region in the best possible way—not threateningly, but in a matter-of-fact way—so that the people of South Sudan who have suffered so much for so long have some decent opportunities not only for themselves but for their children.
10.30 am
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham): This has been a fascinating and well informed debate, and I congratulate the hon. Member for Glasgow North East (Mr Bain) on securing it. I praise him for his well informed and compelling speech, and pay tribute to him for his work. I also congratulate him on his election to the chair of the all-party group on Sudan and South Sudan, and I look forward to working with him in that capacity.
The House will know that I follow the situation in Sudan and South Sudan very closely. I was fortunate to visit Sudan in July, and was the first UK Minister to do so after secession of South Sudan. While I was there, I met a number of Cabinet Ministers, and impressed on them the UK’s continued commitment to Sudan. I
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made clear our hopes that they could work with their southern neighbours and international partners for a peaceful and prosperous future. Similarly, my right hon. Friend the Foreign Secretary was in Juba for its day of independence on 9 July. When addressing the people of the newest country in the world, he was sincere when he stated that the UK would stand by the people of South Sudan as they sought a future of stability, prosperity and lasting peace, particularly peace with its most immediate neighbours.
We should not downplay—the hon. Member for Glasgow North East made this point—the achievement of South Sudan’s peaceful secession on 9 July, which was the result of leadership in both countries, or the important role of the international community. Since then, we have seen positive developments in some areas of both countries. South Sudan has taken its place on the international stage, and has joined major international organisations such as the UN, the African Union and UNESCO. The signing ceremony of its accession to UNESCO was held recently at the Foreign Office. South Sudan has also applied to join the Commonwealth, a move which the Government strongly support. The application process will be an important means of ensuring that South Sudan entrenches our shared values of democracy and human rights. Commonwealth countries, including several of South Sudan’s neighbours, can provide important assistance in those areas.
Sudan has also shown some welcome signs of becoming a more constructive voice in regional issues—for example, in its support of the new Government in Libya, and the leading role it has played in the Arab League’s recent action against the Syrian regime. I will come to the Arab League in a moment. However, it is extremely unfortunate that there have been some worrying developments that lead us to believe the elusive goal of peace is still far from the reach of the Sudanese people.
The hon. Member for Glasgow North East and other hon. Members mentioned the states of South Kordofan and Blue Nile. Conflict continues in those states in Sudan, causing a humanitarian emergency. Neither national nor international organisations are being granted access to provide support to civilians affected by the conflict. We are supporting the efforts of the UN to negotiate access, and I hope that the visit of my noble Friend, Baroness Amos, UN Under-Secretary General for Humanitarian Affairs, later this month will lead to some progress.
We are very worried about reports of new offensives in the past few days around Jau and Talodi in South Kordofan. That escalation and spread of the conflict are putting civilians—those who remain in South Kordofan and the estimated 16,000 who have been displaced to Yida in Unity state—in even greater danger. We continue to make it clear to the Government of Sudan, the Sudan People’s Liberation Movement North, and the Government of South Sudan that there cannot be a military solution to the conflict in South Kordofan and Blue Nile. We condemn indiscriminate aerial bombardment by the Sudanese armed forces, and we are calling on those who are fighting to cease hostilities immediately, to allow unfettered humanitarian access to all populations, and to engage in inclusive political dialogue that addresses the root causes of conflict. We urge the Governments in
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Khartoum and Juba to respect each other’s problems, and to refrain from unilateral action and inflammatory statements.
Some hon. Members referred to nationality and southerners in the north. We are worried about the lack of progress in resolving nationality issues, which threatens to leave stateless thousands of southerners who have been resident in the north for many years. We are urging both Governments to extend the deadline, and to put in place administrative arrangements to address the problem.
There is a significant humanitarian issue for returnees to the south who are awaiting transport, and my hon. Friend the Under-Secretary of State for International Development recently visited the way station at Kosti to draw attention to the plight of thousands of returnees who have been waiting months to take barges south. We are working with the UN to ensure that their needs are addressed, and we are urging both Governments to assume responsibility for the returnees.
It is also worrying that there has been conflict across the international boundary between the two states, and the recent cross-border bombings by the Sudanese air force at Yida and Quffa are particularly worrying. I issued a statement at the time—on 10 November—condemning any action that puts civilian lives at risk. We are calling on all parties to exercise restraint, and to cease actions that provoke conflict within each other’s territory. It is totally unacceptable for either Government to provide support to proxy armed groups that contribute to conflict in their neighbour’s territory. There are worrying signs that both sides are doing just that.
I stressed the importance of non-interference to South Sudan’s Foreign Minister, Nhial Deng Nhial, when I met him on 24 September, and I repeated that message last week to a special envoy who had been sent to the UK by President Salva Kiir. I will make exactly the same point next week to the Sudanese presidential adviser, Dr Ghazi Salaheldin, when he visits London, and I will emphasise the critical necessity of allowing humanitarian needs to be addressed urgently.
As the hon. Member for Glasgow North East made clear, those latest events make it all the more important that both sides allow a border monitoring mission to deploy quickly. We will pursue a resolution at the UN Security Council in the next few weeks to ensure that UN peacekeepers can take on that important task in support of the two Governments. Some hon. Members, including the hon. Member for Cheltenham (Martin Horwood) and, in an intervention, the hon. Member for Strangford (Jim Shannon), as well as the hon. Member for Edinburgh North and Leith (Mark Lazarowicz), asked about how to engage the Arab League and the African Union. I agree that it is important to engage as many important regional organisations as possible. The region is engaged. Ethiopia supplied troops to go to Abyei. There will be an AU summit in January, and I hope that Sudan will be a key issue on its agenda. As the hon. Member for Glasgow North East said, and as the right hon. Member for Warley (Mr Spellar) emphasised, the regionalisation of the conflict could be very damaging to the entire area.
I want to speak about the unimplemented areas of the comprehensive peace agreement. It is incredibly important that decisions on oil, citizenship, border demarcation and Abyei are given urgent attention. We
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have been particularly concerned about the failure to reach agreement on an equitable sharing of oil revenue, and I am worried that the Sudan Government have recently raised the temperature by threatening to halt the trans-shipment of oil from South Sudan, as well as by making an unrealistic royalty demand for $32 a barrel, which is way over the going rate.
We welcome the constructive role being played by the AU’s high level implementation panel, which is mediating between the parties on these issues. Talks that it facilitated in Addis Ababa on 25 to 30 November reached no agreement, but some constructive proposals were placed on the table, including on the level at which compensation should be paid to Sudan for the loss of oil revenue. As the Foreign Secretary said yesterday in a joint statement with his Norwegian and US colleagues, it is vital that the two parties return to the table as soon as possible to find equitable solutions. Sorting out oil revenue is crucial to both countries’ economies and to both currencies.
A number of colleagues, including the hon. Member for North Antrim (Ian Paisley), referred to whether there could be a pipeline to South Sudan, which is a fair point. The proposal has been reported in the media on a number of occasions. Indeed, it has been suggested that a Japanese company could be contracted to build a pipeline to Kenya. We take the view that it does not make a huge amount of commercial sense, because peak production has already been reached and it would take a long time to build. The only sensible short-term way forward is to ensure that there is agreement between the two countries on this important issue. As I said, it is absolutely vital for both their economies.
I mentioned the importance of Abyei as one of the outstanding CPA issues. Obviously, we are concerned that neither the Sudanese armed forces nor the Sudan People’s Liberation Army has withdrawn fully from the Abyei area, despite the presence of the United Nations interim security force. We fully support UNISFA in its efforts to secure the Abyei area and to monitor the withdrawal of both parties’ troops. We are calling on the Governments of Sudan and South Sudan to co-operate fully with the mission so that it can deliver on its mandate.
Several hon. Members mentioned Darfur. There has been significant progress there, and I am pleased that the UK’s Special Representative for Sudan participated in a conference in Washington earlier this month, which saw discussions between the Liberation and Justice Movement, which has signed the agreement, and other groups that currently remain outside the peace process, about how they might be brought in.
The right hon. Member for Warley mentioned the LRA. I agree that one of the concerning developments recently has been the statement by a number of armed groups that they want to come together in a new umbrella organisation to work to overthrow the Government of Sudan. We want to see peaceful political change in Sudan. We are therefore greatly concerned about any talk of further incitement and use of violence.
Development assistance has been mentioned by several hon. Members. Despite the ongoing conflicts and the political difficulties that face both countries, it remains a priority for the UK to support the peoples of the two Sudans in building a more prosperous future. Our development programmes are based on the provision of substantial assistance to both countries. As well as
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humanitarian assistance, DFID’s support is focused on delivering basic services to those who need them most, and to building accountability of the Governments on both sides of the border.
As the hon. Member for Glasgow North East reminded us, we are providing £50 million a year to Sudan over the next four years. Alongside many other donors, we are contributing to its humanitarian needs. Indeed, the Under-Secretary of State for International Development recently announced additional support for the World Food Programme that will enable it to meet the humanitarian food needs of approximately 315,000 people who have been particularly affected by conflict in South Kordofan, Blue Nile and Abyei. DFID is also seeking to address longer-term development needs. Its programmes will improve education, ensure provision of clean water and sanitation, encourage better access to justice and support the demand for improved governance in Sudan.
We all know that the needs faced by South Sudan are absolutely huge. We are talking not about reconstruction, but the construction of a new country. There is virtually no infrastructure. I believe there are only 25 kilometres of tarmacked road, so the needs are huge. We will be providing £90 million a year for the next four years to help the people of South Sudan. We will be working closely with others, including the US, UN and EU, and our programmes will support accountable, inclusive and transparent government, economic growth and improved security and access to justice. In particular, the UK through DFID aims to help 240,000 children to get through primary school; enable 4 million people to receive life-saving health care and nutrition; help 1 million people get enough food to eat; provide more than 750,000 people with malaria prevention and treatment; and give more than 500,000 people access to clean water and sanitation.
The hon. Member for Glasgow North East mentioned the global fund, AIDS and the lack of support from other countries. I can assure him that, as far as the UK is concerned, we will be doing all we can to keep up the pressure on other donor countries. We have influence within the global fund, and I can assure him that we will be delivering on our commitment and working with other countries to ensure that they also deliver. I will certainly raise the specific ideas that he mentioned with the DFID Minister. We need to work in many other areas as well.
As the right hon. Member for Warley said, we must not forget about the silent majority of people who stayed outside the different militia and guerrilla forces. I agree entirely with what he said about agriculture. South Sudan has the most phenomenal potential to build its agricultural sector and put in place total food security. I was in South Sudan a year ago, and as I flew into Juba, I was struck by the incredibly verdant countryside on either side of the Nile, yet, after a mile or so, the ground became arid and rugged. Obviously, irrigation, modern farming techniques and irrigation are needed. Of course, there was irrigation in the past, before the conflict. The country was able to provide food for most of its people before the war started all those years ago. Food security is incredibly important, but we cannot have food security without infrastructure.
The hon. Member for Strangford mentioned the Olympics. We are in discussions with the Government of South Sudan to see how we can support their wish to
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participate in 2012. They have to join international sports federations and we are offering any help that we can. That matter has certainly been taken on board.
Several hon. Members raised the issue of debt. They will know that Sudan assumed responsibility for the entire £38 billion of international debt outstanding at the time of independence. Agreement was reached and based on an assumption that Sudan would be granted debt relief by the international community within two years of secession, failing which the two parties would have to renegotiate.
We have taken a leading role on the issue of debt relief for Sudan, including though the establishment of an international technical working group, to address the progress that will be required. I have raised debt relief with a number of key partners, including China. I can tell the hon. Member for Strangford that China is a key player, because it holds a great deal of that debt. We are committed to supporting Sudan in making progress towards debt relief. However, I agree with the hon. Member for Cheltenham. Sudan needs to understand the importance to its creditors of real and continued progress in resolving outstanding CPA issues and in ending the ongoing conflicts. He asked whether there is any other leverage that we can bring to bear. We do not have any arguments or disputes with the Sudanese people in the north. In our view, trade will create wealth and bring prosperity. We want to see the creation of jobs and cross-border trade between the two countries. Cross-border trade is one way to create wealth, but we will not see such trade if a war is going on.
I can tell the hon. Gentleman that there is leverage here. We are not going to advance trade at the expense of human rights; we have made that very clear. When I was in Sudan earlier this year, I went to Port Sudan in the east, where there has been a successful peace process. We made it clear that, where there has been a successful peace process, we will reinforce that with trade. Indeed, that is why we were pleased to see the Kuwait investment conference for eastern Sudan held last year. Where there is a successful peace process taking place in north Sudan, we will certainly do what we can to encourage UK companies to go there and invest. Obviously, there are obstacles as things stand at the moment with the different conflicts going on.
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It has been an interesting and full debate with a huge amount of cross-party agreement. It has now been five months since the successful birth of South Sudan. As these new countries adjust to life as neighbours, we too have to adjust to dealing with two sovereign states. The CPA foresaw the possibility of two states co-existing peacefully and prosperously, maintaining the strong economic and personal ties that continue to bind people across the international boundary. For that to succeed, both countries must draw back from interfering in each other’s affairs, address the issues left unfinished from the CPA, and focus on resolving the conflicts within their own borders through inclusive governance and promoting economic and social development.
Our Government will continue to deliver, both in public and in private, tough messages about the work that both sides need to do. The urgency of such messages should be apparent at the heart of a region where the winds of the Arab spring are blowing, and it is vital that the international community, through the UN and regional organisations such as the African Union and the Arab League, does not reduce its efforts to resolve the outstanding problems of Sudan and South Sudan. We should also acknowledge the enormously positive work that is being done by many non-governmental organisations and civil society groups in addressing the needs of the Sudanese people—I highlight in particular the work of the Churches in Sudan and South Sudan and their humanitarian support and work for community reconciliation.
I thank the hon. Member for Glasgow North East for raising this issue and for giving me the chance to explain the Government’s position, and it is heartening that so many constructive, positive and imaginative suggestions have been made this morning. It is a crucial moment for Sudan and South Sudan; there is a lot to gain but, as the right hon. Member for Warley pointed out, a huge amount to lose. I hope that, with the focused attention of the international community, we can steer the path of those countries towards peace and prosperity for all their peoples. After decades of conflict and appalling, dreadful suffering, they deserve nothing less.
10.51 am
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Centenaries (UK and Ireland)
11 am
Naomi Long (Belfast East) (Alliance): The timing of this debate is in many ways very appropriate. Yesterday, 6 December, marked the 90th anniversary of the signing of the Anglo-Irish treaty, which led to the formation of the Irish Free State, as was, and ultimately to the partition of Ireland and the creation of Northern Ireland. It also led to the Irish civil war, which some sources believe may have claimed more lives than the original war of independence against Britain that preceded it.
In the context of this debate, it is worth noting that not only did the civil war leave Irish society divided and embittered in its immediate aftermath, but that the political divisions of that era remained the dominant cleavage in Irish politics for almost a century, reflected by the two main political parties, Fianna Fáil and Fine Gael—the direct descendants of the opposing sides in that war.
Arguably, the 2011 Irish general election, which took place against the backdrop of the serious financial and economic crisis, is the first in Ireland’s history that has departed significantly from civil war politics. That is evidenced by the clear switching of voters between those parties. We can therefore be in no doubt that history casts a long shadow forward. The events of the past shape us—shape our identity, shape our present and also shape our future, to the good or otherwise, and never more so than when those events are contentious.
We are rapidly approaching the start of a decade of centenaries of seminal events and significant milestones in the shared history of the UK and Ireland. The period in question commences with the signing of the Ulster covenant in 1912 and the Home Rule crisis; covers the period of the first world war, from 1914 to 1918, including the battle of the Somme in 1916 and the Easter rising in the same year; and culminates in the events to which I have referred regarding the partition of Ireland.
During the period of history that I am describing, in 1912, the Titanic was launched and, tragically, sank—an issue of huge importance to my constituency, in which she was built. The period also stood witness to the emergence of the Gaelic revival movement and to the rise of both the women’s suffrage movement and the labour movement, from which flowed universal male and limited women’s suffrage in 1918. The Dublin lockout, which lasted from August 1913 to January 1914, was probably the most serious industrial dispute in Irish history, reshaping entirely the relationship between worker and employer. Also during that era the Irish Citizen Army, the Ulster Volunteer Force and the Irish Volunteer Force were formed, the latter two being actively engaged in gunrunning activity.
I concede that the list that I have given is very long, but it is by no means exhaustive. I have focused entirely on centenaries, without reference to the fact that, in the same period, we will mark other significant anniversaries, including the 400th( )anniversary of the plantation of Ireland.
The period between 1912 and 1922 was one of considerable change and turmoil, which shaped not only Northern Ireland, but the relationships within and between these islands. Sadly, in much the same way as post-partition politics in the Republic has been defined
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by the civil war, the divisions evident during that period remain to a large extent the basis of divisions in modern Northern Irish society. Therefore the manner in which we publicly mark those historic events, which remain both sensitive and emotive, is hugely important to preserving the current stability and, more importantly, to the building of a peaceful, stable and shared future.
Mr Gregory Campbell (East Londonderry) (DUP): I congratulate the hon. Lady on securing the debate. She is referring to the manner in which and the sensitivity with which commemorations are held. Obviously, the timing of the centenaries of each of the events that she has outlined is fixed, but does she agree that in the divided society that we have in Northern Ireland, how and where those events are commemorated is very important—so that they can be celebrated, rather than causing divisions like those that occurred in the past?
Naomi Long: I agree entirely. Celebrating may not always be appropriate. It may be a case of marking or commemorating some of the events, which are still very emotive. That is an important point.
Handled well, the coming decade has the potential to allow us to explore our past together, aiding understanding through education and discussion, and helping us to learn from our past and to consider how we can create and shape stronger and better relationships and enhance community relations. By contrast, if handled poorly, it has the potential to be a highly charged and fractious period, marked by deepening antagonism and division in society, and playing to and reinforcing centuries-old divisions rather than focusing on future progress.
Mark Durkan (Foyle) (SDLP): I congratulate the hon. Lady on securing this important debate. Although it will be impossible to achieve or express a received version of our history in relation to all these events, it is of course right that we should be responsible in dealing with the centenaries. However, particularly as the decade progresses, we will also be hitting significant 50th anniversaries, which might be much more contentious in the north. Surely that adds to the point about getting the treatment of the centenaries right, in a measured and responsible way.
Naomi Long: I agree entirely. The degree of maturity displayed over the coming 10 years will set the tone for the handling of events that are lived history for many of us who grew up in Northern Ireland during the troubles. That is an important point. People will of course have their own perspectives on the past and, indeed, differing aspirations for the future, and the free expression of that cultural diversity is a cornerstone of any normal liberal democracy. Different parts of the community will inevitably wish to place differing emphasis on selected events, and the right to do so should be respected.
Ms Margaret Ritchie (South Down) (SDLP): I congratulate the hon. Lady on securing the debate. Does she agree that in relation to these largely, shall we say, contentious issues, there must not only be very good management? We must all seek to build consensus and to develop understanding so that we can celebrate our shared identity. We must build, in many ways, an active process of reconciliation.
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Naomi Long: I agree. What the hon. Lady refers to is hugely important. I am about to come on to how we can go about doing that.
The desire to place context around the public marking of the centenaries is not about curtailing people’s expression of their perspectives and aspirations, which may differ. It is about ensuring that space and opportunity are created for discourse, interaction and debate in order that people have the opportunity to engage with aspects of our history with which they would not traditionally associate and to consider alternative perspectives on those events with which they most closely identify, so that no single narrative crowds out all other opinion.
It is therefore important that both Governments are involved in marking events throughout the period and not just those aspects of most relevance to their own jurisdiction. I hope that that approach will be reflected in the Minister’s response to the debate. I shall give just one example. During a recent visit to Belfast city hall, the Taoiseach specifically asked to see the original covenant table, which sits in the council chamber; and, in recognition that there is interest among people in the Republic of Ireland in marking the signing of the Ulster covenant, the Irish Government are supporting work by the Orange Order in the south to mark that event and to collate the history of those communities.
David Simpson (Upper Bann) (DUP): Does the hon. Lady agree that although the anniversaries or centenaries in Northern Ireland—and, of course, the Republic of Ireland—are important to both sections of the community, it is important that this matter is not left to the devolved Administration and that our national Parliament should also get involved?
Naomi Long: I agree entirely. One reason why I sought this debate is my belief that both Governments need to be involved in structuring the commemorations, as both Governments were heavily involved in the original events.
The transformative power of respectful commemoration based on inclusion and cultural diversity is also reflected in the preparatory work by the Northern Ireland Community Relations Council and the Heritage Lottery Fund. In developing their guidance notes for funding bodies, called “Remembering The Future”, they have stated in relation to the forthcoming centenaries:
“How these and others are marked in public as opposed to private space will chart the progress this society is making on its journey out of conflict. These anniversaries need not be mutually exclusive; indeed, if the commemorations are handled sensitively, they will provide an opportunity to underline how much of our history is shared.”
It is that potential that I want to explore in the remainder of the time available to me.
Given the huge improvements in east-west relations during my lifetime—marked most notably by Her Majesty the Queen’s recent state visit to Ireland, hosted by former President Mary McAleese—the decade ahead is an important opportunity to build on that established good will and progress and to enhance further the relations between the UK and Ireland. In doing so, it can make a tangible contribution to cohesion, sharing and integration in Northern Ireland. The success of that historic royal visit also teaches us important lessons
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about how to maximise the benefit of these unique opportunities when they present themselves. Such events are not spontaneous, but require a mix of detailed planning, careful management, sensitive choreography and strong political leadership.
The same is true of the upcoming commemorations, so I am pleased that the Taoiseach, despite all the other challenges facing Ireland, is establishing a commemorations committee to oversee his Department’s work, and that an all-party Oireachtas consultation group on commemoration has been established, which is being chaired by Jimmy Deenihan TD, who is Minister for Arts, Heritage and the Gaeltacht. I trust that that will provide a good basis for close east-west and north-south engagement. Today gives us an opportunity to probe the preparations being made by the UK Government ahead of the commencement of the upcoming decade next year.
Dr William McCrea (South Antrim) (DUP): Does the hon. Lady agree that with everyone participating in the preparations for these centenaries, it is vital that no one tries to rewrite the history of the United Kingdom or Ireland?
Naomi Long: I agree. I assume that the hon. Gentleman has sneaked a little peek at my speech, because I am about to move on to historical rigour.
Working together, the British and Irish Governments, along with the Northern Ireland Assembly, local councils and other interested groups, all of which are planning for the upcoming period to varying degrees, can set the tone for how events are marked and ensure that certain principles apply. Those principles include placing events in an inclusive and shared framework and looking to the wider history and context of the time in these islands and across Europe, rather than allowing celebrations to fragment into a series of, at best, exclusive and, at worst, divisive, events marking each centenary.
That spirit of inclusion must be matched with historical rigour. While there is still no shared or agreed narrative about many of the events, and while many myths continue to endure, there is a set of agreed historical facts, which should be the starting point for exploring different perceptions and interpretations of history. It is also crucial that we consider not just individual events in isolation, but their consequences, if we are to develop a deeper understanding of the period and our interrelated history. Much good work has been done already, and the Minister will be able to set out in his response the work that the UK Government have done in preparation for the coming period.
Time does not permit me to reference all the ongoing work, but I want to flag up Belfast city council’s commemorations working group. This cross-party group has developed a plan that, rather than focusing on individual events, has framed a programme divided into three chronological periods. The first, entitled “Shared History, Differing Allegiances”, covers 1912 to 1914. The second, which covers 1914 to 1918, includes world war one, the Somme and the Easter rising. The third will cover the events surrounding the partition of Ireland. That thoughtful approach to the civic commemoration of those events is a good example of cross-party working, and other work can be based on it.
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Clearly, many of these events are significant beyond Northern Ireland, having both a national and international context. They will therefore be marked not only in Northern Ireland, but throughout these islands. The co-ordination of approaches will therefore be crucial if we are to maximise the opportunity not only to build good relations, but to capitalise on the upcoming period’s heritage and cultural tourism potential.
Northern Ireland has a competitive advantage because of the international interest in Ireland and the UK generally, including in its varied culture and history. It also has a strong creative industries and arts sector, and that shared asset is well placed to develop inclusive, high-quality cultural engagement and products around these historic events.
More broadly, Northern Ireland’s attractiveness as a general tourism destination has been boosted significantly by the positive publicity generated by a number of international events—including, most recently, the MTV awards in Belfast. National Geographic Traveller has listed the city as one of the top places to visit in 2012. That accolade comes on the back of TripAdvisor listing Belfast as the best-value UK city break, Lonely Planet encouraging people to visit the city before the rest of the world does and the Financial Times listing it as one of the top 10 places in the world to hold a conference or major event.
The recommendation by National Geographic Traveller reflects the 2012 Titanic centenary. The story of the Titanic creates an almost unrivalled international draw for Belfast, and particularly for my constituency, where so much of the authentic physical heritage linked to the construction of the Titanic is located, and where the construction of the Titanic Signature project is also making rapid progress. The year 2013 will see Derry/Londonderry assume the mantle of UK city of culture, and Northern Ireland will host the World Police and Fire games, which will, again, add to the tourism opportunities for Northern Ireland.
Co-ordination of the commemoration activity throughout these islands, and close collaboration between tourist boards, the arts sector, business and civil society will be necessary to ensure that the cultural, heritage, tourism and related economic benefits of the coming period are maximised and that the tourism legacy created continues to contribute to economic growth beyond the immediate decade.
The coming decade therefore presents us with both a challenge and an opportunity. It will not be easy, and the issues that are raised cut to the core of current divisions, but it would send a very positive message and mark real political progress if a mature, agreed way forward on sensitive issues could be found in Northern Ireland and between the UK and Ireland.
These events present us with an opportunity to move beyond the divisive historical legacy of the period marked by these centenaries and to deliver a watershed transition to a new era of shared history, where the focus shifts increasingly towards healing divisions, building cohesion and addressing our joint economic challenges.
We can respectfully and sensitively mark our shared history but refuse to be held captive by it. That aspiration can be advanced. The UK and Irish Governments have a role to play in that process. The east-west dimension
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was crucial to the history of the period we are talking about, and it remains important to exploring and commemorating it successfully in the years ahead.
I am grateful to have had an opportunity to raise this matter in Westminster and for the participation of other Northern Ireland MPs in the debate. I look forward to the Minister of State’s response, as I know from my discussions with him and the Secretary of State that the Northern Ireland Office is keen to make progress with others on this decade of positive change.
11.15 am
The Minister of State, Northern Ireland Office (Mr Hugo Swire): I thank the hon. Member for Belfast East (Naomi Long) for her opening speech and congratulate her on securing a debate on this important issue. It will not come as a great surprise that I agree with much of what she said and with the responsible and interesting contributions of all other Members.
We all have different interpretations of history. Too often in Northern Ireland, the celebration of the past has been a cause of division. Respectfully, I submit a challenge to all those with any influence. The biggest challenge with these anniversaries is to recognise the past in a manner that does not cause hurt and does not offend, but that seeks, at least in some small way, to bring people together.
We approach a decade that will witness many important anniversaries, including the centenaries of the Ulster covenant, the battle of the Somme, the Easter rising and the Government of Ireland Act 1920. Each of those events will evoke different images and represent different understandings of our past; that is the reality. However, this decade also affords us an opportunity to come together in a spirit of mutual respect. That is possible; we need look no further than Her Majesty the Queen’s ground-breaking visit to the Republic of Ireland in May. Many people thought that a bridge could not be built over the painful events of the past and the different interpretations of history, but they were wrong. The key is to learn from the past and, as Her Majesty put it,
“to bow to the past, but not be bound by it.”
For too long, we have concentrated on our differences as we have sought to acknowledge our history. Yet, if we look at the past, we can see strong evidence of a shared history. Sir Edward Carson, the first person to sign the Ulster covenant, was born in Dublin and educated at Trinity college. James Connolly, who took such a central part in the Easter rising, was born in Edinburgh and served in the British Army for seven years. Willie Redmond, whose brother John was an Irish nationalist leader, died fighting in the first world war at Messines, in Belgium, and I visited his grave there in June. All this shared history has often been kept quiet by those who seek to emphasise differences and divisions.
For our part, the Government feel that some form of recognition is important. My hon. Friend the Member for South West Wiltshire (Dr Murrison) was recently appointed as the Prime Minister’s special representative to co-ordinate events to mark the centenary of the first world war. Those events will, of course, have particular resonance in Northern Ireland and, indeed, in the Republic of Ireland, given that people from both traditions fought and died alongside one another in the face of a greater oppression.
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One hundred years ago, this Parliament witnessed important events that were to shape the lives of future generations, and we are exploring options for marking them in some small way. That is being done in consultation with the Irish Government and all interested parties. To use Her Majesty’s words in Dublin, this will be done in a manner that emphasises the importance of forbearance and conciliation.
Although the UK and Irish Governments must play a significant role in ensuring that we approach this decade in a constructive and complementary manner, the greatest challenge will lie in ensuring that that approach is adopted in Northern Ireland. It is there that the Executive and the mainstream political parties must take the lead in ensuring that those who would seek to undermine the political process do not have the opportunity to do so. Those people oppose forbearance and conciliation and will try to use important anniversaries to further their own regressive agenda. They are the same people who in 2011 try to recreate the worst parts of our history. They do not want to commemorate loss and suffering; they want to create it. They do not want to recognise battles fought 100 years ago; they want to fight them all over again. Those people thrive on the suspicion and mistrust that can come from our different interpretations of history. They should not be allowed to hijack history to suit their own narrow and biased agendas.
As we approach important anniversaries, the greatest weapon we have against those people is tolerance and understanding: tolerance for different but equally valid perspectives on past events and understanding that celebration of those events may offend those with a different perspective. As I stated at the beginning of my speech, I respectfully submit that challenge to all those with influence. It needs real leadership, and we are not
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short of leadership and courage in Northern Ireland. We are where we are today thanks to the leadership and courage of many brave people. We cannot change history, but we can change how we deal with it and we can do all that we can to ensure that the commemoration or marking of significant events brings people closer together, rather than driving them further apart.
As we move towards a decade of anniversaries, we should think more of commemoration and less of celebration; more of recognition and less of triumphalism—
Dr McCrea: While we are in the midst of the Government’s preparation for the centenaries, is it not also correct that Northern Ireland should be a vital part of next year’s excellent celebrations for Her Majesty’s diamond jubilee?
Mr Swire: I imagine that Her Majesty would want to visit all parts of the United Kingdom in her jubilee year and equally that all parts of the United Kingdom would want to receive Her Majesty and recognise the extraordinary work that she has done on behalf of the nation throughout her rule. The hon. Gentleman will, as a musician, know how dangerous it is to interrupt someone who is reaching his peroration, so if he will forgive me, I shall step back a bit, to try to get back in the mood that I was in before he interrupted me.
As we move towards a decade of anniversaries, we should think more of commemoration and less of celebration; more of recognition and less of triumphalism; and more of mutual understanding and less of mutual mistrust. Our language should be temperate; our ambition should be to educate; and our objective should be to bring people together.
11.23 am
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Pension Plan Charges
[Mr Roger Gale in the Chair]
2.30 pm
Brandon Lewis (Great Yarmouth) (Con): It is a pleasure to serve under your chairmanship this afternoon, Mr Gale. I declare an interest: I have a pension myself, and I draw Members’ attention to the Register of Members’ Financial Interests, as I have an interest in a company that has a pension scheme.
“Annual management charge”, “reduction in yield” and references to “bid/offer spread” are just a few of the descriptions that can be attached to our pension pots. When our annual pension statement arrives, do any of us study it in great detail, or do we just glance at it before scratching our heads and filing it away?
I imagine that most consumers feel confused when they see phrases such as “annual management charge”, “reduction in yield” and “bid/offer spread”. A natural reaction is to assume that pension companies and fund managers understand it all and know what is best for us. Many, however, feel that the information is important, but do not understand why that is so, or what it means, particularly, for their final pension pot. That is why the pensions industry and the financial media will carefully watch our deliberations today. Perhaps the complexity of the issue means that many people are unable to understand and see the purpose of it, or why it matters so much. That may well be an indication of why Members are present today.
It is right for there to be constant demands for transparency about pension fund investments, as the hon. Member for Dagenham and Rainham (Jon Cruddas) highlighted in an Adjournment debate last year, and transparency about pension charges should be no different. It is easy for us, as politicians, to exhort that everyone should save for retirement—they are easy words. We want people to do that to be able to provide for themselves when they are older. In Government, it is easy and clear, with our experts to advise us, to see why that matters and why money put away when we are young matters more as we get older. The biggest challenge for the Government and the pensions industry is to overcome consumers’ attitude towards pensions—only half of working adults between the ages of 20 and 64 are currently saving for retirement.
Although the biggest reason given by consumers for the lack of saving is their inability to afford the contributions required to build a pension pot, there are other interesting underlying problems. A quarter of respondents in a study by the National Association of Pension Funds stated that they did not trust the pensions industry. Other surveys indicate that 80% of people want greater transparency about how pensions operate and what they cost. Although research conducted by a pension provider, Aviva, suggests that only 2% of people cite charges as the single prohibitive factor preventing them from investing in a pension, the proportion rises to a worryingly staggering 20% for the under-24 age group.
Can we assume that the lack of transparency about pension charges, alongside a misunderstanding about the system of charges, is a fundamental problem holding back a wider retirement savings culture? If so, it is
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particularly pronounced among the lowest age groups and lowest earners. We need to target the transparency at the new generation of workers, whom we need to get saving as soon as they enter the workplace.
My position in today’s debate is not to focus or comment either way on the level of charges; it is for the companies that provide pensions and advice on pensions to argue why their charges are at a particular level when the charges of others are at another. The point of today’s debate is to highlight the need to be able to compare and understand charges and costs.
Mr Gregory Campbell (East Londonderry) (DUP): I congratulate the hon. Gentleman on securing the debate. Regarding the lack of transparency about charges, we sometimes see what I believe to be helpful information in the financial press. We should push companies to ensure that they provide information on the impact that those charges will have, year on year, on the final pension received by a payee.
The point that needs to be clarified is the effect that charges will have at the age a person retires—60, 65 or 68; it is not just about making sure that the charges are transparent. Surely, if the ongoing and year-on-year impact of those charges were transparent, there would be a huge impact on a person’s choice of company.
Brandon Lewis: The hon. Gentleman makes a good point, and I will touch on it later. I fully agree that one of the issues that people do not understand is that a figure that seems small now can have a huge impact on how a pension pays out later on—up to 25%, as I will touch on later. The hon. Gentleman is absolutely right. That is exactly the clarity and understanding that we need.
Provident Financial’s clients are low earners, who often borrow just £100 or less to get through to the end of the month. The company told me recently that the issue for many of them is not so much about whether they can save. They may be able to save only a small amount; I know that the Minister appreciates that, because we have had a conversation about it. In some cases, it could even be just a few pounds a week or month. However, all that money can add up to mean something later.
The hurdle that those customers find is psychological. The company said to me that people who are on the lowest incomes understand and learn how to manage their money and how to get their family through a week or a month. Within that, they will still do certain things—£1 or £2 a week on sweets for the children, or something like that. What they do not do is trust an unnamed and unknown big organisation with some of their money, because it is complicated and there is no face to it. That is why they use organisations such as Provident Financial rather than high street banks.
By dealing with the issue of transparency, we may well be able to break through that psychological barrier and get more people saving. If the industry is clearer and puts things across more simply, it will instil more confidence in the customers that it is looking to pick up. I will return to that with a clear example in a moment.
The system is complex. People’s underlying attitude is unsurprising, given that we have such a diverse and complex pensions industry, with a wide range of schemes
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and options alongside an array of different regulatory regimes. A wide range of items may be included in pension charges—and alas, with no clear industry standard at the moment, providers often differ on what is included. Just to name a few, any or all the following may be included: product management, communications, services, administration, regulatory requirements, some investment management and, possibly, the cost of providing advice. How can any consumer find an easy way to compare like with like when there is such a range of options and figures printed on a statement? It is simply not possible.
Jim Shannon (Strangford) (DUP): I, too, congratulate the hon. Gentleman on bringing the matter to the House today. We need clarity about hidden charges—charges that people do not know are being made and which are removed from people’s funding regularly—and about sales commission. There are often hidden charges before someone can leave a scheme.
There is also excessive trading in respect of those who are trying to keep on top of the portfolio; there is a charge every time that happens, and customers do not know that. There are a lot of hidden charges that customers do not know about. Does the hon. Gentleman think that such charges should be made known to the pension holder, so that they are aware of the costs involved?
Brandon Lewis: It is absolutely right that as much as possible should be transparent—potentially, everything should be as transparent as possible. The hon. Gentleman is right. As I will come on to say, people do not necessarily understand that when they come out of certain schemes or change jobs, the potential cost to them can as much as double. The costs are effectively hidden, because they are not clear or transparent at the time of entry, let alone of exit. That is why we need regular transparency. I will touch on that further in a moment.
It does not seem possible to find an easy way of comparing like with like. Just last week, the Work and Pensions Committee was taking evidence on pensions and it became very clear from looking at different operations that there are major variations in style between companies. What highlighted the issue of transparency for me more than anything was the fact that one company said that the simplicity and transparency of its charges is its single biggest marketing advantage. If Members will bear with me, I will read a short quote from that session. Adrian Boulding of Legal & General, which I congratulate for having this kind of transparent operation, said to the Committee:
“We compete on price in the market place and we are able to do that because we have invested heavily in technology. If I look at pension schemes that we have sold this year, they have all been sold within a price range of 0.3% at the bottom to 0.8% at the top. 90% of them have been sold at 0.5% or less.”
Again, that is a range of figures that many people will struggle to understand. However, Mr Boulding went on to say:
“One of the particular features of our pitch to the market is that we charge just a single charge for the scheme, whereas some providers now want to charge £1.50 in addition to a fund management charge. NEST charges a contribution charged at 1.8% in addition to a fund management charge. Some insurance companies charge
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higher fund management charges when people leave the scheme. We charge a simple, straight fund management charge and it is the same for all members whether they are in the scheme or whether they have left, and there is only the one charge. We find that gives us an edge in the market place.”
It was interesting that a company specifically said that the simplicity of its charging—it only has a single charge—was its marketing edge.
What is included in the charge element of a pension fund varies, but the inconsistency in how charges are communicated is an additional complicating factor. In fact, the wide range of approaches is needlessly complicated. Some pensions are regulated by the Financial Services Authority and require an illustration of the effects of charges. Other pensions, mainly those that are trust-based, have no requirement for such disclosure. The stakeholder pensions were introduced in 2001 and I credit the previous Government for introducing something that provided some simplicity and clarity. Stakeholder pensions require disclosure of individual deductions.
The lack of comprehensive and consistent information prevents effective monitoring by the FSA, the pensions regulator, and, potentially, by the Department of Work and Pensions itself. We risk creating a regulatory black hole if we fail to create a clear communications framework. That is why there is also a need to specify which regulator covers which area and to define regulators’ powers to avoid market confusion over which regulator covers which issue—let alone confusion among consumers or among the employers that are implementing a scheme.
The approach taken by different pension providers and schemes also varies widely, as the National Association of Pension Funds has helpfully highlighted. Some providers quote an annual management charge as a percentage; others illustrate the effect in cash terms. Some present information in a personalised form, where charges are illustrated in a very varied way over different periods, whereas others provide information with a generic example. In some cases, the information is prominent, but in others it can be hard to find. In some cases, there are even charges for different parts of the process—for example, fund management prices can be shown separately.
We should compare the pensions sector with the banking sector, in which statements now clearly show what bank charges are on a weekly or monthly basis. The example of the banking sector is certainly one that the pensions sector should look at.
There is also financial jargon, which is unhelpful in any industry. If the range of charges and the communications about those charges are inconsistent, a pensions fog is created, and the impenetrable financial jargon that consumers must navigate has created a further consumer whiteout. In fact, I have used much of that jargon in my opening remarks today. I want to illustrate that point by giving two real-life examples, courtesy of the National Association of Pension Funds. They highlight how difficult it is for any consumer or business to understand what they are taking on with pensions. The first example is taken from a handbook provided to employees on a trust-based scheme. The handbook says:
“The manager’s charges differ according to the type of fund. The charges are made within the fund and are reflected in the price of fund units. With some funds, two unit prices are shown - the “bid” price, at which units are sold, and the “offer” price, at
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which units are bought; the difference - the “bid/offer spread” - reflects the manager’s dealing costs. The bid/offer spread on these funds vary.”
Then there is an impenetrable table listing six funds, showing for each one:
“a percentage annual charge on fund and a percentage bid/offer spread”.
Just looking around the Chamber now, I can see that Members are already somewhat glazing over with the difficulty of trying to understand what we ask ordinary people to understand in their daily lives.
Richard Graham (Gloucester) (Con): I congratulate my hon. Friend on securing this debate on a really important topic and on building a strong case for transparency and clear communications. Does he think that the example that he has just given proves the point that Einstein used to make when he said, “If you can’t explain something to your grandmother, you probably don’t really understand it”?
Brandon Lewis: My hon. Friend has just summed things up with exactly the sort of clarity that we need in pensions charges, and I agree entirely with him.
Let me further enhance that point by giving another example, which is from a different type of scheme: a contract-based scheme. The quotation comes from a block of text headed “Additional expenses” that goes into a pension fund member’s handbook:
“Additional expenses such as trustees’, registrars’, auditors’ and regulators’ fees may be deducted from some investment-linked funds. In addition, where the [name of insurer] investment-linked fund links to a Fund of Funds (a fund that holds other underlying funds as its investments) the additional expenses may also include the cost of managing the underlying funds. Where these expenses arise within the fund they have been taken into account in the calculation of the unit price. Details of the Annual Management Charge and any Additional Expenses can be obtained from your [insurance company] Pension Pack.”
I assure Members that that is not an excerpt from a Monty Python sketch. It is, however, what people are having to deal with, and it is absolutely no wonder that consumers are confused and indeed suspicious of pensions when they are presented with information in such an opaque, complicated and almost incomprehensible fashion.
As I have already mentioned, many other financial products—such as mortgages and loans—now present information in a much clearer way, generally as a result of consumer pressure. I hope that similar consumer pressure will be brought to bear on the pensions industry.
It is rare for pension providers or schemes to show the actual cash amount of charges on an individual statement. Surely that would be the clearest way to provide vital information that the majority of people can understand. It is time to move away from a too long and too complicated explanation of charges towards greater clarity and understanding.
I have experience of being responsible for a company’s pension scheme. In that scheme, people had to contribute nothing themselves but they were given money by the company to enter the scheme. That money did not come from their salaries; it was money over and above their salaries. However, on far too many occasions, even educated people with degrees turned the scheme down. When we asked advisers why that happened, we heard on a number of occasions that it was because people
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simply do not trust the forms or the companies, and they do not want to get into filling in forms and giving things away. They do not understand that, as in the case of my former company’s pension scheme, it is about effectively trying to give them money; they still turn the money down. The system is so complicated that it puts people off, even people who are highly educated.
The problems that the system creates and the benefits of reforming it are what I will turn to next. The introduction of auto-enrolment next year will see between 10 million and 11 million extra employees being given access to a workplace pension. The Government’s aim is the provision of low-cost pension options for savers, yet consumers’ suspicion or wariness of pensions means that there is a risk of a high opt-out rate, which is something that we all obviously want to avoid. We must avoid exacerbating the problem because charges and their structure are difficult for people to understand.
Small businesses particularly face that problem. The complexity of schemes for businesses to choose from could risk disengagement by employers. At this point, I must congratulate the Federation of Small Businesses on considering establishing its own pension scheme. It understands that there is an onus on companies, particularly small and medium-sized enterprises, to do something. However, those SMEs are not only worried about the potential cost of auto-enrolment; in many cases, they see their staff as being part of a family. They care about their staff and want to provide the best for them, so they will want to ensure that they are making the best offer, the best investment and the best decision for their staff. They do not necessarily have the time to become involved with a range of pension providers but they know and trust the FSB, because they are members of it, so the idea that the FSB itself should have a brand of pension for SMEs to be part of makes a lot of sense.
For many businesses, independent financial advice will be unaffordable and, as I have just said, they will not have the time or expertise to cut through what can be a dense, even impenetrable, amount of financial information. Transparency can lead to better decision making on behalf of employees.
Much of our discussion today is about the information provided when someone joins a scheme, yet there is often scant information about what happens once they are involved in a scheme, as has already been touched on by Members. The lack of comprehensive information does nothing to reassure consumers, and it means that funds are under no pressure to demonstrate value for money and that much further down the line people can be in for a shock when they see where their pension stands, because of the charges. I agree with the sentiment expressed by Aviva, which said that focusing entirely on charges might be
“counterproductive and risks deterring a generation of new savers.”
In terms of what those charges are, I think that Aviva is right, and in terms of making sure that the charges are understandable, we still have an important job to do.
We need to see that charges provide value for money and flexibility, and to do that we need to see what the charges are in a way we can all understand. We need to see whether members can receive value for money if a charge is very low, because the very best pension fund operators might not see that as a viable option for their involvement. Although I want to see the lowest possible
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charges for consumers, to encourage as many of them as possible to invest and have the best return on their money, we also must ensure that they and their employers receive adequate and proper advice, otherwise it might be that only higher-end earners will get the advice they need and want—and, indeed, pay for. There needs to be an industry culture of charges reflecting the cost and value of the services provided, but providers must continue to find ways to offer better value for money, which means finding additional efficiencies, using new technologies as Legal & General has outlined, and improving processes.
I believe that providing clear financial information using a pounds and pence principle will exert sideways pressure on schemes to maximise value for money. Showing consumers and employers what the bottom line in charges is allows them more easily to compare schemes. With a whole range of products, whether it is high street banking and its charges or anything else we want to buy, we are generally able to go out into the marketplace and find an easy way to compare like with like, and decide if we want to invest in a more expensive or a lower-cost product. If we are looking for the latter, we can see the range of offers from various companies, understand them and make an informed decision about where to invest and what to purchase. With pensions, it is extremely difficult to find like-for-like offers, and when employers have a range of things to do, including running their businesses, this is one more thing that we must make simpler for them.
I have thus far focused on companies, and on information being given to companies that run schemes, but we must not forget the wide range of people out there who have personal pension schemes. There are people at the higher end who can pay advisers whom they trust to make the best decisions, but there are other consumers who have gone to the trouble of taking out their own pensions who are not necessarily at the highest end and able to pay high-value advisers. Nevertheless, they need good pensions, and they need to have faith in them and understand them. We need clarity and transparency so that end-users—consumers—can see what the cost of their pension is when they get their statement, not just when they first enter a scheme but potentially on an annual basis.
I want to turn to what the Government can do. What options are available to Ministers to create a new culture of charge transparency? I argue for a very light-touch approach from the Government. Their role in this transformation should be to guide, encourage and motivate the process, and resorting to regulation or further legislation must be a final option. The introduction of auto-enrolment will mean that the national employment savings trust will become the default option for many. Although we should welcome NEST’s role in pension provision, we must also remember that it is just another provider, and is neither designed nor suitable for everyone. I hope that its existence will assist in driving down charges across the sector, but its own charging structure is not a simple model and I am interested in the Minister’s view on how we can move that forward.
I hope that, even though NEST provides a low-cost option, Ministers will press for greater transparency across the sector, so that there will be benefits of transparency also for people for whom NEST is not the most suitable option. NEST will not necessarily attract
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higher earners or employees who require a larger choice of investment funds and greater contribution levels, but those people equally need greater charge clarity. NEST will not pick up many seasonal workers or low earners who fall below the threshold, many of whom could be women who work part-time due to child care issues, and we must do more to simplify and open up the system to give them an option to save, if only a few pounds each week. The system needs simplicity and clarity if it is to have a chance of encouraging a wider range of people to come into saving.
I am interested to hear from the Minister how he thinks the Government can encourage transparency, how he thinks charges can be set out clearly and in terms readily understood by savers, and whether he believes, as I do, that this approach should apply equally to contract-based and trust-based pensions, where there are currently no requirements for charges to be disclosed to savers. Will he also outline how his Department plans to provide guidance to consumers and employers ahead of the introduction of auto-enrolment? It is important that we take every opportunity to raise this issue and to clarify the matter.
Employers have a crucial role. They must be fully aware of the costs and charges associated with the workplace schemes for which they will effectively be responsible for their employees. In evidence to the Work and Pensions Committee last week, it was indicated that the code of practice, at least in the first period, will be aimed at giving clarity of evidence and information to employers, so that they can make decisions about the scheme for their staff, rather than directly to the end-user or consumer, and in the long term that will not be enough. We need the clarity and transparency to go right through to the end client. Legal & General has managed it, and we need to ensure that we get it across the sector. Will the Minister also comment on the suggestion by Which? that pensions should be benchmarked against NEST to assure value for money?
Several organisations, including Which?, have expressed concern about active member discounts, which are schemes that have a low charge for people who are actively contributing but in which the charge increases, often significantly, once someone moves job or goes on maternity or paternity leave. That issue was touched on in an intervention earlier. I have heard it expressed that this is more of an inactive member penalty, and should be seen as such. It is potentially one of the biggest issues facing pension costs, and it should be addressed. Again, it can particularly affect women who take a break from work due to child care issues, and low earners who can be out of work for periods of time.
I am particularly concerned about the increase in charges levied by some insurance companies for people who change jobs, and transparency can help to deal with that as well. Which? research has found that some companies have an annual management charge of between 0.5% and 0.7% for active members, but that once someone leaves a company the charge can double. Such high charges could have a big impact on the pension received by the consumer at the end of the scheme, with their pension potentially reduced by up to 25%.
Although I would like to see a commitment from the Government to clarify the governance and regulation of charges, I have mentioned the desirability of a light-touch approach from Government and the impetus for change
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must come from the industry. The National Association of Pension Funds has taken the lead in responding to the challenge to simplify the communication of charges. Earlier this autumn, it initiated an industry-wide discussion on the preparation of a voluntary code of practice on transparency of fees and charges, which resulted in the establishment of a working group to pursue that goal. I believe that only this morning the working group met to discuss how charges will be presented to employers in future, and I look forward to hearing about that discussion in greater detail.
That is exactly the responsible industry-led attitude that Minsters will be, and I am sure are, encouraging, and I hope that both Her Majesty’s Treasury and the Department for Work and Pensions are able to play an active role in the process. The heavy hand of further statutory regulation or additional legislation should be pursued only if this process fails or proves unsatisfactory. I hope that a new code of practice is agreed and adopted across the pensions sector by next spring, ahead of the introduction of auto-enrolment later in the year, but we must ensure that we are able to move gradually and, potentially, as quickly as possible to ensure that the clarity that is needed and that the industry is now working on developing can be provided not just to employers operating schemes but to end-users.
Although that step initiated by the industry and the NAPF is very good news, it is not the total solution. For that we need simplicity in the statements, to give clear figures to pension holders of the cost of their pensions on an ongoing basis, going right through to the end client and not just to the employer running a scheme. For consumers, employers and the pension industry itself it is vital that the Government clarify the existing regulation of charges and encourage that transparency. Failure to do so will risk a return to the mis-selling scandals of recent decades and a drain on the new auto-enrolment scheme as employees opt out of the scheme chosen on their behalf. Most importantly, it will risk a massive loss of consumer confidence, jeopardising the radical reform necessary to secure the future retirement of millions.
Across Departments and local government, we have found that the transparency agenda has had a cleansing action. Costs have been cut, people are more aware of what is going on and confidence can be rebuilt. It is the most cleansing initiative before us today, and Government have taken that on board. I argue that the pension industry should also take transparency on board as a way to clarify the issue to restore, rebuild and develop confidence in the pension industry, so that people will save more to provide for their future when they retire.
3 pm
Jenny Willott (Cardiff Central) (LD): I congratulate the hon. Member for Great Yarmouth (Brandon Lewis) on his comprehensive speech, which covered a wide range of issues. I think that we would all agree that transparency is generally a good thing, and he gave lots of good reasons why, including some apposite examples of the problems created by lack of transparency, which we have probably all experienced.
Following on from the points that the hon. Gentleman raised, I have a couple of issues to highlight. Transparency in itself is not necessarily enough. He mentioned the introduction of auto-enrolment and the fact that across
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the House, we all want more people to save and we want auto-enrolment to be a success. Part of that will involve transparency, ease of use and so on, but there are also financial implications. People’s take-home pay will be reduced at a time of difficult economic circumstances. We must overcome that and encourage people to understand that it is good to save for retirement. As he said, in some cases, free money is being offered to employees, yet they still do not take up the pension.
We need to overcome that significant hurdle in British society and get people to think more seriously about long-term saving. Part of that involves financial literacy and education. A lot of the problem is that people do not understand what they need to do, and as the hon. Gentleman said, they are bamboozled by a lot of the information that they receive. I am concerned that even with transparency about charges, which I support, people will still be confused if they do not understand what they are looking at. Many people do not understand compound interest or the compounding effect of charges; 0.8% sounds extremely small, but over the lifetime of a pension, it can be a significant amount of money. People simply do not understand what they are looking at. He is right that there might be many ways to present the information to make it more useful and practical in making a decision, but we must also ensure that people know what they are looking at and understand how it relates to the choices before them.
It is not just transparency of charges that is important but transparency about the range of different products from which people can choose and how their individual characteristics should inform the choice that they make. For example, as the hon. Gentleman said, are they male or female? Are they likely to take maternity leave or a career break? Are they self-employed, which might cause their income to rise and fall? Do they have a shorter life expectancy, for any one of various reasons? All those things affect what products are most appropriate. More transparency and more information are needed, so that people can make well-informed decisions about the best products for them.
We must also ensure that people are aware of the risks associated with different products, including charges and investment risk. Investment risk is often not explained properly, so people are not really aware of what they are signing up to. I have a couple of different random pensions—very small pots—from previous employment, as probably a lot of people my age do. I am not saving in them any more, but I get an annual statement telling me that I have lost a huge amount of money over the past year because the stock market has gone down.
Such information will not encourage people to save unless it is put in context and they understand the bigger picture and their long-term goal. We must ensure that it is put in context and that people understand all the different elements. A lot of that will involve education in schools to give people much better financial literacy at a much earlier age. A whole generation of people are going into employment who do not really understand anything to do with pensions, savings, debt, credit cards and so on. We must do much better. A lot of good work is going on in schools, but we must ensure that that is done as well as improving transparency, so that people know what they are looking at when they get better information.
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I would like more transparency about the investment side of pensions, as that might encourage people to save. Foreign pension funds have been investing heavily in UK infrastructure during the past couple of years, but so far UK pension funds have not done the same. Moves are afoot to encourage them to do so, but a number of UK pension funds invest in less ethical concerns such as extraction industries, weapons manufacture and so on. That has an impact on people’s choices about whether to save and which company to save with.
If we had transparency about where money was invested, fund managers would have to provide more information, so that people could see where their money was being invested and possibly move it around, thus making better use of their consumer power to encourage fund managers to invest where people want them to invest. That could encourage more people to save, particularly young people. I have many students in my constituency. For a lot of young people, ethical investment is a big issue. If they are to sacrifice some of their salary and tie it up for many decades to come, they want to know that that money will be used for good while it is invested by other companies. Better transparency would let people know where their money is, so that they can see what is being achieved with the investment of the money that they are saving. That would encourage more people to save as well.
We must be careful not to make the situation worse. One reason why annual statements are so complicated is that there is an awful lot of regulation about what information must be provided. When people get the annual statement for their private pension, stakeholder pension or whatever, they get a huge pile of bumf that goes with it, including lots of models showing how much they will get if they retire at 65 and what will happen if they carry on saving at this rate or if the market goes to this or that level. It is all useful information, designed to help people be better informed, but it switches many people off because there is too much detail. In theory, it is helpful, but actually, it can be counterproductive.
I agree completely with the hon. Member for Great Yarmouth that we must be careful about light-touch regulation. We must not be too prescriptive and must not just lay on more regulation, saying that more information must be provided, making the situation worse. We all want people to be able to see what they are investing in and to save more for the future. We need transparency to make that happen, but it should be done proportionately, assist people to see what they are investing in and encourage them to put money aside.
3.8 pm
David Mowat (Warrington South) (Con): I, too, congratulate my hon. Friend the Member for Great Yarmouth (Brandon Lewis) on leading the charge. During his remarks, he distinguished between the need for transparency and the absolute cost. I contend—I will talk a bit about the absolute cost—that there has been a market failure in the UK pensions industry over the past two decades. That market failure is having a significant impact on the private sector propensity to save. Fewer than half of people working in the private sector now contribute to a pension fund. Transparency and cost are symptoms of the market failure.
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To give some numbers, the Financial Services Authority estimated this month that some 31% of private sector pension pots go to fees. That is not surprising, because fees are, roughly speaking, 1.5% to 2%. Most pension funds aim for retail prices index plus 3.5% to 4%, so 50% of the real return is budgeted to go in fees. When things are difficult, as they have been over the past couple of years, the reality is that the figures are much worse, and absolute returns fall.
The real issue is that the private pensions industry is massively subsidised, and it would be hard to find an industry in the UK that is subsidised to the same extent. The Government pays something in the order of £40 billion a year into the industry to keep it going in the way that it has come to expect.
As I said, we have a chronic market failure, which has a number of unpleasant consequences, and I want to explore a little how that market failure has arisen. Principally, it is an issue of complexity; we have complete asymmetry of information between pension fund users and the funds themselves, and my hon. Friend gave a number of the excellent examples.
The consequence is that a whole industry of financial advisers has grown up to act as an intermediary between these complex pension funds and the average employee or punter. The difficulty, of course, is that the commission structure that was put in place has seriously compromised financial advisers’ independence. I congratulate the previous Government on what they did on the retail distribution review, and I hope this Government will push forward quickly to introduce it, because it is one of the things that must happen.
This market failure has also been caused by barriers to entry, which are a classic reason for market failure. Funds can charge fees of 1.5%, 2% or more in some cases because new entrants are not coming into the market with the velocity that we would expect. That, too, is to do with the industry’s structure, and it is for the Government to encourage changes. When I was reflecting on the debate this morning, I looked at one platform and found 5,000 funds were available to me. They were provided by something like 45 different suppliers. The industry has not consolidated, because it has not been forced to and it is not subject to commercial pressure. The consequence is that fees have been too high, with all that that means for the private sector take-up of schemes.
At the heart of this issue is a lack of transparency. Transparency can mean different things at different times, but there is a lack of understanding and comparability. Let me mention a number of the different charges that I know of, although there may be many others. There are annual charges, entrance charges and exit charges. A new one, which a number of companies are using, relates to churn. The average pension fund—this is an extraordinary statistic—has a churn rate of 128%, which means that it turns over the equities that it invests in by 128% in one year. That generates charges and income, and all that goes with that. Warren Buffett advises people to spend 10 to 15 years in an equity, and it is not clear why pension funds are churning to the extent they are, unless that is to generate revenue for themselves.
There is the new platform charge, but I will not go into that, given the time. I have not even talked about the way the charge structure for annuities works or the
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degree to which annuity advice is independent. The new super-charge has also come in. Companies are trying to get this trailing charge through before the RDR comes in, which is why we need to push ahead with it. Advisers are signed up for a trailing fee for many years into the future on the basis that they continue to have some kind of contact with the punter, even though about 50% or 60% of them never see the punter again. It is very difficult to bring transparency into such a charging structure and to provide for comparability, but we must try.
What are the consequences of this market failure? We can look at that in three ways: the consequences for the industry, the punter and the Government. This morning, I looked at Hargreaves Lansdown, which has about 500 employees, and the mean salary for one of its directors is £1.5 million per annum—nice business if you can get it.
What does market failure mean for the consumer? We have talked a little about that. Over the past 15 years, the average consumer in a private sector pension fund has had a return of 4.2% per annum. Broadly speaking, that is a bit better than the yield in the FTSE—that is the sort of return that consumers have managed to achieve after charges.
The consequence is that there is a massive lack of confidence in the pension industry. I know a lot of people who know that they should invest for the future and that they should put money aside, although they are in their 40s or 50s, so it is possibly too late. They do not do so, however, because they mistrust the industry. The fact that there is tax relief and that a lot of this money is free is lost because there is such distrust towards the industry, and I am not sure that people are totally wrong to feel like that.
The recent report from Lord McFall said that the median pension pot for a private sector person in their 40s or 50s is £35,000, which translates, even if built up, into a pension of less than £2,000 a year. Those are the consequences for the punter of this market failure, which has been caused by the lack of transparency.
The consequences for the Government are also pretty serious. We are getting an under-pensioned populace, despite the fact the Government are subsidising the industry to the tune of £30 billion to £40 billion per annum. Superimposed on that is the honest attempt to fix the problem with pensioning through the auto-enrolment scheme. However, that will actually result in a further subsidy and a further inflow of funds to the industry. Unless, it comes at the same time as reform, we will continue to see the current market abuse.
What should the Government do? We have talked about the need for simplification. As I listened to my hon. Friend’s examples, I was reminded of the debate we had in the main Chamber about the energy companies and the need for transparency on energy tariffs. We heard that it was not possible properly to compare energy tariffs because they were so complex, so people did not know when and when not to switch. Frankly, the situation before us is analogous, but arguably more serious, because the amounts of money involved are much greater.
My hon. Friend gave us some sensible ideas about simplification, and the Government should think hard about them. There must be a way of doing things more
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simply. The Government might wish to look at the experience in other European countries, because there are better markets and rates are lower in many of them.
I have talked about the need for the RDR to go ahead at speed. I would like to ensure that that happens and that the review is not delayed, as it has occasionally been rumoured to be.
The Government should think hard about a cap for the pension funds that are permitted to be part of the NEST system. Under the stakeholder pension brought in by the previous Government, there was a cap of 1%, with a cap of 1.5% in the medium term, and that is probably justified. When an industry is not operating in a free market because it is as heavily subsidised, as this one is, it is reasonable for the Government to think in those terms. Indeed, this does not sound like a very free-market solution, but most of the people who join auto-enrolment will need a very simple tracker fund based on the FTSE, and there are all sorts of ways that could be achieved. There are several funds in Europe with charges of the order of 0.08% for a thing like that, and I think that the Government might want to think about different ways to achieve it.
I have not talked much about annuities, but the problem with respect to the market failure in annuities is that 75% of people who purchase them buy them from their pension provider. There may not be anything wrong with that, if it is the best deal, but the truth is that there is a huge difference between good and bad annuity rates. The Government should require pension advisers to ensure that at least three different quotations are given before a customer can take an annuity from the provider.
I want to touch briefly on one other final cause of the market failure. I am a trustee of the House of Commons pension fund. It is clear to me as a trustee that there is a tendency to be quite conservative about things. The only downside for a trustee, in relation to the possibility of being in breach of trust, is the potential for doing something risky. Most pension funds should buy assets—buy shares—themselves. They should not do that through funds and lose 2%, but there is no incentive for trustees to act in that way. In fact, all the incentives are for them to act in the opposite way. I used to work in the IT industry, where people used to say, “No one ever got fired for hiring IBM.” Trustees have a similar characteristic, and that is a contributory factor to the market failure that I have talked about, which is causing so much difficulty now.
The Government have a big issue to deal with—I shall not call it a scandal—to do with transparency and practices that it would be reasonable to call anti-competitive. The country is under-pensioned, which will cause severe problems in the next four decades. There is a need to look hard, as a matter of Government policy, at getting confidence and zeal back into the industry, so I wish the Minister well.
3.22 pm
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab):
I congratulate the hon. Member for Great Yarmouth (Brandon Lewis) on calling the debate. There is no doubt that costs and charges are one of the biggest issues in pensions. I welcome the fact that the National Association of Pension Funds called an
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industry summit on 23 November, to discuss transparency. However, as the speeches of the hon. Members for Cardiff Central (Jenny Willott) and for Warrington South (David Mowat) suggested, it is not clear that transparency in itself will be sufficient to tackle excessive costs and charges. In the past month and a half, I have spoken to many stakeholders in the pension sector, and I am grateful to them for the time and effort that they have put into those meetings. I am also grateful to them for the candour with which they described the industry’s situation.
The hon. Member for Great Yarmouth rightly raised the question of complexity. The focus on transparency is important; but I want to pose two or three questions or observations about whether transparency will be sufficient. First—I think that this was touched on by the hon. Member for Warrington South—even with greater transparency, some pensions are inherently complex. We might even say that they are brain-numbing. There is a complexity to them that is not apparent in some other financial services. It is worth emphasising the extent of the challenge that the Minister, the Government and the country face with pensions. Some of the figures have been mentioned already, and without going into the specifics, I think that we can say pretty straightforwardly that many people—more than 40%—are not saving anything at all. Of the rest—those who are saving—many are not saving enough, related to which is something that was mentioned a moment ago by the hon. Member for Warrington South: annuities. Annuity rates are pretty eye-boggling. We know the reasons for that: the downward pressure on bond yields and gilt markets, in particular, and longevity. However, when those issues are taken together, it becomes clear that the country faces a huge challenge in the pensions sector.
We know from the findings of Lord McFall’s workplace retirement income commission that there is poor transparency about costs and charges. Worryingly, Lord McFall found:
“Disclosure around costs and charges remains inconsistent across schemes and providers. What is consistent, though, is the opacity of that disclosure.”
I can only endorse the report’s recommendation. Lord McFall suggests:
“All schemes should be required to disclose costs and charges in a way that is transparent for consumers and which shows the cash impact of charges on the pension pot. The industry should develop a code of good practice on this issue and the government should monitor this and consider taking regulatory action if standards are not improved.”
So far, so good. I have in my mind the market failure emphasised by the hon. Member for Warrington South. The issue arises whether, as we go on, market failure will be solved even by something as worth while as a code of conduct.