The Prime Minister:
My hon. Friend is entirely right. Obviously, this is not something we want to see happen, and it is in our interests that the eurozone deals with its issues, strengthens its firewalls and strengthens its banks, and that we start to see the high interest rates in parts of Europe come down. But it would be irresponsible not to prepare proper contingency plans, and that is what the Treasury and others have been doing. As I say,
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whether Greece stays in the euro or not is not within our power, and we must prepare for all eventualities; but obviously, a disorganised exit would cause real difficulties.
Dan Jarvis (Barnsley Central) (Lab): Our country has invested a lot in Afghanistan—a lot of sacrifice and a lot of resource. So, along with many others, I am increasingly concerned at the lack of progress in the critical issues of politics and governance in Afghanistan, which, by nearly all accounts, are getting worse, not better. Will the Prime Minister therefore pledge to re-energise this process in order to give Afghanistan the best chance of surviving as an entity post-2014, ensuring that our efforts and sacrifice are not wasted?
The Prime Minister: I respect the hon. Gentleman’s views, not least because he served in the military and knows about what he speaks. Regarding the political surge in Afghanistan, he is perhaps being a little too pessimistic. In Helmand province, the area for which we have been responsible, we have seen the excellent Governor Mangal make some real steps forward in governance. There are district governors in almost all the province now, and we have seen a huge amount of progress in wheat seed distribution, building schools and hospitals and providing basic levels of service. But clearly we need to do more, and what happens politically and in terms of reconciliation will determine the nature of the outcome we achieve in Afghanistan.
Iain Stewart (Milton Keynes South) (Con): I welcome the declaration at the NATO summit on the interim ballistic missile defence system. Russia, however, remains hostile to the scheme. Has progress been made in persuading Russia that the scheme’s primary point is to protect Europe from ballistic missile threats from rogue nations, not from Russia?
The Prime Minister: Obviously, it is still a difficult discussion between NATO and Russia, but I think there is a level of understanding that the point of having a ballistic missile defence shield is to protect Europe from potential threats, including, for instance, Iran. It is important to remember that this is not instead of nuclear deterrence—it sits along side nuclear deterrence, which remains a key part of our defence posture.
Mr Andrew Love (Edmonton) (Lab/Co-op): The International Monetary Fund confirms in its article IV report published yesterday—if we needed it confirmed—that plan A is not delivering growth. It has also made a number of suggestions and recommendations, many of which have been discussed in the Chamber today, and some of them will be implemented in the coming months. The report goes on to suggest—recommend, even—a plan B to boost growth and temporarily cut taxes. Is the Prime Minister listening?
The Prime Minister:
I listen very carefully to what the IMF says, and to me, two things stand out. First, it says that reducing the high structural deficit over the medium term remains essential and that the UK has made substantial progress towards achieving a more sustainable budgetary position—alongside saying that the situation
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we inherited made the IMF shiver. Secondly, and importantly, it forecasts that the UK will grow faster this year than France, Germany or the eurozone, so it is predicting that things will improve, not get worse.
Bob Blackman (Harrow East) (Con): As our brave troops come home from Afghanistan, one of the key issues is the long-term sustainability of the Afghan economy. In the past, its biggest export has been the poppy crop, which has fuelled the illegal drugs trade worldwide. However, that self same product could be used to alleviate medical suffering worldwide. What consideration has been given to purchasing the poppy crop, so that we can use it for beneficial medical aims and sustain the Afghan economy as well?
The Prime Minister: I have looked at this issue in some detail. The key thing is that if proper governance, proper rule of law and proper transport networks can be delivered in a country, then what might be done with its ability to grow poppy might be considered; that is what happened in Turkey. But I have a feeling that if a poppy-purchasing project were suddenly introduced now, rather like in “Blue Peter”, you would buy one and they would produce another one they had made earlier, so I do not think it would work. But I do believe that the Afghan economy can develop, and that is one of the reasons that we are spending a serious amount of money not just on supporting the Afghan national security forces but on economic development in Afghanistan, and clearly, that will be key to its future.
Seema Malhotra (Feltham and Heston) (Lab/Co-op): Recently, I had a meeting with Afghan Sikhs in my constituency. Under the Taliban, they were forced to wear yellow ribbons and were prohibited from cremating their deceased loved ones. They have raised with me grave concerns about their freedom in the future and women’s freedom in Afghanistan. Can the Prime Minister update the House on any discussions that took place in Chicago on minority rights and women’s rights, so that we do not see a rolling back of social progress?
The Prime Minister: The hon. Lady raises a very important point. I had a good meeting with President Karzai in Chicago, and one of the points I made to him was that the quality of Afghan democracy, Afghan rights and Afghan justice will be absolutely key in delivering success. The Afghan constitution does guarantee some basic rights. That is why we say that, of course, if the Taliban put down their arms and stop fighting, they can discuss a future political role, rather as IRA-Sinn Fein have done in Northern Ireland, but they have to accept the basic tenets of the Afghan constitution.
Amber Rudd (Hastings and Rye) (Con): I am immensely proud of the commitment to international aid made by this country, but I am concerned about the levels of some of the other members of the G8. May I urge the Prime Minister to use next year’s presidency to remind some of the other members of their Gleneagles commitment?
The Prime Minister:
I would be delighted to do that. One of the strengths of the G8 is that it produces this accountability report, and I will make sure that a copy is put in the Library of the House of Commons because
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it is very compelling. It really holds countries to the promises they made about aid, about spending and about the different bits of that spending. People can see it there, in black and white: who has met their promises and who has not. We will continue to do that next year.
Mr William Bain (Glasgow North East) (Lab): There are nearly 25 million people unemployed across the EU at the moment, and economic demand is continuing to fall in the eurozone and in this country, whereas in America it is rising this year. Will the Prime Minister therefore follow the lead of the US and Japanese Governments, and the advice of the IMF yesterday, and bring forward much-needed capital spending to boost infrastructure and get the construction sector off its knees?
The Prime Minister: We have said that we want to use the hard-won credibility we have, the low interest rates we have and the strong national balance sheet we have to encourage that private sector investment. We have made a series of important announcements about housing, including backing mortgages of up to 90% loan to value to try to get the housing market working again, because the housing market is not functioning. I would just say that if we look at America’s deficit reduction plans, we find that it actually has plans to reduce its deficit faster than we do.
Gavin Williamson (South Staffordshire) (Con): Does my right hon. Friend agree that the G8 decision to create the capital markets access initiative will help Arab spring countries to tap into international capital markets, bringing them both stability and prosperity?
The Prime Minister:
My hon. Friend makes an important point. I think it is still a net bonus to the world that there has been the Arab spring, and we need the wealthy countries of the world and the European Union to get behind it. One of the problems we face is that those north African and Arab countries that have set themselves free were told in the past that they had experienced a free enterprise economy, whereas in fact they had really been having a sort of crony capitalism economy. We need
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to work very hard with them to encourage them to take a path that will make sure that their economies grow for the future.
Mark Durkan (Foyle) (SDLP): I welcome the Prime Minister’s alert on the levels of aid going from the richest to the poorest countries. In following through on the commitment to sustainable hunger reduction, will he promote more support for smallholder farmers, who number more than half the world’s 1 billion hungry people, so that they and their families can grow and eat more and better food, can trade produce and can employ others, thus helping communities to thrive?
The Prime Minister: The hon. Gentleman makes an important point; part of the presentation given to the G8 by the New Alliance for Food Security and Nutrition was that through the proper use of fertilisers and of things such as exchanges, we can actually make sure that smaller farmers become more sustainable, grow their yields and can not only feed their families, but build a small business.
Mr Speaker: Last, but not least, we must hear from the voice of West Worcestershire, Harriett Baldwin.
Harriett Baldwin (West Worcestershire) (Con): I was so pleased to hear the Prime Minister announce a day for discussing global hunger during the Olympics. Does he agree that the agenda should cover not just food security and food production, but the hidden crisis of malnutrition, which literally stunts the growth of so many children around the world?
The Prime Minister: My hon. Friend is absolutely right. It just seems to me that while we have the eyes of the world on Britain for the Olympics—and many African leaders will be coming to support their Olympic teams—we have a good opportunity to bring people together to say, “Here we have a great initiative in the New Alliance for Food Security and Nutrition. Let’s take it to the next level. Let’s encourage more countries to join. Let’s make sure that we lift more people out of hunger and out of poverty.” But the point she makes about nutrition is absolutely crucial for the future of the planet.
Mr Speaker: I thank the Prime Minister and colleagues.
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Public Appointees (Tax Arrangements)
1.44 pm
The Chief Secretary to the Treasury (Danny Alexander): As hon. Members are aware, in February I announced a review of the tax arrangements of public sector appointees. I said that I would report back to the House on the results of that review, which is what I would like to do in this statement today. As I said at the time to the House, there is absolutely no place for tax avoidance in government. That is especially so at a time when money is tight and we all have to pay our fair share to help tackle the deficit.
As I told the House in February, senior civil servant appointments are audited against the Treasury’s “Managing Public Money” guidance. That document states that
“public sector organisations should avoid using tax advisers or tax avoidance schemes as any apparent savings can only be made at the expense of other taxpayers or other parts of the public sector.”
That is why when questions were raised about the tax arrangements for senior public service appointees, I immediately put this review in place, and I would like to thank the investigative journalists at ExaroNews for bringing the issue to our attention.
The review looked at the extent of off-payroll engagements in Government Departments and their arm’s length bodies. With respect to the NHS, the review was limited to the boards of NHS organisations. None the less, the “Managing Public Money” guidance, and the new principles that I will set out today, apply in full to the NHS. The review could not include either local government or the BBC, which are not under direct control from central Government—it will be for those organisations to justify their own off-payroll arrangements, in the light of the unprecedented transparency we are showing today. Nor does it include devolved Administrations, and I hope they will now also follow the example we are setting.
Let me be clear to the House: the review published today did not seek to identify evidence of tax avoidance—that is the role of Her Majesty’s Revenue and Customs. The review looked at off-payroll engagements, because the opaque nature of those engagements has created the conditions where tax avoidance could be taking place. Let me also make it clear there are circumstances where it may be necessary and appropriate for an employer to appoint an individual off payroll—for instance, where Departments need to employ specialists to carry out short-term roles when there is no available civil service expertise. That practice will continue. However, the review has revealed the extensive and long-standing nature of off-payroll engagements in government. I can tell the House that the review has identified more than 2,400 off-payroll engagements in central Government Departments and their arm’s length bodies that were live on 31 January this year. That is an unacceptable number, given the lack of transparency on the tax arrangements of these contracts.
That lack of transparency cannot continue, so today each Department involved is publishing on its website a list of off-payroll appointees who, as of 31 January, were engaged at an annual cost to the Department of more than £58,200. The majority of cases relate to technical specialists; in fact, more than 40% relate specifically
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to IT specialists. The data also show that 70% of cases relate to arm’s length bodies. About 10% of the cases relate to payments made directly to a personal services company. More than 85% relate to intermediaries such as employment agencies, where it is not possible to know whether the individual is or is not using a personal service company. The other 5% relate to the self-employed, who are therefore subject to self-assessment in the normal way. About 70% of all those in the identified cases are paid more than £400 a day, and more than 70 cases cost Departments more than £1,000 a day. About 900 of the cases—approximately 40%—date back longer than two years. In fact, more than 20 cases date back more than 10 years, which some might consider an astonishing length of time to be on a contract. It is also worth noting that since January this year, more than 350 off-payroll contracts identified by this review have since ended. In about 10% of those cases the individual remained with the Department but is now on the payroll.
It is clear that off-payroll engagement without sufficient tax transparency has been endemic in the public sector for too many years. It is a problem that built up and was presided over by the previous Government. Indeed, it is likely that under their watch many more thousands of cases of off-payroll payment have come and gone, yet no one said a word.
The solution to the problem is not to turn a blind eye or brush it under the carpet. We must bring an end to the “don’t ask, don’t tell’ approach to the issue and it is clear that the tax arrangements for off-payroll employees in the public sector are not as transparent to the employer as they should be. At the moment, contracts with off-payroll employees do not give Departments the right to request detailed tax assurance from individuals; nor can HMRC provide that information due to taxpayer confidentiality. Even when off-payroll employees are in fact paying the correct amount of income tax and national insurance, the employer has no means of reassuring themselves that that is the case. It is right that we should tackle that lack of transparency.
Today I can announce new tighter rules on off-payroll appointments. First, the presumption is that in the future the most senior staff must be put on the payroll. Secondly, all Departments must put in place provisions that allow them to seek formal assurance that anyone paid a senior rate and employed off-payroll for more than six months is meeting their income tax and national insurance obligations in full. If that reassurance is not provided when requested, Departments should terminate the contract.
Finally, these new tighter rules will be monitored carefully and any Department that does not comply will be fined up to five times the cost of the salary by the Treasury. In addition to those changes, we have shared all the detailed information from the review with HMRC, which will be able to take any further action it decides is necessary in individual cases. There will be no lengthy transition period for the new rules, either. They will be implemented by September this year and will be applied to existing contracts too, subject to value for money. Departments will report to Parliament on the outcome as part of the 2012-13 annual report and accounts process.
There is one further measure I want to announce today. Working through an intermediary provides an opportunity to minimise, or in some cases avoid completely,
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paying income tax and national insurance that would otherwise be payable. We already have anti-avoidance legislation, commonly known as IR35. That rule ensures that where there is in effect an employment relationship, if it was not for the interposition of a personal service company, the person concerned pays the appropriate amount of tax and national insurance. The rule is a vital tool in tackling tax avoidance and helps to ensure that people pay the right amount of tax.
Let us take as an example an individual earning £120,000 a year. In that instance, there could be as much as a £23,000 difference between the amount of tax and national insurance paid compared with that paid by somebody on the payroll. When IR35 was introduced 10 years ago, it was comparatively rare for controlling persons of an organisation to work through a personal service company. In the past few years, however, there have been high-profile reports of that happening, so today the Government are also consulting on the Budget proposal that all so-called “controlling persons” must by law be on the payroll of their organisation. This proposed tightening of the rules will apply to any organisation, be it public or private. It is right that when an individual is in a position to control the major activities of an organisation, they should be on the payroll of that organisation.
At a time of tight public finances, it is vital that everyone pays their fair share. The changes I have outlined today help to ensure that senior public staff pay, and are seen to pay, their full and fair share of income tax, and they demonstrate yet again the Government’s determination to clamp down on all forms of tax avoidance. I commend the statement to the House.
1.53 pm
Rachel Reeves (Leeds West) (Lab): I thank the Chief Secretary for his statement and for providing advance notice of it. We welcome this review of the pay and tax arrangements of senior public servants.
At a time when ordinary families and businesses are bearing the brunt of the recession that this Government have created and at a time when more than 700,000 jobs in the public sector are being cut while ordinary public service workers who keep our NHS, schools and police services running have had their pay frozen and their pension contributions increased, people will be shocked that more than 2,000 senior public servants, many earning several times the average public sector wage, have been paid in a way that allows them to avoid paying their fair share of tax, and that 1,200 of these deals have been done by the present Government in the past two years.
The vast majority of working people in this country have no choice over how or whether to pay the tax that they owe and they will feel that those who benefit from the highest public sector salaries have a special responsibility to make their proper contribution to the funding of the public services on which we all rely and to which they owe their generous salaries. We should all be clear that if the taxpayer is paying someone a living, particularly a better living than the vast majority of taxpayers enjoy, that person has a duty to pay their fair share of tax and the Government have a duty to ensure that they do so.
The statement is a valuable step towards greater transparency and accountability and we welcome that, but I have a number of questions that I hope the Chief
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Secretary can answer today. First, on the question of the chief executive of the Student Loans Company, we now know that he was appointed at a salary significantly higher than that of his predecessor and that he potentially avoided paying around £42,000 annually in tax, an amount almost twice the average public sector salary. Will the Chief Secretary tell us which members of the Government agreed to the arrangement made with the chief executive of the Student Loans Company and which members of the Government were aware of the arrangements before the matter came to the public attention in February? Have changes been made to his payment arrangements since then and can we be assured that he is now paying his full share of income tax and national insurance? If not, when can we have that assurance? If his contract has been altered, has there been any cost to the taxpayer in doing so?
The Government committed to publishing details of all public servants paid more than £150,000, yet the chief executive of the Student Loans Company was not on the list published in 2011 despite, as we know, earning £182,000 and despite the fact that his predecessor was listed. Will the Chief Secretary explain why the chief executive’s name was not on that list and can he tell us if any other public servants paid more than £150,000 have not been listed so far and whether they will be listed in the 2012 publication?
Secondly, on the subject of the extent of the problem and the scope of the review, will the Chief Secretary confirm how many such deals were signed off since February, when the affairs of the chief executive of the Student Loans Company came to light? Will he confirm that those individuals paid more than the Prime Minister will have been personally approved by the Chief Secretary? How many has he personally approved? If any did not come to him for approval, can he explain why?
The review’s findings cover only people who earn more than £58,000, which is more than twice the average annual salary in this country. Will the Chief Secretary tell us why his review excluded anyone on less than £58,000 a year, and if he will return to the House with findings that include all such cases? In those cases where a public servant was not being paid on payroll, were the individuals concerned paying their proper share of income tax or national insurance? What was the cost to the Exchequer of those arrangements?
Despite the emphasis on transparency, the findings presented today do not include local authorities, non-maintained schools, public broadcasting authorities or other publicly owned companies. Those areas account for a substantial portion of the public sector pay bill. When will the Chief Secretary come to the House with figures that cover those areas? It is not enough for him merely to encourage the publication of that information by others.
The findings also do not cover publicly owned banks. I think that taxpayers who have paid to rescue those banks would expect those employed by the banks to be paying their tax at the appropriate rate. Will the Chief Secretary conduct a review of the extent of such arrangements in the publicly owned banks?
The findings also do not cover privatised or contracted-out services. Does the Chief Secretary think that those earning large incomes from taxpayer-funded contracts should be expected to pay their proper share of tax, and what steps will he take to ensure that that is happening?
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Thirdly, as regards what the Government will do next, the Chief Secretary has told us that there will be a new presumption that the most senior staff must be on the payroll. How does he define “the most senior staff” for those purposes? Will he give a clearer definition of the exceptional circumstances in which he will allow some public servants to continue receiving their salaries off the public sector payroll? Will he give an undertaking that those cases for which those exceptions have been made will be made public and that the exceptional reasons for them will be given?
In future cases, will Departments be allowed to seek assurances about the tax affairs of public appointees with off-payroll arrangements, or will they be required to do so, as this morning’s news reports imply? If they will not be required to do so, why not? Why not have that duty to seek such assurances?
Where these arrangements are disallowed for current or future appointees, can the Chief Secretary give us his assurance that their salaries will not rise to compensate them for the loss of net income that may result? Can the Chief Secretary confirm that in accordance with previous commitments given on transparency and accountability, all those covered by the review whose earnings exceed £150,000 will be included in the Government’s annual list of people earning more than this figure?
On the wider issue that the Chief Secretary mentioned—how IR35 laws are used to avoid tax beyond the public sector, which clearly needs to be addressed—can he guarantee that HMRC will have sufficient resources to monitor, manage and enforce the full payment of taxes at a time when it is being asked to absorb £2 billion-worth of cuts to its budget?
In conclusion, the Government need to ensure value for money for every pound of taxpayer money spent, especially at a time of wage restraint for nurses, teachers and police, and huge cuts in the number of people working in the public sector, so the Opposition welcome the Chief Secretary’s commitment to rein in the avoidance of tax, but I hope this will apply to all those who are paid by the taxpayer, and that there will be genuine transparency in pay and in any exceptions to the rules set out today.
Danny Alexander: I am grateful for the shadow Chief Secretary’s welcome for the steps that I announced today, though it was striking that in her response there was no reference at all to the fact that many of these arrangements date back to the time of the previous Government. About 40% of the cases identified began work under the previous Government.
If the hon. Lady wants to know more about why those arrangements came into place, she could ask her Front-Bench colleagues if they were here. She could ask the Leader of the Opposition, for example, as two cases date back to his time as Secretary of State for Energy and Climate Change. She could ask the shadow Home Secretary, as nine cases date back to her time as Secretary of State for Work and Pensions. She could ask the shadow Health Secretary, as 45 cases date back to his time as Secretary of State for Health. She could ask her colleague the shadow Chancellor, because at least 24 cases date back to his time as Secretary of State for Education. Yes, it is once again their mess and we are cleaning it up.
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The hon. Lady asked a few questions. With reference to the chief executive of the Student Loans Company, as I said in answer to the urgent question from the right hon. Member for Newcastle upon Tyne East (Mr Brown) in February, the individual concerned went on the payroll straight away—that day. I announced that at the time of that statement, which I think the hon. Lady responded to. Of course, going on the payroll was the appropriate thing to do. As I made clear then, I had no knowledge of any tax benefit to an individual. As is the practice with cases where those involved are earning more than the Prime Minister’s salary, the approval is given within the Department. My role as Chief Secretary is to examine the salary level to make sure that it is consistent with the pay restraint that we are properly putting in place across the public sector.
This review looked at the salary level above £58,200 because that is the minimum salary level in the senior civil service, and it focused on senior public service appointments. These rules will be available for Departments to apply more generally, should they wish to do so. As I said in my statement, the review was not looking for evidence of tax avoidance because individual tax arrangements are a matter of taxpayer confidentiality, but all the results of the review from across Government have been passed to Her Majesty’s Revenue and Customs so that they can investigate if they choose to do so.
I referred in my statement to organisations that are not within the control of central Government, such as local authorities, the BBC and so on, but I am sure the many Labour councils around the country will have heard the shadow Chief Secretary’s remarks and will be bringing forward as a matter of urgency transparent publication of all the arrangements in their local authorities. I look forward very much to seeing that.
In relation to IR35, I should remind the House that in the spending review we provided an additional £900 million to Her Majesty’s Revenue and Customs specifically to focus on their work tackling tax evasion and tax avoidance. That will include resources to investigate cases caught out by the review or cases under IR35. The hon. Lady will know that the Office of Tax Simplification looked at the operation of IR35 last year and we are carrying forward some of its recommendations, but the proposal on which we are launching a consultation today—that controlling persons in organisations should, as a matter of course, be on the payroll—will strengthen the IR35 regime, which I hope Members on both sides of the House will welcome.
Alec Shelbrooke (Elmet and Rothwell) (Con): I listened carefully to my right hon. Friend’s statement, taking note of his comments regarding the BBC. A great number of my constituents pull their hair out at the huge salaries paid to people at the BBC, only to see them invest them in companies outside to try to avoid tax. Will the IR35 regime go some way towards trying to address the situation?
Danny Alexander: The arrangements at the BBC are a matter for the BBC. I know that my right hon. Friend the Secretary of State for Culture, Olympics, Media and Sport has drawn the review to the BBC’s attention, so it is aware of the focus that the Government are placing on the issue. IR35 potentially applies to any taxpayer in the relevant set of circumstances, whether that individual works for the BBC or for any other organisation.
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Margaret Hodge (Barking) (Lab): I welcome the Chief Secretary’s statement and I join him in congratulating David Hencke on the work that he did in uncovering the situation. Will the right hon. Gentleman confirm that he and his officials will co-operate with the investigation that my Committee will now undertake on his review?
Will the Chief Secretary comment on the fact that HMRC authorised the payment to the Student Loan Company’s chief executive under this arrangement? What instructions has he given to HMRC to deal differently with exceptions, which he is still allowing? Scope matters. Although his review has looked at the senior civil service, it matters how people are paid, whether they work in NHS trusts or for private companies delivering public service funded through the taxpayer’s pound—
Madam Deputy Speaker (Dawn Primarolo): Order. The right hon. Lady is not asking a series of questions. This is a statement. I have given her considerable latitude, given her seniority, but I think she has asked enough questions now. Perhaps she should leave some for other Members who are rising.
Danny Alexander: I am grateful to the right hon. Member for Barking (Margaret Hodge) for her questions. Certainly, Treasury officials will co-operate with the investigation which I gather her Committee will undertake into these matters. I welcome that because, as I said in my statement, it is important that the light of transparency is shed on the issue as much as possible. I am sure that her Committee can play an incredibly valuable role in that, as it always does. I gather that the role of HMRC may be the subject of a soon-to-be-forthcoming report from her Committee. No doubt that will speak for itself, but of course the rules that I am putting in place today and the rules that exist for managing public money should be applied by all Departments in relation to public service appointments, and I made clear my view about the particular case that she referred to when I responded to the question from the right hon. Member for Newcastle upon Tyne East (Mr Brown).
I agree that scope matters. I should say in relation to the NHS that although the review looked at board members in NHS organisations, because I wanted it to be done quickly so that we could bring forward recommendations and change the practices across the public sector, its recommendations will apply across the NHS and will need to be applied there in the same way as in any other part of the public sector.
Mr Bernard Jenkin (Harwich and North Essex) (Con): Will my right hon. Friend stress an important assurance which I think he made, that HMRC will continue to be blind as to whether they are dealing with somebody who works for the public sector or the private sector, that all people will be treated equally by HMRC, and that for the most part in his statement he was speaking as an employer? In his review of IR35, will he take great care not to catch up with musicians, artists and others who are traditionally regarded as self-employed but may have controlling roles in organisations? It would be a great mistake if we made the cost of employing those people, particularly international people, much more expensive, to the detriment of the arts in this country.
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Danny Alexander: I can assure my hon. Friend that HMRC is completely blind as to whom any individual works for. Taxpayer confidentiality is an essential part of the way in which HMRC works and we are making no changes whatever to that. We have passed the information that we discovered through the review to HMRC. It will be for it to decide whether it wishes to make any further inquiries. That will be a confidential matter for it to pursue in its own right. This is not an overall review of IR35; it is a particular consultation in relation to controlling persons of organisations. I am certain that the point that he raised will be noted and perhaps brought forward by him or others in responding to the consultation, which opens today.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): The Chief Secretary deserves credit for his handling of the issue since it came into the public domain. Like my right hon. Friend the Member for Barking (Margaret Hodge), I pay tribute to him and to the investigative journalists, David Hencke and others, who first drew it to our attention. It makes no difference whether those arrangements were agreed by Labour Ministers or Ministers in the coalition; they are wrong and he is proceeding in the right way to put a stop to things. Can he tell the House roughly the cost of unwinding the arrangements and whether that cost will fall on the individual Departments from within their existing allocations, or whether some supplemental allocations will be needed? Can he also say when the Secretary of State for Business, Innovation and Skills first knew about the arrangements for the head of the Student Loans Company and what he did to bring them to an end?
Danny Alexander: I am grateful for the right hon. Gentleman’s comments and for his role in bringing these matters to the House’s attention. I wholeheartedly agree that it makes no difference when the arrangements started and which Minister was responsible; frankly, the situation has grown up over a number of years and under Governments of different hues. It is right that we are taking action to bring the situation under control and ensure proper transparency so that there is no perception of the potential for tax avoidance. He and I agree 100% on that.
It is impossible to say at the moment what the costs, if any, of unwinding the existing arrangements will be. Of course, as I said in my statement, senior people must be brought on to the payroll, unless there are exceptional short-term circumstances. For others, we need arrangements in place that allow assurances to be given that the proper and full amount of tax is being paid, and that will depend on the outcome of those processes with individual members of staff. Of course, if there are costs to be borne, they will have to be borne from within existing departmental allocations. If Departments do not comply with those rules, there will be a fine of up to five times the salary involved, levied by the Treasury on departmental allocations, which I hope will give Departments a strong incentive to comply with the rules as quickly as possible.
Stephen Williams (Bristol West) (LD):
My right hon. Friend and his colleagues have done some very important work in bringing these arrangements to light, but is it not the case that someone should be engaged in this way only in circumstances where there is a genuine short-term
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shortage in government of a particular expertise or if the individual genuinely has a wide portfolio of private sector clients unrelated to other public sector work? Is not what is needed an emphatic statement from him that these arrangements should be not commonplace, but truly exceptional?
Danny Alexander: I am grateful to my hon. Friend for his comments and his welcome. He is right that the arrangements should be exceptional and unusual, and should apply only in particular cases, such as when there is a short-term shortage, as he says, or a particular specialism is needed to deliver a project. That is why so many of these cases relate to IT professionals delivering individual projects. There is an employee test under the IR35 rules, which I am told is simple and straightforward, and that should be sufficient for determining on which side of the line someone sits.
Mr Alan Campbell (Tynemouth) (Lab): It is now clear that some of the worst cases take place in local authorities such as North Tyneside. Can the Chief Secretary not do more to direct HMRC not only to deal with these abuses, but to seek redress?
Danny Alexander: I am interested to hear that there are particularly egregious offenders in North Tyneside and am grateful to the hon. Gentleman for drawing that to the House’s attention. My right hon. Friend the Secretary of State for Communities and Local Government has of course drawn this process to the attention of all local authorities precisely to get them to show a transparency similar to that which we have shown with the review today, and I very much hope that they will all follow that example. It is for HMRC to decide whether it wishes to investigate an individual case and whether there is a case to answer. As I have said, the existence of these arrangements does not in itself demonstrate that tax avoidance is taking place, because it is perfectly possible for the arrangements to be in place and for the proper amount of tax to be paid. The problem is a lack of transparency, so getting people to publish the information so that HMRC can decide whether it wishes to investigate must be the right process to go through.
Bob Blackman (Harrow East) (Con): I welcome my right hon. Friend’s statement. Everyone wants to see public servants paying their right and fair share of tax. I respect the fact that he cannot investigate the tax affairs of all the individuals concerned, given the scale of this activity and the length of time it has been going on for, but what estimate has he made of the total loss that would be caused to the Exchequer if all these people used this legal means to avoid paying tax?
Danny Alexander:
I am grateful for my hon. Friend’s welcome for this work. I am sure that he would not wish Ministers to investigate the tax affairs of individuals, as that way would lie ruin for the country. I cannot make such an estimate for the reason behind my previous comment: taxpayer affairs are confidential and it is for HMRC to deal with particular cases when it finds that avoidance is taking place. What I can say is that there is a very large number of cases and that this relates to the wider question of consultancy and contingent labour in government. He might be interested to know that in 2009-10 the previous Government spent £2.4 billion on
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contingent labour of various sorts. In 2010-11, thanks to the additional controls on consultancy that we put in place, we reduced that to £1 billion, and I expect the bill to be reduced further in 2011-12. There are things that central Government can do to reduce dramatically those costs across government, and that is precisely what the coalition Government are seeking to do.
Mark Durkan (Foyle) (SDLP): I thank the Chief Secretary for his statement and commend him for the action he has taken since the scandal became apparent. If we are to believe that Revenue and Customs is now boarding this Good Ship Lollipop, how will we know whether someone receiving amounts of money from the public purse over £58,200 in future will not exempt themselves simply by ensuring that they accumulate it from a number of Departments rather than one? The measures he has announced today relate to Departments reporting amounts over £58,200 that they are paying to individuals, but they do not seem to address the issue of people pocketing money from a number of contracts with different Departments.
Danny Alexander: The hon. Gentleman asks an interesting question, and he is right that someone might be earning small amounts of money from a number of different Departments. Of course, in that case it is likely to be a contractor, of the sort my hon. Friend the Member for Bristol West (Stephen Williams) referred to, who has multiple clients. It is not clear on the face of it that these rules should apply in those cases, but I will certainly consider the sort of case that the hon. Gentleman mentioned.
Mr David Winnick (Walsall North) (Lab): As someone who is not involved in a vendetta against the BBC, unlike some Tory Back Benchers, I can tell the Chief Secretary that, as a result of correspondence with the director-general of that organisation, I have been informed that there are just two full-time employees left at the BBC, both very high-earners, on personal service contracts and that that will end in July, which is certainly welcome. Why is it so difficult for the Treasury to close the loophole, whether in the public or private sectors, so that unless it is a genuine company there can be no way in which individuals pay less tax than they should be paying?
Danny Alexander: I am grateful for the hon. Gentleman’s remarks about the BBC, which is useful information for the House to have before it. I say to him in all seriousness that the rules relating to this sort of case—the IR35 rules—were put in place by the previous Government, and we are seeking to strengthen them through the consultation we have today. The coalition Government have done more than many previous Governments to take action on dealing with tax avoidance and evasion across the board, because it is vital in a time of austerity that everyone pays their fair share, and that is what we are doing. Frankly, it is what the Government of whom he was a part did not do.
Mr Nigel Dodds (Belfast North) (DUP):
I welcome the Chief Secretary’s statement, but should we not apply the rules to all individuals receiving money from the public purse, rather than allowing the BBC, local authorities and others off the hook? I fear that, unless they are forced to take this action on transparency,
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all sorts of obstacles will be put up. I know from correspondence with the BBC in Northern Ireland that it has not been as transparent there as it has been elsewhere. In fact, it has stonewalled and refused completely to give information to me as a Member of Parliament, so I urge him to go further and force organisations such as the BBC into transparency.
Danny Alexander: The new Treasury rules that I have announced today apply only to organisations under central Government control. That is how the rules work, but I encourage the right hon. Gentleman and other hon. Members who have made the point about local authorities to continue their campaigning in order to ensure that those organisations do reveal such information. He did not refer to the Northern Ireland Assembly Government, but he may very well want to take steps to ensure that that organisation also brings forward the appropriate degree of transparency about its arrangements, too.
Mr Andy Slaughter (Hammersmith) (Lab):
The Chief Secretary to the Treasury is right to admit that without the work of Exaro and “Newsnight” he would not have
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a clue what is going on across Departments, but the action that he has announced today will affect no more than a tiny percentage of the abuse taking place throughout the public sector. He needs to do more than write letters to the NHS and to local government. One so-called consultant, Mr Nick Johnson, has received £1 million from Hammersmith and Fulham council in the five years since he retired on an ill-health pension of £60,000 a year from another local authority. On the Chief Secretary to the Treasury’s figures, Mr Johnson would have avoided £200,000 in tax, so when is the right hon. Gentleman going to act on such abuse?
Danny Alexander: The hon. Gentleman refers to the national health service, and I was very clear in my statement and in my response to the right hon. Member for Barking (Margaret Hodge), the Chair of the Public Accounts Committee, that the rules apply throughout the national health service and, indeed, to academy schools. I do not control the finances of local authorities, but I can make it very clear that I want to see them go through a similar process, and I am sure that campaigning local MPs such as the hon. Gentleman will not rest until their local authorities do so.
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Point of Order
2.21 pm
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): On a point of order, Madam Deputy Speaker. It became public over the weekend that the Prime Minister and several Cabinet members are to be coached by lawyers at a cost of £1 million before they give evidence to the Leveson inquiry. Given that some of us thought the whole point of the inquiry was to get at the unvarnished truth about the unhealthy relationship between some politicians and the media, should not a Minister come forward to explain who is training whom, why it is necessary and who on earth is paying for that excess?
Madam Deputy Speaker (Dawn Primarolo): That is not a point of order for the Chair with regard to the conduct of business, but the right hon. Gentleman is a very experienced Member, and I am sure that he will go to the Table Office and explain the information that he seeks. Perhaps the office will advise him on how he might pursue it, but it is not for today in the Chamber.
Bill Presented
Enterprise and Regulatory Reform Bill
Presentation and First Reading (Standing Order No. 57)
Secretary Vince Cable, supported by the Prime Minister, the Deputy Prime Minister, Mr Chancellor of the Exchequer, Secretary Theresa May and Norman Lamb presented a Bill to make provision about the UK Green Investment Bank; to make provision about employment law; to establish and make provision about the Competition and Markets Authority and to abolish the Competition Commission and the Office of Fair Trading; to amend the Competition Act 1998 and the Enterprise Act 2002; to make provision for the reduction of legislative burdens; to make provision about copyright and rights in performances; to make provision about payments to company directors; and for connected purposes.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 7) with explanatory notes (Bill 7-EN).
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Electoral Registration and Administration Bill
[Relevant documents: The Tenth Report from the Political and Constitutional Reform Committee, Session 2010-12, on Individual Electoral Registration and Electoral Administration, HC 1463, and the Government’s response, Cm 8245.]
Madam Deputy Speaker (Dawn Primarolo): Mr Speaker has selected for today’s debate the amendment, which will be moved in accordance with normal procedure.
2.23 pm
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper): I beg to move, That the Bill be now read a Second time.
The Electoral Registration and Administration Bill will tackle electoral fraud by speeding up the introduction of individual electoral registration—that is, requiring electors to register individually rather than by households. In doing so, we will move towards a system in which individuals have to provide information to enable their application to be verified. That will modernise our electoral registration system, facilitate the move to online registration and make it more convenient for people to register to vote. We want to tackle electoral fraud, increase the number of people registered to vote and improve the integrity of the electoral register.
Mr Denis MacShane (Rotherham) (Lab): This is a very early intervention, but 23,388 of our fellow citizens living abroad are entitled to vote, while 1,147,401 French citizens will be voting in the French parliamentary elections next month. Why do we deny that core citizenship right to so many of our fellow citizens simply because they do not live within the UK? I am not sure that the situation is within the purview of the Bill, but it represents a shameful denial when other countries are so much better than we are.
Mr Harper: The right hon. Gentleman makes an interesting point. There are about 5 million British citizens overseas, and there is a debate to be had about the length of time—currently 15 years—that one should remain entitled to vote. Of the 5 million citizens overseas, only 30,000 or so are registered to vote, and for those who have been overseas for less than 15 years there is no bar at all on voting.
There are questions to be asked of all of us about why those people do not feel the urge to register and to cast their vote in our elections, but in part 2 of the Bill, which I shall come on to later, we are going to lengthen the period of a general election campaign, making it more practical for overseas voters to receive and to cast a postal vote so that it counts in an election. I hope that that will be helpful.
Dan Rogerson (North Cornwall) (LD):
I am grateful to the Minister for giving way so early in our deliberations. The point about overseas electors bears a great deal of exploration. If they are not going to participate, alongside citizens who are still resident, in the democratic process and in our constituency-based system, will more information be provided to political parties and to independent
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candidates about how to contact overseas electors? The information that has been on the electoral register up until now would not allow for much discussion or interaction with them.
Mr Harper: The hon. Gentleman makes a good point—to which we might return in Committee, given that I have not got very far with my speech and want to make a little progress before I take any more interventions.
As I was saying to the right hon. Member for Rotherham (Mr MacShane), part 2 also contains provisions to improve the administration and conduct of elections, thereby serving to increase voter participation and to make a number of improvements to the running of elections.
Before I explain the rationale behind our proposals, I shall deal briefly with the Opposition’s reasoned amendment and approach.
Mr Graham Allen (Nottingham North) (Lab): Before the Minister turns to the burden of his argument, may I congratulate him on how he has involved the Select Committee on Political and Constitutional Reform and the House in the deliberations on the Bill? It is an exemplar of good practice, but he will see from the reasoned amendment that there is still some way to go. May I also put on his agenda the question of fines for people who do not register? They will be introduced under secondary legislation, so at the moment we have no idea whether an effective and proportionate fine will be available. Will he address that in his remarks?
Mr Harper: I am grateful to the Committee’s Chairman for what he says, and I hope that by the time I finish my remarks the House will see that I have addressed satisfactorily all the points in the reasoned amendment, at which stage I will of course urge Members on both sides of the House to support the Bill’s Second Reading.
We debated this subject on an Opposition day in January during which I welcomed the tone that the right hon. Member for Tooting (Sadiq Khan) adopted. He said, for example, that he welcomed the process that the Government had adopted and how we were acting; he noted that we had had a draft Bill and a White Paper with pre-legislative scrutiny; and he noted that the Deputy Prime Minister and I had said that we would not just listen to concerns, but act on them and make changes accordingly.
At the time I noted that that was a shift from last autumn, when the right hon. Gentleman’s party leader said, in response to our making registration individual rather than household, that the Labour party was going to go out and fight against the change, and when the shadow Deputy Prime Minister, the right hon. and learned Member for Camberwell and Peckham (Ms Harman), said that our proposals were
“a shameful assault on people’s democratic rights.”
I thought that that was nonsense when she said it. In January, the right hon. Member for Tooting appeared to think so, too, and he adopted a sensible tone that was welcomed not just by me, but by Members on both sides of the House, so I am disappointed that in tabling this reasoned amendment he appears to have reverted to the Labour party’s original approach.
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One of the main points in the reasoned amendment that I will not cover later in my speech is the assertion that there was cross-party support for the Political Parties and Elections Act 2009. As I said in January’s Opposition day debate, it is true that we supported the proposals in the Act for individual registration, but it is worth reminding the House that the previous Government had to be dragged kicking and screaming to include them. They were not in the Bill when it was introduced in this House, and that is why we voted for a reasoned amendment. In fact, they were not in the Bill when it left the House of Commons, although by that stage the Labour Government had made a commitment to include them. They were, however, introduced in the other place. My right hon. Friend the Member for Horsham (Mr Maude), now Minister for the Cabinet Office and Paymaster General, who led for us on the issue, ably assisted by my hon. Friend the Member for Epping Forest (Mrs Laing), said:
“I am glad that at the eleventh hour the Government have, at last, agreed to move ahead with individual voter registration, albeit in what still seems to be a lamentably leisurely time scale. They committed to the principle of individual voter registration many years ago, but a bit like St. Augustine, they seem to be saying, ‘Make me chaste, but not yet.’”—[Official Report, 2 March 2009; Vol. 488, c. 695.]
My right hon. Friend made it clear that we approved of the decision to proceed with individual registration, which we thought could be accomplished earlier. We said that it would be our intention to do so, and on page 47 of our 2010 manifesto we made a commitment to
“swiftly implement individual voter registration”.
It is not fair and right, or at least it leaves out something quite important, to say that there was complete cross-party consensus on that measure.
Before I set out the Bill’s provisions in detail, let me explain the rationale on how we got to this stage following the draft proposals and the significant amount of pre-legislative scrutiny that has taken place. The move to individual registration was supported by all three main parties in the previous Parliament and was in each of their manifestos. It is supported by the Electoral Commission and the Association of Electoral Administrators and has been called for by a wide range of international observers. We remain one of the few countries in the world to rely on a system of household registration. I believe, as I am sure many Members do, that a system that relies on the rather old-fashioned notion of the head of household, whereby just one person in the house is given the responsibility of dealing with everyone else’s registration to vote, is out of date. It does not engender any personal responsibility for being registered or promote a person’s ownership of their own vote, and it could give that one person the ability to disfranchise others. That is not the approach that we adopt in other areas where people engage with the state.
Mr David Evennett (Bexleyheath and Crayford) (Con): I welcome what my hon. Friend is endeavouring to do in this Bill, particularly his determination to modernise our system and to get more people registered to vote. Does he share my concern that many people are on the register who should not be, and, in particular, that people who do not have leave to remain in the country are participating in voting? Will that also change under his system?
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Mr Harper: My hon. Friend is right. There are two aspects to what we are doing. We want to make sure that the register is more complete and that people who are eligible to vote are on it, but it is equally important to make sure that those who are not eligible to vote are not on it. I hope that he will be reassured about that as I set out some of the details. On his specific point, there will be changes to make it clearer for people to identify when they are a Commonwealth citizen and what their immigration status is. We will be piloting some work with the UK Border Agency to see whether we can create a systemic process to check people’s leave to remain so that only those who are entitled to be here are able to vote here. That will be a welcome step forward.
Mr Nigel Dodds (Belfast North) (DUP): Will the Minister give way?
Ms Karen Buck (Westminster North) (Lab) rose —
Mr Harper: Oh, I have a choice. I give way to the right hon. Gentleman.
Mr Dodds: The Minister said that the United Kingdom is one of the few countries that does not have individual registration. Of course, we have had that in Northern Ireland for some 10 years. I think it has been a success, and I therefore warmly welcome his proposals. However, it has led to a drop in the number of people registered, partly for the reasons that he outlined—for example, because some people should not be on the register in the first place. Will he take on board the lesson that we learned in Northern Ireland, which was that resources needed to be put into the Electoral Office to ensure that young people, in particular, got signed up to the register?
Mr Harper: I welcome the right hon. Gentleman’s comments. I should have said that the Bill implements these measures in Great Britain rather than in the United Kingdom. We have learned a great deal in Northern Ireland, for example on implementing a carry-forward provision to reduce the risk of a significant drop-off. Interestingly, the research that we commissioned from the Electoral Commission, which was published last year, demonstrated that although we in this country have had the rather complacent attitude that we did not really have a problem, under the individual registration system in Northern Ireland, the proportion of eligible voters registered to vote is about the same as it is in the rest of Great Britain. We therefore have a lot to learn.
Chris Ruane (Vale of Clwyd) (Lab) rose —
Mr Harper: May I first finish responding to the right hon. Member for Belfast North (Mr Dodds)?
On the right hon. Gentleman’s second point about young people, I had an opportunity to visit Grosvenor grammar school in Belfast to see an example of what, in engaging with people individually, the Electoral Office does with young people in schools. The interesting thing, and another lesson for us, is that a larger proportion of 16 and 17-year-olds are registered to vote in Northern Ireland than in Great Britain. As well as making sure that we deal with the potential risks, we have an opportunity to do a better job in getting younger people and disabled people, for example, registered to vote.
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Mr Harper: I will take one more intervention before I make some progress. Ladies first.
Ms Buck: Does the Minister agree that this is an issue of proportionality? At the moment, approximately 6 million people are not on the electoral register. Does he recognise that the main issue of concern is not spread across the country as a whole but targeted in particular areas and on particular communities, particularly frequent movers? We already know that only one in six of the population who moves frequently is likely to be on the electoral register. Does that not reinforce the need for targeted investment to support individual registration, because otherwise it will be people in inner cities and in the private rented sector who lose out in not finding themselves on the electoral register?
Mr Harper: The hon. Lady makes a good point. As she says, the single piece of information that suggests whether someone is on the electoral register is frequency of movement. We recognise that, and several of the steps that we are taking with stakeholders are intended to work out how we can better deal with it. I will set out later how we propose to fund this and ensure that the money reaches local authorities, and if the hon. Lady thinks that I still have not dealt with the issue, I will take another intervention from her.
Mr Harper: If the hon. Gentleman will forgive me, I am going to make some progress, and will perhaps take an intervention from him later. Otherwise I will not get through my speech, and many other Members wish to contribute to the debate.
It is clear that the current system of registration is unacceptably open to electoral fraud. There is widespread concern about that; indeed, a survey carried out at the end of last year found that 36% of people believe that it is a problem. If citizens do not have confidence in the integrity of our electoral register, they will not have confidence in the integrity of the outcome of elections. We need to tackle that. When we came into office, we did not think that the plans for which Labour had legislated, which involved a voluntary process initially running in parallel, were the best way to tackle the problem. We thought that it would lead to confusion and have a very significant cost. That is why we want to speed up the introduction of individual registration so that the register published after the 2015 annual canvass will consist entirely of entries that have been individually verified, with the sole exception of some of those in the armed forces.
The Electoral Commission supports that position. At the beginning of the month, Jenny Watson, chair of the commission, said, when commenting on alleged fraud in the recent London mayoral elections:
“The Electoral Commission wants to see our registration system tightened up and it’s good that the Government plans to introduce new laws to do this which will apply to any of us who want to vote by post before the 2015 General Election.”
Frank Dobson (Holborn and St Pancras) (Lab): Did the Electoral Commission find any fraudulent activity in the London mayoral election?
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Mr Harper: There have been a number of cases of fraud, although admittedly not many proven cases. An international observer body, the Office for Democratic Institutions and Human Rights, which is part of the Organisation for Security and Co-operation in Europe, described the voter registration system in Great Britain as
“the weakest link of the electoral process due to the absence of safeguards against fictitious registrations.”
“Consideration should be given to introducing an identification requirement for voters when applying for registration as a safeguard against fraudulent registration.”
That is very important. As I said, 36% of the public think that our electoral registration system is vulnerable to fraud, and that is clearly a problem.
Gordon Birtwistle (Burnley) (LD): I welcome this proposal, because during the recent elections in Burnley there were reports of wholesale fraud taking place on an industrial scale through personation and fake postal votes. Is the Minister considering proposals to require photo identification when people turn up to vote to cut out the appalling growth in personation that is taking place in some polling stations? [ Interruption . ]
Mr Harper: That point has been raised with me. At the moment, I do not think that striking the balance between making sure that people who are eligible to vote can vote and preventing those who are not eligible from doing so requires voter ID at polling stations. I heard several Labour Members shout out that that was an illiberal proposition, which is rich coming from people who thought that having compulsory ID cards was a good idea. This Government legislated to get rid of ID cards, and we do not mean to bring them in via the back door.
Last June, we published a White Paper and draft legislation setting out our proposals. We proposed that in 2014, every elector on the register would be invited to make a new application providing personal information that would be verified by comparing it to data held by the Department for Work and Pensions, to ensure that the applicant was a genuine person. Every elector would have to make a new application and anyone who did not, or whose application was unsuccessful, would be removed from the register published after the 2015 annual canvass.
We held an extensive public consultation on those proposals, which had more than 900 responses. As its Chairman said, the Political and Constitutional Reform Committee carried out pre-legislative scrutiny, and there have been a number of debates and questions on the matter in both Houses.
Members may have noted that earlier today, to assist the House in its consideration of the Bill, my right hon. Friend the Leader of the House announced in a written ministerial statement that the Bill will be part of a pilot for explanatory statements on amendments. I hope that all hon. Members who plan to table amendments will participate in that pilot, as will the Government.
Gavin Shuker (Luton South) (Lab/Co-op): What percentage of the eligible UK population does the Minister believe will be registered after 2015 under his plans?
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Mr Harper: I sincerely hope that it will be no lower than the population that is registered today, and indeed that it will be higher. One of the interesting things that we learned from the information that was published last year was that the number of people who were registered was not as high as we had hoped. That research, which the Electoral Commission carried out last year, will act as a baseline for the process. I have made a commitment to get the Electoral Commission to carry out the same research after the process, so that people can see how successful it has been. We want the process to be transparent and we have nothing to hide.
Paul Uppal (Wolverhampton South West) (Con): I take the Minister’s point about two thirds being the anticipated carry-over to the new register. However, I understand from reading the information from the Electoral Commission that voters who are on the register and who do not reply to the request for individual electoral registration will still be able to vote in the general election of 2015. Is that correct?
Mr Harper: Yes, that is correct. I referred to that point in response to the right hon. Member for Belfast North, when I spoke about the carry-forward. There is the important safeguard that if people fail to register to vote individually and there is no reason to think that they are not eligible to vote, there is a carry-forward process to stop the drop-off that we saw in Northern Ireland when it moved to a new system.
Mr Harper: If hon. Members will forgive me, if I am to take interventions, I need at least to answer the questions that people have asked before I take another one. I need to balance taking interventions with making some progress, or I will be chastised by Madam Deputy Speaker.
Hon. Members: There are six hours.
Mr Harper: There are, but I do not think that Members would be very pleased if I took all of them to speak from the Front Bench. Other Members want to participate in the debate.
I will finish answering the question from my hon. Friend the Member for Wolverhampton South West (Paul Uppal). If the check with the DWP database, the data matching or other information suggests to the electoral registration officers that a person is not eligible to vote, because they are not a real person or because they do not live at the given address, of course they will remove them from the register. This is about carrying forward people when there is no information to suggest that they are not eligible, and they simply have not registered. We thought, on balance, that it was better to do the carry-forward to avoid the problem that occurred when individual registration was implemented in Northern Ireland. The consultation suggests that we have got that balance right.
Mr Clive Betts (Sheffield South East) (Lab) rose —
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Mr Harper: Let me make a little more progress, then I will take more interventions.
Although there was widespread support for the principle of individual registration, concerns were raised about how our initial proposals might affect the completeness of the register. We have listened to those points and have made four significant changes to the initial proposals. Those changes are included in the Bill and we are confident that they will safeguard the completeness of the register as we move to the new system.
The first major change is that the Bill enables us to delay the timing of an annual canvass. There were concerns that in the initial proposals the gap between the last canvass under the old system and the start of the transition to individual registration was too long. It was thought to be preferable to carry out a full canvass in 2014, before sending electors individual invitations to register. We do not want to have an extra canvass, as that would be costly and confusing, but we intend to use this power to move the last canvass under the current system from autumn 2013 to spring 2014, so that the register is as up to date as possible before the transition to the new system.
Ms Buck: Will the Minister give way?
Mr Harper: I have already allowed one intervention from the hon. Lady. Let me make some progress and I will take more interventions in a moment.
The second major change in the Bill will enable us to require electoral registration officers, instead of inviting everyone on their register to make a new application, to begin the transition by matching the names and addresses of every elector already on the register against the DWP’s customer information system. Where the name and address match, and the ERO therefore has confidence that a genuine person lives at the address that they say they live at, that person will be confirmed on the register and retained. They will be informed that they do not have to make an individual application to register. That means that we can balance the integrity of the register with not insisting that every voter takes action in the first transition.
Evidence from the data-matching pilots that we carried out last year suggests, as my hon. Friend the Member for Wolverhampton South West mentioned, that the details of about two thirds of electors can be verified in that way. Today, I will place in the House of Commons Library the evaluations of the data-matching pilot by the Electoral Commission and my Department. Subject to parliamentary approval, we plan to run further data-matching pilots later this year to refine that method.
When an individual’s information cannot be verified, the electoral registration officer will invite them to register individually. They will be asked to make a new application and to provide their national insurance number and date of birth. As we set out last year, there will be reminders and the extensive use of door-to-door canvassing, as there is now, to encourage applications. If a person does not make a successful individual application, they will still be able to vote in the 2015 general election, as my hon. Friend said. However, any individual who wants to use an absent vote, where the risk is higher, will have to make a successful new application or to have been confirmed and retained on the register. That will ensure that people have greater confidence in the integrity of that election.
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Nick Smith (Blaenau Gwent) (Lab): I thank the Minister for giving way. In the further pilots, will the Department use credit reference agencies such as Experian to see whether that boosts electoral registration?
Mr Harper: We will carry out two sets of data-matching pilots. The first set, for which the orders have been laid before the House, although not yet debated and approved, involves the DWP specifically because it will pilot the pre-confirmation process. The second set, for which we have not yet laid the orders, will use other Departments. We have had conversations with private sector agencies. One problem is that there is some circularity in the process, because one way in which they construct their databases is by using the electoral register. It is therefore arguable how much information we would learn from them. However, we have had conversations with them and we will continue to do so.
Mr Harper: Go on then; I give way to the hon. Member for Vale of Clwyd (Chris Ruane)
Chris Ruane: I thank the Minister very much for giving way.
On the private sector’s knowledge of electoral registration, two and a half years ago I was informed by Experian that 6.5 million people were missing from the register. When I raised that with the Electoral Commission, it said that the figure was 3.5 million. Six months ago, the Electoral Commission said that, having done its research, the figure was 6 million. The private sector has excellent databases, which we should be utilising to maximise registration.
Mr Harper: The hon. Gentleman has made that point before. As I said to the hon. Member for Blaenau Gwent (Nick Smith), we are not closing off that option and we will continue to have conversations with those organisations.
Following the 2015 general election, there will be another full household canvass and all potential electors who appear—
Siobhain McDonagh (Mitcham and Morden) (Lab): Will the Minister give way on that point?
Mr Harper: If the hon. Lady lets me make the point on the canvass, I will then take her intervention.
All potential electors who appear on the returned canvass form but have not been verified individually will be invited by electoral registration officers to register. That canvass will include reminders and the extensive use of door-to-door canvassers. At the end of the canvass, the EROs will—
Mark Tami (Alyn and Deeside) (Lab): Will the Minister give way?
Mr Harper: No; let me finish this point, then I will take the intervention from the hon. Member for Mitcham and Morden (Siobhain McDonagh), who got her bid in first.
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At the end of the canvass, the EROs will send personally addressed individual electoral registration application forms to individuals who appeared on the electoral register produced at the end of the old-style canvass, who have not been verified individually and whom electoral registration officers do not believe to have moved. That will act as a final check to ensure that individuals who are to be removed from the register understand what will happen if they do not make an individual application. That will be a robust process, because people will have to go out of their way to avoid being registered. The register that will be used for the 2015 boundary review will therefore be robust, complete and accurate. The relevant part of the Opposition’s reasoned amendment does not hold up at all.
Siobhain McDonagh: Under clause 4, the procedure for the canvass will change. At the moment, if the ERO or their canvasser knocks on a door and finds somebody who is not registered, they fill in the form there and then. Clause 4 states that that can no longer happen, and that the canvasser can only take people’s names and addresses and then send a form to them. Surely the point is that canvassers knock on doors because people have not filled in their forms without assistance.
Mr Harper: Canvassers will be able to identify that there are voters at an address, but each voter will have to register individually and provide their information to the local authority so that it can be verified. We will examine the canvass process when we develop the secondary legislation. Because of the nature of the information being collected on the doorstep—not just people’s names and addresses but their national insurance numbers—we need to take data security carefully, as we have at every step of the way. We will continue to have discussions with local authorities and the Information Commissioner about how best we can do that, but we have a robust set of processes in place to ensure that everyone is registered.
Mr Harper: Let me make a bit more progress, then I will give way to the hon. Member for Sheffield South East (Mr Betts), who has been bidding to get in for some time.
The use of data matching to confirm existing electors will simplify the transition process for most people in the country. It will create a floor below which registration rates cannot fall, and importantly it will allow registration officers to focus their efforts and resources on electors whose details cannot be confirmed and eligible people who are not on the register.
Mr Betts: The Minister said that there would not be transitional arrangements for people who have a postal vote. Does he understand that people who have applied for a postal vote in the past now assume that they are going to get one at every election? There could be a real problem with the Government’s proposals, because, in 2015, people who assume that they are going to get a postal vote will not get one as the lists will have been scrapped. That could have an adverse affect on turnout, because postal voters are more likely to vote, and it could effectively discriminate against the elderly and people with disabilities, who are proportionately more likely to have a postal vote.
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Mr Harper: The two thirds of voters whose details are confirmed automatically will be moved over to the new register once their information has been verified. If they are absent voters, their absent vote will automatically be carried forward as well. [Interruption.] That is what will happen. Absent voters whose details are confirmed and who are moved on to the register will be able to use their absent vote. However, people whose information has not been verified and who do not make an individual application will not be able to have an absent vote. Of course, local authorities know who those people are, and we are working with them and with the Electoral Commission to ensure that everyone with an absent vote is contacted so that they know that if they want to continue having an absent vote they need to register individually. We are confident that local authorities will do that. In a moment, I will set out how we will ensure that local authorities get the funding needed to ensure that that takes place.
The third major change that we have made is removing the opt-out provision from the Bill. The original intention was very simple: to enable EROs to focus their resources on people who wanted to register to vote, rather than having to keep chasing individuals who had no intention of registering. However, we have listened to the arguments made by Members of the House, the Electoral Commission and the Political and Constitutional Reform Committee. We want the maximum number of eligible people to be registered to vote, so we have decided to remove that provision.
The final major change we have made to our proposals is that we will enable electoral registration officers to issue a civil penalty when an individual who has been required to make an application fails to do so. Over the past few months, there have been discussions about whether an offence should be attached to an individual form. At the moment, it is not an offence not to be registered, which will not change, but there is a criminal offence of not returning the household canvass form. That, too, will remain, because by not doing so somebody can disfranchise other people.
We were faced with the question whether we should create a new criminal offence to be applied to the individual application form. We did not think it appropriate to criminalise people who simply did not register to vote. After careful consideration with key stakeholders, and after listening to Members, we believe it is appropriate to create a civil penalty—akin to a parking fine—for individuals who, after being required to make an application by a certain date, fail to do so.
Simon Hughes (Bermondsey and Old Southwark) (LD): The Minister will know that I am very pleased by that announcement, for which I have lobbied. I am grateful for the Bill and the changes the Government have made to it.
To maximise the number of people registered and get people to understand the penalty if they do not respond, will the Minister ensure that local authorities, social landlords, schools, colleges, sixth forms, the high commissions of Commonwealth countries and the Irish embassy play their full part in getting the system known among those with whom they regularly deal?
Mr Harper:
The right hon. Gentleman makes a very good point, and he has indeed been greatly involved in making points on the matter in the House, for which I
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am grateful. In his constituency there is significant voter turnover each year, which presents challenges to his local registration officer. We are already working with groups that represent some of the categories that he mentions, but he also mentions a couple that we had not previously considered, such as high commissions. We will certainly bear them in mind, and I will discuss the matter with my officials.
Mark Tami: Will the Minister give way?
Mr Stewart Jackson (Peterborough) (Con): Will my hon. Friend give way?
Mr Harper: I will finish my point about the civil penalty, then I will take an intervention from my hon. Friend the Member for Peterborough (Mr Jackson).
The Bill provides that after a registration officer has followed any specified steps and an individual has not made an application, he can require them to do so. If at that stage they fail to do so, he can impose a civil penalty. The intention is that only those who refuse repeatedly can be fined. We do not think it would be particularly helpful to democracy if we fined hundreds of thousands of people, so we expect the number of fines levied to be similar to the number of prosecutions at present. Nor do we want to create a financial incentive for local authorities to use fines as a revenue-raising measure, so any moneys collected—[Interruption.] I hear one of my hon. Friends chuckling, but one or two local authorities have been known to do such things, so any moneys collected will be paid back to the Exchequer through the Consolidated Fund.
Mr Jackson: I agree with the compromises that my hon. Friend has made on the opt-out and the civil penalty. I am sure he agrees that people’s propensity to register for elections is a function of societal change as much as anything else. The Electoral Commission has stated:
“Recent social, economic and political changes appear to have resulted in a declining motivation to register to vote among specific social groups.”
“changes in the approach to the annual canvass…as well as matters of individual choice and circumstances (such as a decline in interest in politics).”
Surely we need to concede that some people do not want to register because they are not interested in the process.
Mr Harper: We do. The main impact on an individual who does not register to vote is the rather obvious one that they lose their opportunity to vote and have their say in how their country is governed, but there are also some public policy reasons why we want people to register to vote. One reason is to ensure that there is a complete register for the purpose of boundary changes, and another is that the electoral register is used as the pool for jury service. We therefore want to ensure that it is as accurate as possible.
My hon. Friend is right that is up to Members and to people involved in politics of all descriptions to motivate people to register to vote and then use their vote. The use of the vote will, of course, remain sanction-free. It will be entirely up to people whether they use their vote.
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Mark Tami: Will the Minister give way?
I shall set out how we intend to fund the transition to individual registration. We have allocated £108 million over the spending review period to do so, including by meeting local authorities’ costs over and above the current cost of electoral registration. I can confirm today—this is new information—that we will fund local authorities in England and Wales directly through grants under section 31 of the Local Government Act 2003. Those will be allocated grants for the purpose of paying for the transition, not just money buried in the revenue support grant. In Scotland, electoral registration is carried out for the most part by EROs who, barring two exceptions, in the city of Dundee and in Fife, are independent of each local authority. There, the additional costs of implementing the new system will be paid directly to them.
Mark Tami: The Parliamentary Secretary talked a lot about the canvass. Does he accept that the quality of the canvass is important, and that some local authorities are much better than others? I welcome his comments on the extra money, but will he ensure that it will be spent on that and not just ferreted away somewhere else?
Mr Harper: Local authorities will have legal obligations to deliver those measures, and I will consult them over the summer about the precise details of the timing of and approach to grant allocations so that they get the money to pay for transition when they need it, and ensure that there is clear accountability, showing that they are taking the steps required by law to prepare for the transition to the new system.
Mr Wayne David (Caerphilly) (Lab): The Parliamentary Secretary makes an important point, but will he give a commitment to the House now that the money will be ring-fenced?
Mr Harper: Section 31 grants are specific grants, and the hon. Gentleman needs to be aware of an interesting point: local authorities already fund about one third of the cost of electoral reform, so if we insisted on a specific amount being spent on electoral registration, it would be easy for local authorities that wanted to do so to evade that. They could use the money that we gave them to pay for their business-as-usual electoral registration and not do any of the things that we want them to do. We will give them money directly; we will consult about the mechanism so that we have some accountability; we will recognise that some local authorities have bigger challenges than others so that all the money is not dished out in the first place—we want local authorities that face the biggest challenges to be able to bid for extra funding—and we will try to ensure that we have a workable system that is not too bureaucratic. I am confident that local authorities and electoral registration officers will welcome our announcement about not allowing the money to be swallowed up in the overall revenue support grant by paying direct grants under section 31 of the Local Government Act 2003. They will have the confidence that they have the money to deliver the programme.
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We consulted widely on our proposals for individual registration, which have undergone pre-legislative scrutiny. We have worked closely with the Electoral Commission, the Association of Electoral Administrators and groups of front-line staff on our plans. We will begin publishing draft secondary legislation for IER in June, and we will continue to add to the package as the summer progresses, aiming to conclude publication before Parliament returns in the autumn. We will talk to those key groups about the detail of the proposals as we go along.
There will be some matters for which we do not intend to publish draft legislation—for example, those for which we have no current plans to use the powers. There will be other matters on which we want to seek stakeholders’ views about the approach. In the amendment, Labour Members deplore our not publishing secondary legislation and it is therefore worth saying that, for two similar measures—the Electoral Administration Act 2006 and the Political Parties and Elections Act 2009, both of which contain significant powers to be made by regulation—no secondary legislation of any description was published at any stage during their passage. It was all made and published after the Bills had received Royal Assent. On that issue, therefore, the Labour party is very much in the mode of “Do as we say, not as we do.”
The Government’s approach is to treat the House much more seriously, to publish Bills in draft, to carry out pre-legislative scrutiny, and to publish draft legislation while the measure is still going through the House. May I pick up the point that the Chairman of the Political and Constitutional Reform Committee made? Members can see what is proposed while the Bill is undergoing its parliamentary passage. I will take no lectures on that from anyone on the Labour Benches.
So far, I have discussed the measures that we are taking to mitigate the risk of the transition to the new system. There are also several opportunities to do better. The Bill will facilitate online registration, whereby an individual will complete the end-to-end process without having to fill in a paper form. That will make it more convenient for individuals to register to vote, more accessible for, for example, people with visual impairments, and more accessible for young people. It is our intention that the online system will be fully operational when the transition to individual registration begins. As I said yesterday during Deputy Prime Minister’s questions, that is a genuine opportunity, certainly for disabled people.
For example, Scope said that it
“supports the change to a system of IER, and warmly welcomes the Government’s commitment to ensure that disabled people’s needs are taken into account”.
It agrees with our assessment that
“the introduction of IER should improve access for voters with disabilities. The current arrangements do not adequately allow for disabled people’s access needs to be taken into account”,
and that the introduction of IER offers an ideal opportunity to put in place a more accessible system. We intend to do that.
Mr Mark Williams (Ceredigion) (LD):
I thank the Parliamentary Secretary for sharing the information about the online system with some of us last week. He will know that one of the concerns that some of us have is about access to national insurance numbers as a
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means of taking part in that system. There is some difficulty in that people do not readily have access to their national insurance numbers. What suggestions has he for improving that?
Madam Deputy Speaker (Dawn Primarolo): Order. I know that the Parliamentary Secretary is trying to be extremely helpful to the House, and he has taken lots of interventions. However, perhaps he will bear it in mind that he has been speaking for more than 40 minutes, that many Members wish to participate in the debate, and that there will be winding-up speeches.
Mr Harper: I am very grateful, Madam Deputy Speaker. I predicted when I was being perhaps excessively generous that I would be taken to task at some point, and that has happened.
Madam Deputy Speaker: Order. In that case, it is a shame that the Parliamentary Secretary did not take his own advice.
Mr Harper: I know that one of my faults is that I am generous to a fault, and I will do my best to rein in that generosity. I will respond to the hon. Member for Ceredigion (Mr Williams) and then I will finish my speech without taking further interventions. I am grateful for your direction, Madam Deputy Speaker, and I am sure that other hon. Members will realise that I am simply following wise advice rather than being ungenerous.
The hon. Gentleman made a good point about national insurance numbers. We have done quite a lot of work on that. The vast majority of members of the public have ready access to their national insurance numbers. When polled, 95% of people did not feel that it would be a problem. Of course, we will ensure that, on the online system, as on the paper-based system, we give people advice if they do not have a national insurance number about the process that they have to follow to get one. There will be an alternative mechanism for the small number of people who do not have a national insurance number to demonstrate their identity to the ERO. However, we do not want to allow that to be a get-out for everybody else. If the hon. Gentleman has anything further to say on the matter, I am obviously happy to discuss that with him.
I believe that the changes that I have outlined on individual registration will ensure the completeness of the register. I think that the Government have listened, learned and improved the Bill.
Let me consider briefly the clauses in part 2 about the administration and conduct of elections, which are intended to improve the way in which elections are run. They address issues that parliamentarians and electoral stakeholders have raised, and make several practical and sensible changes. I will not go through them all, just the most significant.
First, let me consider the provision that extends the electoral timetable for UK parliamentary elections from 17 to 25 days. That will benefit voters, particularly overseas voters and service voters based abroad, enabling them to have more time to receive and return a postal vote. It also makes it easier to combine general elections with other polls.
The Bill also provides for assisting postal voters—I hope that that is of assistance to the hon. Member for Sheffield South East—whose votes are rejected at elections
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because their postal vote identifiers do not match those stored on records. For example, someone’s signature may have changed or they put down the wrong date—for instance, not their date of birth but the date of the election. Around 150,000 postal votes are rejected at elections. Regulations will make EROs have a duty, after the elections, to inform voters that their identifiers have not matched.
[Laughter.]
I do not know why the right hon. Member for Holborn and St Pancras (Frank Dobson) is laughing. The provision is included so that the identifiers can be updated and that, instead of those voters losing their votes at every subsequent election, they can ensure that their votes count in future. At the moment, there is no duty to inform them. While the right hon. Gentleman’s party was in government, hundreds of thousands of postal votes were rejected at elections and nothing was done. Rather than laughing at the sensible provisions, I would hope that he supported them.
Alongside that provision, the Government plan to introduce secondary legislation to make it a requirement that 100% of postal vote identifiers are checked at elections. At the moment, legislation provides for only 20% of postal votes to be checked. Ensuring that 100% have to be checked will strengthen the integrity of the process.
There are also provisions to allow the Secretary of State to withhold or reduce a returning officer’s fee for poor performance, but with the important check that there must be a recommendation by the independent Electoral Commission. That is to ensure that returning officers are more accountable. That provision was implemented on a test basis in the Parliamentary Voting System and Constituencies Act 2011—it was a power that the chief counting officer had. It worked well and we are therefore taking it forward.
The final shape of the proposals demonstrates the value that pre-legislative scrutiny adds to the development of legislation. I hope most hon. Members will see that the Government have taken a careful, thoughtful and measured approach in developing our policy. The Chair of the Political and Constitutional Reform Committee, the hon. Member for Nottingham North (Mr Allen), is not sitting in his usual place as he has been upgraded to the Opposition Front Bench, but he said in January that
“the House is in severe danger of doing the job that members of the public elected it to do. The Government have submitted a pre-legislative proposal to the Select Committee, which is how things should happen. The Select Committee responded with non-partisan efforts to determine a better Bill and to make better proposals, some of which have already been heard by the Government.”—[Official Report, 16 January 2012; Vol. 538, c. 508.]
The Government have since accepted more such proposals. In that spirit, I commend the Bill to the House.
3.10 pm
Mr Wayne David (Caerphilly) (Lab): I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House, whilst affirming its support for a complete and accurate electoral register and a move to a system of individual electoral registration (IER), declines to give a Second Reading to the Electoral Registration and Administration Bill because whilst the Political Parties and Elections Act 2009 received cross-party
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support, establishing an orderly move to IER with a strong independent role for the Electoral Commission in guarding against a sharp fall in registration numbers, the Bill speeds up the introduction of IER, and downgrades the Electoral Commission’s role, with the result that there will be no independent arbitrator with the power to halt the process if it is deemed to have resulted in a sharp drop in registration levels; notes that the 2015 parliamentary boundary changes will be based on the new electoral register which will potentially be inaccurate, risking illegitimate new constituency boundaries; believes the proposals would mean the young, the poor, ethnic minorities and disabled people would face an increased risk of being unregistered and thus excluded from a range of social and civic functions; further regards the proposals as flawed as they risk making the list from which juries are drawn less representative; concludes that because the evaluation of the second round of data-matching pilots will not be published until early 2013 an assessment of the likely completeness of the register is in effect prevented; and deplores the fact that the Government has not published secondary legislation and an implementation plan for the introduction of IER.”
As the Minister has said, the Bill is essentially in two parts, the second of which concerns the minutiae of the administration and conduct of elections. Much of it contains relatively uncontentious proposals, but other matters ought to be addressed, particularly the need to ensure that there are no more queues at polling stations. One proposal might well raise a few eyebrows—to allow a candidate who is supported by two or more political parties to use the emblem of one of them. The Minister has said previously that the measure addresses an anomaly and permits Labour and Co-operative candidates to use those emblems. It is kind of him to be helpful to the Labour party, but I must tell Conservative Back Benchers to be afraid—be very afraid. It could well be the thin end of the wedge. Who knows what it could lead to?
The first part of the Bill demands far greater attention because it focuses on electoral registration. The Opposition’s view is that individual electoral registration is a sound principle. It places an appropriate responsibility on individuals to register to vote and is in tune with modern society. It can no longer be sensible for voter registration to be in the hands of the head of household. Individual elector registration is also an effective way in which to ensure the completeness and accuracy of voter registration. That is why the Labour Government secured legislation for individual elector registration in Northern Ireland and Great Britain.
Last autumn, the Government introduced their draft Bill and White Paper on IER. Understandably, their proposals at the time created consternation among a wide range of opinion. Much attention focused on their suggestion that there should be a virtual opt-out for individuals who do not wish to be reminded about registration by an electoral registration officer. The second proposal that understandably left many aghast was the suggestion in the White Paper that voter registration ought to be a lifestyle choice, and that no fines should be imposed for non-registration. I welcome the fact that the Government have reconsidered both those proposals and others, but we should be clear that a draft Bill and prior consultation are relatively innovative for this Government—there was no draft Bill or prior consultation on two previous pieces of important constitutional legislation, namely the Fixed-term Parliaments Act 2011 and the Parliamentary Voting System and Constituencies Act 2011. I am glad that they are changing their ways. The opt-out has been dropped and civil penalties will be introduced, as suggested by the Opposition. I am also pleased that the Government have listened and that
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many electors on the old registers will be carried over. Similarly, the annual canvass planned in 2013 will now occur in 2014. As far as that is concerned, so far, so good.
Ms Buck: Does my hon. Friend recognise that the population and electoral registration turnover in parts of the country, particularly London and the inner cities, is 30%? Having a canvass a full year before an election means that we risk going into the election with a third of the population unregistered. The Minister said that there will be a national expectation that the total number of people not on the register will fall, which is fine, but if we do not recognise the variance between communities and the pressures on cities, that national expectation will not be much comfort to people such as me.
Mr David: That is a good point, and I shall refer to it later in my speech.
As I was saying, the Government have made positive concessions, but they have not listened on other matters—indeed, they have refused to listen to those who have expressed legitimate concerns about the Bill. Foremost among the Opposition’s concerns and those of many outside the House is the Government’s intention to press ahead with individual elector registration at a breakneck speed. The concern that there will be no carry-over for many postal and proxy votes in the move to a new register has been expressed by a range of disability charities, including Mencap, Sense, the Royal National Institute of Blind People and Scope.
Mr Mark Williams: I have read the Scope briefing and share that concern, but is the hon. Gentleman not reassured by what the Minister has said? He said that a very small group of people will not be carried over and that there will be a carry-over of existing absent voters to the new list.
Mr David: I am not entirely reassured by what the Minister has said. In fact, I found his comments contradictory and confusing. It is a straightforward matter, and I hope that he provides in his winding-up speech the clarification that the Opposition and organisations such as the Royal National Institute of Blind People want.
There is also a worry that moneys for EROs to support transition have not been adequately ring-fenced. I listened carefully to the Minister. He provided more clarity, but has specifically not stated that the money will be ring-fenced so that it is spent on the purpose for which it is intended, which was a key Political and Constitutional Reform Committee recommendation; I pay warm tribute to the Committee’s work.
Many other concerns are referred to in the reasoned amendment, one of which is the power that the Bill gives to Ministers to cancel annual canvasses. The Government’s argument is that we might at some point no longer need annual canvasses, when registers are complete. The Opposition argue that an annual canvass is needed even if we eventually have high registration levels, because we must always guard against, and be diligent about, any deterioration of the electoral roll.
The Government have made much of their U-turn on civil penalties. I do not want to belittle their volte face, but before the House can make an assessment of the civil penalty that the Government propose, it needs to
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know exactly how much the penalty will be. The Minister has said in other exchanges that the penalty will be like a parking fine, but the size of parking fines varies enormously across the country. Here in Westminster, they can be as high as £130, but in Rhondda Cynon Taff in south Wales, they can be as low as £25. Nobody wishes large numbers of fines to be issued, but if fines are to be an incentive for people to register, they need to be fixed at a reasonable level, and yet we do not know what that will be.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con): When I was a Conservative party agent way back in the 1980s—[ Interruption. ] —people were forced to pay a fixed fine of £50 for non-registration, but does the hon. Gentleman know how many people were forced to pay it?
Mr David: That is not much of an argument. We need an indication from the Government, which they have failed to provide, of the level at which the fixed fine will be set. There is no question of varying the fixed fine, of course; it will be a uniform fixed fine. We simply want to know what it should be. The Observer suggested that it might be £100. There have been other suggestions, too. I am simply saying that given that the Government are making a big thing of having listened to the opinions of many people outside the House and are committed to a civil penalty in principle, we need to know what they judge an effective figure to be.
Gavin Shuker: Is not the point that the threat of a fine is proportionate to how much money it would take off people? If it is a small fine, people will be less likely to register, but if it is a larger fine, they will be more likely to do so.
Mr David: My hon. Friend puts it very well.
The Minister told us that details of the civil penalty would be set out in secondary legislation, which brings me to a broader point. With this legislation, perhaps more than any other, the devil is in the detail, but the detail is tucked away in secondary legislation and we cannot see it. Last November, I asked the Deputy Prime Minister, from the Dispatch Box, whether the Government would publish their secondary legislation at the same time as the primary legislation. That was six months ago. Additional information has been forthcoming, including today, but six months later we still cannot properly assess these proposals, simply because we do not know—we have not been told—the detail.
One of the main reasons we have continuing concerns about the Bill relates to the Government’s timetable for implementation. Under the last Labour Government, the Electoral Commission was to play a key role in monitoring and assessing the progress towards a new register. Sadly, that role has been diminished and downgraded. Instead, the Government are rushing pell-mell into a new system of electoral registration that ought to provide the cornerstone of our democratic process. We understand from the Government that they are undertaking a second round of data matching. That is to be welcomed and will show how complete the new register is at the end of 2015. The pilots will indicate whether the new register will be depleted. In all reasonableness, I think that the House should be aware of the conclusion of the
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pilots before it decides on the Government’s implementation timetable, yet the results of the data-matching pilots will not be available until early next year.
Why are the Government hell-bent on introducing this radical change at breakneck speed? It has been suggested that they are determined to end the carry-over arrangements before 1 December 2015 for reasons of Conservative party self-interest.
Mrs Eleanor Laing (Epping Forest) (Con): I recall that we first discussed individual electoral registration in the House seven years ago, since when it has been implemented in Northern Ireland—effectively a pilot scheme for the rest of the UK—and it has been looked at over the past two or more years in great detail. How can that possibly be described as breakneck speed?
Mr David: It is breakneck speed. This is the first piece of legislation in the Queen’s Speech to be introduced. The Electoral Commission and many others have said that we must first complete the data-matching exercises. The Government have deliberately introduced this legislation as quickly as possible in their legislative programme to circumvent the evidence coming forward that might highlight weaknesses in the process.
Simon Hughes: The hon. Gentleman has a problem. He is a good guy and, like me, wants a good Bill. The Government came up with proposals, have hugely improved on them having listened to him, me and many others, including people outside, and they now want to implement a system that his Government never implemented, despite saying that they would—and this Government will do it as quickly as possible, and they are building in the safeguards. On this occasion, then, he ought to accept that the Government have done a good job. Why does he not simply thank the Government for having listened?
Mr David: With all due respect, I say to the Liberal Democrats that, yes, concessions have been made, but there is still a long, long way to go. As I hope the Liberal Democrats come to realise before the end of the passage of the Bill, some measures in it might well work against their interests. The advantage will be with the Conservatives, and the Liberal Democrats might pay a very high price for acquiescing in the policies of their Conservative masters.
What is the significance of 1 December 2015? It is when the next parliamentary boundary review takes place. As we should all be aware, under the Parliamentary Voting System and Constituencies Act 2011, if, for whatever reasons, there is a decline in the number of electors in certain constituencies, the parliamentary boundaries must be redrawn. It would be most unfortunate for the Government to give the impression that they were seeking political advantage by introducing IER at the end of the transitional period, when the size of the electorate could be temporarily diminished. It could be that the new data-matching pilots will indicate that December 2015 is precisely the time when electoral numbers are likely to be at their lowest.
Chris Ruane:
What reason have the Tory Government given for bringing forward IER by one year and putting
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back the next election to the latest possible date, which is May 2015? Is it happenstance or could it be for political advantage?
Mr David: I do not think it is mere coincidence. It is possible to look at the dates and come to certain conclusions. I only wish that the Liberal Democrats would do the same and recognise that there is a lot in what I say.
That concern has been identified by many others. The Political and Constitutional Reform Committee has raised it, as has the Electoral Reform Society, which pointed out that a depleted register could lead to the reduction of inner-city constituencies, while leaving
“thousands of…citizens who will not be accounted for or considered in many key decisions that affect their lives, yet will still look to MPs to serve them as local constituents.”
I ask the Government, therefore, to dispel any impression that their agenda is partisan. To do that, all they need to do is adopt a more reasonable time scale for the introduction of IER that goes beyond December 2015.
It is because the Government have so far been unable to acknowledge our concerns or act on our proposals that we have tabled our reasoned amendment. If the amendment is unsuccessful, we will oppose the Bill’s Second Reading. That is not a course of action that we want to take, but we feel it absolutely necessary to uphold the integrity of the electoral system while ensuring that our democratic system is built on firm foundations.
Mr David: We believe that there is no firmer foundation than an accurate and complete electoral register.
3.29 pm
Mr Stewart Jackson (Peterborough) (Con): I like the hon. Member for Caerphilly (Mr David), but I fear that spending too many evenings in parliamentary Labour party meetings has made him quite paranoid, given that the previous Government advanced the same substantive proposals for individual electoral registration in Northern Ireland and that the consultation document that was published in 2005 was followed by the Northern Ireland (Miscellaneous Provisions) Act 2006, which gave rise to individual electoral registration in Northern Ireland. Neither we nor anyone else accused those measures of being rushed through. The hon. Gentleman must be the first Front Bencher to argue against the substantive proposals of the previous Government. The bigger question is why the integrity, autonomy and authority of the electoral register should be more important in Northern Ireland than in England, Wales and Scotland.
Mr Harper:
I would have made this point to the hon. Member for Caerphilly (Mr David), had he shown the generosity of spirit that I did. Given his complaints about the diminishing register and the risks involved, would my hon. Friend like to consider why the Electoral Commission’s research showed that in 2000, under the previous Government, 3 million people were missing from the electoral register and that by 2010, just after they had left office, the figure had risen to 6 million? If there is a party in the House that has shown itself to be
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a past master at driving people off the electoral register, it is not the party on the Government Benches; it is the party opposite.
Mr Jackson: The Minister makes an astute point. In 2001, the year in which the hon. Member for Caerphilly entered the House, the English electorate numbered 37.3 million. By the end of Labour’s second term, in 2005, the figure was 37.1 million. So Labour did not push up registration rates in an increasing population either.
I take with a pinch of salt Labour’s protestations and faux outrage. We have argued for many years that overseas voters should also have the right to be registered, and that active steps should be taken to achieve that. That point has also been made by the hon. Member for Caerphilly’s erstwhile right hon. Friend the Member for Rotherham (Mr MacShane). However, that did not happen during the 13 years of the previous Government. Indeed, they more or less ignored services voters, despite many people from military constituencies saying that that was an outrageous and egregious oversight.
Mr Evennett: My hon. Friend is making some powerful points. Does he agree that the modernisation of our system is essential, and that it should be brought in as soon as possible?
Mr Jackson: I could not agree more with my hon. Friend, who has great experience in the House.
The Bill is absolutely right, in that its central aims are to tackle electoral fraud, improve the integrity of our electoral system, particularly the electoral register, and modernise the electoral registration system, which, as my hon. Friend the Member for Bexleyheath and Crayford (Mr Evennett) says, is most important. The hon. Member for Nottingham North (Mr Allen) was gracious in paying tribute to the Minister and the Department for engaging in an open and wide-ranging debate during the pre-legislative scrutiny and public consultation, and for producing the White Paper and a detailed, comprehensive Government response in February 2012. It is far from the truth that this is some kind of rushed, gerrymandering Bill. It has attracted a lot of support, including from organisations such as the Electoral Commission. There is consensus around the Bill.
The proposals in the Bill featured not only in the Conservative manifesto of May 2010 but in the coalition agreement, so we certainly have a mandate for carrying out this policy. If the hon. Member for Caerphilly were more generous of spirit, he would perhaps admit that the previous Government wanted to proceed in a similar way when they were in power. Reference has been made to the Political Parties and Elections Act 2009 in that regard.
Chris Ruane: Will the hon. Gentleman answer a question that has so far remained unanswered? The 2009 Act was passed as a result of consensus across the Chamber, and its provisions were to start in 2015. Why is it so important to bring them back by one year? Why could we not have retained all-party consensus by keeping the date at 2015?
Mr Jackson:
Because we see this as in the best interest of the body politic generally. There is a plethora of evidence to show that cumulative cases of electoral
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fraud—I will come on to discuss this issue later both for my own constituency and across the country—have grievously damaged the faith and trust people have in the electoral process. The Minister is quite right that we have all been complacent in assuming that we live in a society where transparency, openness and fairness exist above all in the electoral process. I did not think I would ever encounter a case in which a judge would describe a British electoral result—in this case, for Birmingham city council—as comparable to one of a banana republic, yet that happened in 2004 under the watch of the Government whom the hon. Member for Caerphilly supported.
Important parts of the Bill are uncontentious, but I will bring some concerns to the House’s attention later. Of course individual electoral registration has been broadly supported across the House over a number of years. Some elements, such as the review of polling places, are innocuous and will not be contentious, as I said.
On civil penalties, I mentioned earlier that we must be cognisant of the fact that some people are not interested in the political process. We cannot force people to register on the basis of a criminal sanction—it is not right to do so—if they genuinely do not feel part of the process. That is a function not of a political process, but of societal change over many years. International comparisons are important for understanding how to get people to register. Australia is an interesting example. The level of civic engagement in schools and colleges there and the amount of publicity given to financial education, for example, has led to school children and young people understanding the importance of being involved in the system. I think that is a much better way of proceeding than having criminal sanctions and a penalty. Our society is much changed.
Siobhain McDonagh: I am certainly no expert on the Australian system and I am sure that school education there is good. Nevertheless, Australia has compulsory voting and has far more frequent and stronger fining than we do.
Mr Jackson: We will not meander down the path of compulsory voting, which is a completely separate issue, and even the benign Deputy Speaker might rule me out of order if I did that. I think it is better to persuade than to threaten and cajole people. That is why I am not particularly concerned one way or the other about the opt-out proposals. Had they remained in the Bill and not been amended, I would still have been happy to support it. We can argue about civil penalties, but I think amounts of £60, £80 or £100 send out a powerful enough message. After all, no one wants to get a parking ticket and be fined £60. We are talking about civic engagement with something that is important for the future of our country, and people understand that they should be part of it.
An important corollary of the changes is the reduction in the potential for financial fraud. Essentially, the capacity to commit fraud is often given via a place on the electoral register. Figures produced over the last year or so in the Cabinet Office impact assessment by the Metropolitan Police Service and the National Fraud Initiative under the auspices of Operation Amberhill showed that of 29,000 information strands collated, 13,214—almost 46%—showed data matches with the
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electoral register that were fraudulent or counterfeit. In other words, the documents were often generated as a result of someone’s being on the electoral register, but were nevertheless fraudulent or counterfeit.
The Minister made the simple point that ours is one of the few countries in the world that still operates a household registration system. The system is backward-looking, and it disfranchises people, particularly women, in communities in which the heads of households take full responsibility for women’s registration and postal vote. We should do something about that. We have a duty to ensure that those women’s votes are not being stolen by people who should not have access to them, because we have a universal franchise based on free and fair access to democracy for every man and every woman, which is what has put us here today.
At present, only a person’s name, address and nationality need to be supplied for that person to appear on the electoral register. As the Minister made clear, this is one of the least robust systems in the world. Let me share with the House our experience in Peterborough. The hon. Member for Mitcham and Morden (Siobhain McDonagh), who I know has been in the House for a long time, was very relaxed and insouciant, perhaps even complacent, about postal votes and the transfer to the individual electoral registration system. However, on 27 April the Peterborough Evening Telegraphreported that 16% of postal votes applied for in the central ward of Peterborough had been thrown out because they were fraudulent or forged.
That is happening now, and it can be extrapolated to different communities and different wards in urban areas throughout the country, including Greater London. However, Members need not rely on me for speculation, because there have already been serious cases of electoral fraud involving postal votes in Slough, Pendle, Birmingham, West Yorkshire and, in particular, Peterborough. I shall say more about that later.
Siobhain McDonagh: I certainly would not tolerate the fraudulent registration of even one postal vote, but how can it be right to reduce access to postal votes for the many because of a few examples of fraud? No investigation, including those by the Electoral Commission and the Association of Chief Police Officers, has discovered extensive fraud. We know that it happens, and we know that it happens in particular places, but surely the job of the police is to find out where it happens and make specific proposals to deal with it, not to disfranchise the many.
Mr Jackson: We are making specific proposals. I think that the hon. Lady is tarrying with the wrong person. I saw the huge resources that were devoted to investigation of postal vote fraud by the Cambridgeshire constabulary—who, as far as I know, received little if any help from the Government of whom the hon. Lady was a member—between 2004 and 2008. It took four years for Operation Hooper to complete its investigation, which resulted in the imprisonment of, I believe, five individuals—two of them Conservative and three Labour, as it happens—following the European and city council elections in the central ward of Peterborough in June 2004.
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We cannot say that we should not bother about this because we have no proof that it happens. It does happen, it is costly, it undermines the very basis of democracy in this country, and we should ensure—as I believe the Bill does—that the correct procedures operate to ensure that it does not happen in the future. The hon. Lady may wish to reconsider her rather lackadaisical approach to the integrity of our electoral system.
One proposal with which I strongly agree, although I do not think that the Government have gone far enough, is the proposal in clause 19 to allow police community support officers into polling stations. I think that if there is a missed opportunity in the Bill, it is our failure to consider the serious problem of personation and intimidation at polling stations. We saw that in Tower Hamlets earlier this month, and we have seen it too often in Peterborough. I must not major on Peterborough’s central ward, but it is the one that I know best. In that ward we have four polling stations. About half a dozen members of the Cambridgeshire constabulary and mobile CCTV are required at each of them because of the issue of personation, of which there have been cases in Peterborough.
We are not going far enough in looking again at the Representation of the People Act 1983, because the power of the presiding officer inside the polling station remains extremely limited. If the hon. Member for Mitcham and Morden were to go into a polling station in Mitcham and Morden and say she was Elvis Presley and that name was on the electoral register, the polling clerk would have very little power to say, “Actually, you’re not Elvis Presley. You’re our esteemed local Labour MP for Mitcham and Morden.” That is not satisfactory. The legal test for proving that the hon. Lady is her good self, rather than Elvis Presley, is very difficult. We have missed an opportunity to look again at that issue.
In closing—which is what the Whips are imploring me to do—may I make two quick points? I have concerns about the removal of the co-ordinated online record of electors—CORE—database. I have no interest in promoting national ID databases—I voted against identity cards—but the Minister must tell us how successful he has been in removing the difficulties of duplication, which have frequently arisen. CORE ameliorated that, but it is no longer in place.
On a slightly mischievous note, this morning on the ConservativeHome website my hon. Friend the Member for Bournemouth West (Conor Burns) made a point about clause 18 and allowing a parliamentary candidate standing on behalf of two or more parties to use a registered emblem of one or more parties. Can the Minister assure me that there is no hidden agenda in that, and that it is just a helpful way to assist Labour and Co-operative party representatives to get elected in their seats?