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Mr Edward Leigh (Gainsborough) (Con): Any western intervention, such as arming the rebels, would make the disasters of Afghanistan and Iraq look like a picnic. The Alawites were a savagely persecuted minority until the French started empowering them; there are only 10 Alawites on the Syrian National Council, which numbers more than 300; and Christians are hugely unrepresented. Instead of constantly criticising the Russians, can we not appreciate that they have a sophisticated understanding of the country, and that we have to work with them to reach a peaceful solution which empowers the minorities?

Mr Hague: I hope that the Russians and all of us have a sophisticated understanding of the country, but that sophisticated understanding, when brought up to date, suggests that we are on the edge of a catastrophe for all those people unless we muster the international unity to ensure that the Annan plan, and the road map that arises from it, is put into practice.

My hon. Friend is entirely right to worry about those things, and I have stressed in my meetings with opposition groups from Syria that not only must they come together but that they need the broadest possible representation of all groups in Syria and to increase the representation of Christians, Kurds and Alawites, working with, and in leading roles in, the opposition movement.

Ann Clwyd (Cynon Valley) (Lab): On a day when Homs is yet again being pounded into the ground, it is very difficult to stand back and watch. I commend the Foreign Secretary for the considerable efforts that he has made so far, but how long can we wait? What does the UN doctrine on the responsibility to protect actually mean in practice? At the moment it does not seem to mean very much; it seems to be a menu from which people pick and mix as they choose. But they are all signed up to it, and once again this calls into question the composition of the UN Security Council. My preferred option is safe havens: it worked for the Kurds; it can work for the Syrians. I realise that it also requires some kind of military intervention, but putting that in place is absolutely essential.

Mr Hague: It is sadly true that nations have signed up to commitments and to principles under United Nations charters at various stages, but it is then very difficult to achieve international unity on putting them into practice. Of course, there are so many nations that signed the universal declaration on human rights—long before the doctrine on the responsibility to protect—whose human rights records the right hon. Lady and I would be severely critical of, so a signature to a declaration is never the same as putting it into practice when a crisis comes. I accept that she is in favour of the safe havens idea, and although I think that there are the constraints I mentioned earlier, I also stress that, given the nature of the situation and the fact that we do not how it will develop over the coming months, unless we can get a peaceful transition going in Syria we are not taking that option off the table, either.

Dr Julian Lewis (New Forest East) (Con): To what extent do the Government believe that the possession in Syria of major Russian technical intelligence-gathering facilities is a factor in Russia’s determination not to see President Assad fall from power?

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Mr Hague: Russia has a range of defence and, one has to assume, intelligence interests in Syria, and they will all be factors in Russia’s alliance with the Assad regime and in the way Russia has acted over the past year to protect the regime. It is hard to rank those things, but they will all be factors. However, Russia’s important interests in Syria should also now be factors in Russia using all possible leverage to bring about a peaceful transition in Syria, rather than a continuation of the current situation, which could bring about the collapse of the country and, indeed, a very clear danger to all those same Russian interests.

Mark Durkan (Foyle) (SDLP): Is the Foreign Secretary worried that a failure to agree on an international conference in, for example, the context of the Mexico meetings could be used as a top-up for the diplomatic “excusory” that we have already had from Russia? In the event of a failure to agree on such a conference, what quick, visible and credible alternative does he envisage?

Mr Hague: Of course it is possible that if we cannot agree the terms of an international conference, some commentators or other nations will say, “Well done; we tried, but we weren’t able to go forward that way.” However, it is important for us to try to ensure that such an international conference would actually achieve something. Also, we do not want an international conference that simply allows the regime to play for time. It is therefore necessary for us to negotiate on the terms of such a conference, even though that means that there is some risk of its not being able to take place. If we do not succeed in bringing about such a conference, then our recourse will be to the United Nations Security Council. I mentioned in my statement that we are already working on elements of a draft resolution that would greatly strengthen the previous resolutions. That would return us to the same problem of winning Russian and Chinese co-operation, but it would return the matter to that forum.

Neil Carmichael (Stroud) (Con): I certainly welcome the Foreign Secretary’s robust approach in connection with arms sales to Syria, notably from Russia, but what assessment has he made and can he give to the House on the likelihood of a change of mood from the Russian Government?

Mr Hague: As I mentioned, there have been changes of emphasis—one can call them changes of language—from Russia over the past couple of weeks. Russia does support the Annan plan, and Russia voted for UN resolutions 2042 and 2043, so we are agreed on the desirability of the Annan plan. What we are talking about is the insistence on its implementation, which I argue to Moscow, as have others, puts a particular responsibility on Russia because of its links with the Assad regime and the leverage that it has over it. As I indicated earlier, there have been some changes. I think there is increased anxiety in Russia about the situation, and I will be discussing this further with the Russians during the course of this week.

Jeremy Corbyn (Islington North) (Lab): Obviously we all condemn the human rights abuses, wherever they are occurring, all over Syria. Will the Foreign Secretary

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be more specific about which opposition groups the UK Government are supporting either financially or with logistical equipment or training, and about whether there are any British arms or British special forces in the area, which can only exacerbate what is already a very serious set of divisions within the opposition in Syria?

Mr Hague: The groups outside Syria that we are supporting—the kind of groups that I have been meeting in Istanbul—include the Syrian National Council, which is the largest of these groups, although some of the minority ethnic communities are not yet affiliated to it, and we want them to come together. All our support is non-lethal. Our assistance takes the form that I described in my statement—communications equipment, training, and human rights monitoring. No armed intervention is being practised or sanctioned by the United Kingdom at the moment.

Duncan Hames (Chippenham) (LD): After meeting Chancellor Merkel recently, Russia’s President Putin sought to claim impartiality, reportedly saying, “We are not for Assad and neither for his opponents.” If this were really so, does the Foreign Secretary consider that future Russian support for a Security Council resolution referring the situation in Syria to the International Criminal Court could help to deter future atrocities in that country?

Mr Hague: Certainly that is something that we have wanted to get going, and we have succeeded in doing so in the UN Human Rights Council resolution, which refers to the International Criminal Court. Such are the atrocities and the appalling nature of these crimes that if we could muster the votes to take that through the Security Council itself, we would do so. I hope that at some stage in the future we will be able to do so, and that we will be able to take the Russian leaders at their word on this, but what they have said recently about not being committed to Assad himself or to the Assad regime has not yet translated into a readiness to support such resolutions.

Caroline Lucas (Brighton, Pavilion) (Green): I welcome the Secretary of State’s strong urging of the Russians to halt their arms sales to the Syrian regime, but does he agree that we ourselves should cease to have any dealings with the foreign arms companies that are providing weapons to the Syrian Government, such as the Russian state-owned company Rosoboronexport? If so, will he use his influence to help to prevent that company from fulfilling its plans to take part in a trade exhibition that will be part of the Farnborough air show next month in the UK?

Mr Hague: I will certainly look at the point that the hon. Lady has raised and discuss it with my colleagues at the Ministry of Defence. I am not sure that we can do much in our relations with that company that would make a difference to this situation, but I will look at her point.

Mr Robert Buckland (South Swindon) (Con): Does my right hon. Friend share my concern that the time that could be spent in negotiating the terms of reference for an international conference is time that the international community can ill afford to waste, bearing in mind the

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continuing loss of life? Does he agree that Russia would be better advised enthusiastically to support the enforcement of the objectives of the Annan plan?

Mr Hague: Yes, I very much agree with that. In the absence of the implementation of the Annan plan, the absence of a sufficiently strong insistence on its implementation and the absence of the implementation of all the UN resolutions that we have promoted, the virtue of a conference is that it could be the forum in which insistence on the Annan plan or something like it is made by Russia as well as by all the other countries that would be involved. Every day and every week that has gone by has contributed to the huge death toll of perhaps 15,000 people. Every day that goes by adds to that death toll. We are pursuing this option in the absence of the other options, which have so far not worked.

Mr Andrew Love (Edmonton) (Lab/Co-op): I welcome the Foreign Secretary’s confidence in the Syrian opposition groups, with the £1.5 million of funding, but let me press him a little on his previous answers. What steps has he taken to reassure himself that those groups are willing to work alongside each other to find a solution in Syria? What reassurance does he have that they are representative of communities in Syria and, perhaps most importantly, that they are supportive of the terms of the Annan plan? Would achieving all those things not be the best way to get Russia involved?

Mr Hague: I can give the hon. Gentleman a fair degree of confidence about those things. Certainly in what they say, the groups are committed to a Syria with respect for minorities and with democracy, as I said in my statement. They are supportive of a peaceful solution. It is difficult, however, to assess how representative they would be in a free election in Syria, since there has been no such election. I hope we will discover that in the future.

The groups are not sufficiently united. I have spoken to them clearly and bluntly about the need to be united. When any country faces an existential crisis, the people who believe in its freedom and territorial integrity should stand together, as we have always done in this country. Syria is certainly in an existential crisis, so I have put that point to the groups strongly. They need to remedy that without delay.

David Rutley (Macclesfield) (Con): Given the scale of the atrocities, will my right hon. Friend tell the House what steps are being taken to ensure that all relevant intelligence is being shared between the parties and nations that are opposed to the Assad regime to enable the best possible international response should the situation escalate in the days and weeks ahead?

Mr Hague: We are in close touch on a daily basis with all our key partners and allies on this matter, including the United States, leading European nations and leading Arab nations. That is why I went back to Istanbul last Wednesday to meet Secretary Clinton and the Foreign Ministers of 13 other nations from the region and from Europe, including the Foreign Ministers of France, Germany and Italy. We share information all the time. What I have said to the House today could have been said, and probably is being said, by the great majority of

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those Ministers in their Parliaments, because we have a common understanding of the situation and of the way forward, which I have described.

Michael Ellis (Northampton North) (Con): The Assad regime is a brutal, wicked and barbaric dictatorship that is savagely oppressing its people. May I take this opportunity to applaud the Secretary of State and his Department for the work he is doing on the international stage to assist the Syrian people? I appreciate that the Foreign Office has, over several months, repeatedly warned any UK citizens who might still be in Syria to leave that country, but I understand that there may be some UK citizens still there—in particular, those who may have dual nationality. If that is the case, are there any contingency plans for any British citizens who might still be in Syria?

Mr Hague: My hon. Friend is right: it is many months now since we warned all British nationals to leave Syria. We have made that clear for a long time, and I reiterated it when we ceased to be able to operate an embassy safely. We have what is called a protecting power arrangement—that is, an arrangement with another country that looks after our interests, which in this case is Hungary, as it still operates an embassy there. We are grateful to the Hungarians for that assistance. They are able to give assistance, if appropriate and possible, to British nationals. However, I repeat that British nationals should not be in that situation. They should have left Syria long ago, and if there are any remaining, they should leave now.

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Family Migration

4.55 pm

The Secretary of State for the Home Department (Mrs Theresa May): With permission, Mr Speaker, I would like to make a statement on family migration.

The Government are committed to reviewing all the main routes for immigration to the UK as part of our programme to reform the immigration system. As a result, we anticipate that net migration will fall from the hundreds of thousands to the tens of thousands. We have already announced major changes to the immigration rules by introducing a cap on work visas and reforming student visas to cut out widespread abuse. We now turn to reform of the family route.

In 2010, family immigration accounted for approximately 18% of all non-EU immigration to the UK—around 54,000 people out of 300,000. However, like the rest of the immigration system, family immigration has not been regulated effectively for many years. Sham marriages have been widespread, people have been allowed to settle in Britain without being able to speak English, and there have not been rules in place to stop migrants becoming a burden on the taxpayer. We are changing all that. The UK needs a system for family migration that is underpinned by three simple principles: first, that those who come here should do so on the basis of a genuine relationship; secondly, that migrants should be able to pay their way; and thirdly, that they are able to integrate into British society. If people do not meet those requirements, they should not be allowed to come here.

In July last year, the Government published a consultation on precisely how such a family migration system can be developed. Today I am setting out the new measures that we are introducing, and will shortly lay before Parliament the necessary changes to the immigration rules, to come into effect on 9 July. I shall place in the Library copies of the detailed statement of intent, together with a summary of the responses to the consultation. When I lay the changes to the rules, I will also publish the impact assessments of the new measures.

For too long we have had an immigration system that could be easily exploited by sham relationships. We are stepping up our enforcement activity, but it is important that policy reflects the seriousness of the problem as well. We will therefore increase the minimum probationary period for new spouses and partners from two years to five years. We will also publish new guidance to help caseworkers identify sham marriages.

For too long we have had an immigration system that did not take into account whether people coming here could pay their way. The Government’s reforms will mean that anyone who wishes to bring a foreign spouse or partner, or dependants to Britain will have to be able to support them financially. They must not become a burden on the taxpayer. Following advice from the Migration Advisory Committee, we will set a minimum income threshold of £18,600 for sponsoring a partner to settle in the UK. This is the level at which a sponsor can generally support themselves and a partner without accessing income-related benefits. Children involve additional costs for the state. To reflect this, there will be a higher threshold for each child sponsored: a £22,400 threshold for a partner with one child, with an additional £2,400 for each further child.

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It has also been too easy for elderly dependent relatives to join their migrant children here and then potentially become a burden on the taxpayer. Therefore, if someone wants to sponsor a dependent relative to come to Britain who requires personal care, they will have to show, first, that they cannot organise care in the relative’s home country and, secondly, that they can look after the relative without recourse to public funds. We will also limit to close family the people who are able to access that route: parents, grandparents, sons, daughters, brothers and sisters. Aunts and uncles will no longer be eligible to come here through the family route. Future applications will also have to be made from overseas, not while the applicant is here as a visitor.

For too long, people have been allowed to settle in Britain without being able to speak English well enough and without having a proper appreciation of our values. So, from October 2013, all those who wish to live here will need to demonstrate that they are able to participate fully in British life. All applicants for settlement will need to pass the “Life in the UK” test and, because a person cannot integrate if they cannot communicate, we are strengthening the language requirement by introducing a separate English language test at intermediate level.

The family migration system will work best if it is able to operate efficiently. That means simplifying processes and removing unnecessary waste. The cost of administering appeals against family visit visa refusals is around £29 million a year. No other category of visit visa attracts a full right of appeal. So the Crime and Courts Bill will remove the full right of appeal for family visitors, bringing the process in line with the rest of the immigration system. In the meantime, we will lay new regulations to restrict the full appeal right to those applying to visit a close family member who has settled, refugee or humanitarian protection status in the UK.

In developing all the measures that I have outlined, the Government have had article 8 of the European convention on human rights—the right to respect for private and family life—very much in mind. But, as the convention itself makes clear, article 8 is not an absolute right. The convention allows the state to interfere in the exercise of article 8 rights when it is in the public interest to do so, and when the interference is proportionate to the public interest being pursued. In an immigration context, it allows necessary and proportionate interference on public safety grounds, or to protect the UK’s economic well-being.

Article 8 is clearly a qualified right, but Parliament has never set out how it should be qualified in practice. So, for too long, the courts have been left to decide cases under article 8 without the view of Parliament, and to develop public policy through case law. It is time to fill the vacuum and put the law back on the side of the British public, so we are changing the immigration rules to establish that if someone is a serious criminal, and if they have not behaved according to the standards that we expect in this country, claiming a right to a family life will not get in the way of their deportation.

If a foreign criminal has received a custodial sentence of 12 months or more, deportation will normally be proportionate. Even if a criminal has received a shorter sentence, deportation will still normally be proportionate if their offending has caused serious harm or if they are a persistent offender who shows particular disregard for

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the law. For the most serious foreign criminals—those sentenced to four or more years in prison—article 8 rights will prevent deportation only in the most exceptional of circumstances.

I will shortly ask the House to approve a motion recognising the qualified nature of article 8 and agreeing that the new immigration rules should form the basis of whether someone can come to or stay in this country on the basis of their family life. For the first time, the courts will have a clear framework within which to operate, and one that is on the side of the public, not foreign criminals. I commend this statement to the House.

5.2 pm

Yvette Cooper (Normanton, Pontefract and Castleford) (Lab): I thank the Home Secretary for giving us early sight of her statement on family migration, article 8 and foreign criminals. I thank her for giving us early sight of it in The Sunday Times and on “The Andrew Marr Show” as well.

I shall respond first to the Home Secretary’s points about article 8. Foreign citizens who come to Britain should abide by our rules. The Government should be able to deport people who break the law and, as she will know, the number of foreign criminals being deported trebled in the last five years of the Labour Government. However, there continue to be cases in which it is difficult to understand why the courts have allowed the foreign criminals involved to stay in Britain. We therefore agree with the Home Secretary that action is needed.

Article 8 of the European convention on human rights is a qualified right, and the right to respect for family life should be balanced against other issues, including public safety, economic well-being and preventing disorder or crime. Parliament is therefore entitled to set out how those rights should be balanced against those considerations when dealing with foreign criminals, and to provide a framework within which the courts should operate. We should discuss those details, but the way in which Parliament provides that framework must be legally effective.

I am puzzled by the Home Secretary’s decision to use a motion in Parliament that will obviously not change the law or override case law in the way that primary legislation would. Surely that approach will risk creating confusion and legal uncertainty. Would it not be better for her to do this properly, through primary legislation, instead? If that were to happen, we would happily hold discussions with the Government to work on getting that right.

On the measures on family migration, when people travel and trade across borders more than they ever did before, there needs to be a fair framework for those who fall in love and build family relationships across borders, too. We agree that stronger safeguards are needed for the taxpayer on family migration. If people want to make this country their home, they should contribute and not be a burden on public funds, but it is not clear that the best way to protect the taxpayer is to focus solely on the sponsor’s salary. For example, in the current economic climate, someone on £40,000 today could lose their job next month, and then, of course, there is no way to protect the taxpayer. The system does not take account of the foreign partner’s income, which might have a differential impact on women. Will the Home Secretary explain why the Government ruled out

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consulting on a bond that could have been used to protect the taxpayer if someone needed public funds later on?

There is also a wider problem about the gap between the Government’s rhetoric and reality. The Home Secretary admitted yesterday that these changes to the family visa will not mean “big numbers”, yet she said again today that she anticipates meeting her net migration target of tens of thousands, even though the latest figures show net migration still at around 250,000. Will she tell us when she expects to meet that target? Does she still think it will be met by the end of this Parliament, in line with the Prime Minister’s promise—“No ifs. No buts.”—that it would be met or are she and the Prime Minister making promises that they have no intention of keeping?

There is also a gap between rhetoric and reality on deporting foreign criminals. The number of foreign criminals deported increased every year until the election, but since then it has fallen, year on year. It fell by 18% in the last financial year alone, as nearly 1,000 fewer foreign criminals were deported in 2011-12 compared with the previous year. According to Home Office briefings to the newspapers, the Home Secretary’s measures on article 8 will apply to 185 foreign criminals. Even if every single one of those article 8 cases had been deported, the Government would still have deported hundreds fewer foreign criminals last year compared with the year before, and we would still have more foreign criminals in the community instead.

The truth is that this announcement does not deal with the growing problem under the Home Secretary’s Government. Too many foreign criminals are staying in Britain—not because of article 8, but, in the words of a borders inspector, because of

“difficulty in obtaining travel documentation”

resulting from the Border Agency’s weaknesses in enforcement and administration. This is another example of problems that have got worse for the Border Agency in the last two years.

We will work with the Home Secretary to get the detail right and on some of the sensible points she has made, but statements and parliamentary motions are not enough; she also needs to take action on the practical problems that have got worse on her watch.

Mrs May: I thank the shadow Home Secretary for supporting the action the Government are taking in some areas, and I hope she will be able to carry that support through when the motion comes before Parliament, because a strong voice from this Parliament on article 8 and the rules on family migration will be all the more effective in relation to the courts.

The right hon. Lady asked why we have chosen to work through a motion in Parliament and immigration rules. We will change the immigration rules, and this Parliament will have an opportunity to make its voice heard and to give its clear view on where it feels the framework should sit in respect of article 8. I have every expectation that that will have an impact on how article 8 is interpreted in the courts.

The right hon. Lady asked why we had gone down the route of the income threshold. We asked the independent Migration Advisory Committee to advise us on what we

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should do and on what income level we should adopt. It gave us a range of income levels from £18,600 up to a higher point, and we chose to adopt the lower point, adding in elements for individual children, rather than go down a route that would be available only to those people who had capital and were able to put up a bond in the first place.

Changes in the numbers were also raised. The right hon. Lady was right to refer to the net migration figure shown in the last published set of statistics from the Office for National Statistics, which includes migration numbers up to September 2011. What she may have failed to look at, however, are the figures for student visas thereafter, as we have seen a significant decrease in the number allocated through to March 2012. [Interruption.] The shadow Immigration Minister, the hon. Member for Rhondda (Chris Bryant), says “That is good”, as though getting rid of abuse in the student visa system were not good. I am not surprised, because for too many years Labour allowed too many people to come to this country claiming to be students when they were not students. We are getting on with dealing with that.

The right hon. Lady talked about the need to deal with deportation. We are increasing the enforcement action that is being taken. All Governments have experienced problems in regard to the acceptance of an individual as being from the country concerned and the granting of the recognised travel documents on that basis, but the right hon. Lady’s claim that this Government are somehow failing in relation to immigration sits ill with the record of her Government over too many years. Her Government failed to control immigration; this Government are controlling immigration. Her Government failed to end the abuse of student visas; this Government are ending the abuse of student visas. Her Government failed to deal with article 8; this Government are dealing with article 8.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. I remind the House that in order to ask a question about the statement, a Member must have been in the Chamber to listen to it.

Mark Reckless (Rochester and Strood) (Con): I welcome the series of impressive and, dare I say, Conservative measures that the Home Secretary has announced. Given that thresholds are higher when children are involved, is there not a risk that people entering the country in order to marry will quickly have a number of children, and may therefore need state support although they are above the original threshold?

Mrs May: I understand my hon. Friend’s point, but I think that it would be highly unreasonable for the Government to tell people that they could enter the country but could not have any children. When people first enter the country, they will be able to stay for a limited period, and will then have to undergo a renewal process to establish whether they meet the requirements at all stages before they achieve settlement.

Mr Jack Straw (Blackburn) (Lab): While, like my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), I do not recognise the

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parody of the last Administration’s immigration policy, I none the less welcome the decision about guidance on article 8. Young Amy Houston, aged nine, was killed in my constituency by a hit-and-run failed asylum seeker who subsequently invented a family life. Despite the very best efforts of the Home Office, my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) and me to pursue appeals, the appeal decisions were, I believe, incomprehensible to most people, and that family have been left bereft.

May I ask the Home Secretary two consequential questions? First, if it transpires that the changes in the immigration rules and the resolution in the House do not work as intended, will she introduce primary legislation? Secondly, will she look at the current practice whereby the courts keep their judgments confidential in cases such as that of Mohammed Ibrahim? It was very difficult even for me, as Justice Secretary and the bereaved father’s Member of Parliament, to get hold of the judgment of that immigration court. Whatever the arguments may be for confidentiality on asylum applications, there can, or should, be no confidentiality in cases such as this.

Mrs May: The right hon. Gentleman has made an extremely important point. As he will have noticed, the current Justice Secretary is in the Chamber and will have heard what he has said. I am sure that we can consider the right hon. Gentleman’s point about the confidentiality of judgments.

The right hon. Gentleman referred to the terrible case involving the actions of Mohammed Ibrahim. Obviously, Paul Houston has been campaigning for changes for some time, and we expect the changes that we are introducing to deal with such cases. The House of Lords in 2007, and the Court of Appeal in more recent cases last year and this year, have made clear the need for a statement from Parliament about where the public interest lies. The right hon. Gentleman is right, and I am grateful for his support.

Mr John Redwood (Wokingham) (Con): I urge the Home Secretary to take the advice that if, peradventure, a motion is not sufficient, this House will be very happy to legislate to deal with the foreign prisoner problem, and will she also explore with the Justice Secretary whether there are more foreign criminals in our jails who could serve their term elsewhere, and not at our expense?

Mrs May: I thank my right hon. Friend for those questions, and they serve to remind me that I did not answer the point made by the right hon. Member for Blackburn (Mr Straw) about the next steps we might take if what we are doing does not lead to a change in the sorts of decisions coming from the courts. If that is the case, we will, indeed, look at further measures, and they could, of course, include primary legislation. I can assure my right hon. Friend that both the Justice Secretary and I have an interest in trying to ensure that as many foreign national prisoners as possible are removed from this country, including being removed to serve their sentence elsewhere.

Keith Vaz (Leicester East) (Lab): I support what the Government are doing on article 8, which is in keeping with the Select Committee’s recommendations on the

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removal of foreign national prisoners, but I profoundly disagree with the Home Secretary’s proposals on spousal visas. The effect of that change will be directed against the British Asian community—not against illegal immigrants, but against settled Britons who are here, pay their taxes and contribute to this country. I do not believe that the British Home Secretary should be determining who the spouse of a British citizen should be based on an arbitrary limit—on an arbitrary financial limit. I urge the Secretary of State to look again at these proposals. She should look at the limits and see how this would affect a city like Leicester.

Mrs May: What I think is absolutely right is that the British Government should say that if somebody is bringing somebody in here to be their spouse or partner, they should be able to support that individual and the family life they are going to have. That is important, and that is what the Government are saying. The right hon. Gentleman talks about the income threshold being arbitrary, but it is not arbitrary. The Migration Advisory Committee looked at various levels of income and this was the level it said was the point at which people could generally support themselves without having to be reliant on income-related benefits. It suggested a higher level to us as well, but we chose this level. I think it is right that people should be able to support the individual they are bringing in to be their partner or spouse.

Lorraine Fullbrook (South Ribble) (Con): I welcome the fact that an English language requirement has been introduced for foreign spouses coming to the UK. What further measures will be put in place to ensure that those coming here legally can be properly integrated into our communities?

Mrs May: My hon. Friend raises an important point. This is not just about numbers; it is also about ensuring that people are able to integrate and participate fully in British society, and speaking the English language is an important part of that. That is why from next year we will raise the required level to intermediate level. We will also require people to take the “Life in the UK” test, to ensure that they have an understanding of life here in the UK, because we want the people who come here to be able to participate fully in British life, and to contribute fully to it, as I am sure they want to do.

Mr Frank Field (Birkenhead) (Lab): I welcome the Home Secretary’s statement, as I have also welcomed her earlier, allied statements on this theme. The polls show that voters of all parties are concerned that our population is growing primarily because of immigration. When all her policies are in place, what impact will they have on that projected growth?

Mrs May: As I have made clear on several occasions, we are putting in place a number of policies that we anticipate will lead to reducing net migration to the tens of thousands. I have never been somebody who says I expect the population of the UK to be a certain figure by a certain period of time, but I think it is right that, by taking these actions, the Government will be reducing net migration, and that will have an impact on the matter the right hon. Gentleman raises.

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Michael Ellis (Northampton North) (Con): I commend the Home Secretary on this move. Does she agree that some of the judgments by judges hearing cases relevant to this issue have, frankly, been embarrassing and infuriating? Judges must be encouraged to consider the public interest first and foremost. If they are not inclined to consider the public interest first, with this House having passed a motion on the matter, primary legislation must be given a high priority.

Mrs May: As I indicated in a previous response, on a number of occasions the judiciary has, in effect, said to Parliament, “You need to set out what is the public interest and where the balance of public interest lies.” That is why I expect that what we are doing in the immigration rules and the debate in Parliament will help judges in saying, “This is where Parliament believes the balance should be between the public interest and the individual’s rights.”

Pete Wishart (Perth and North Perthshire) (SNP): What discussions did the Secretary of State have with the Scottish Government about the proposals? Why was she not open to the suggestion of variance in the minimum income threshold, to match the variance of income across the United Kingdom? We in Scotland do not share her little conservative view of immigration; we prefer to do things a bit differently. Does she not think it is now time that we had our own powers over immigration, so that we can match our community needs in Scotland?

Mrs May: A regional variation in the income threshold was looked at by the Migration Advisory Committee and rejected by that committee for a number of reasons. The committee looked at income versus public sector costs in regions and the purely practical point that if we had regional variation, the result could very well be someone initially going to live in a region where the threshold was lower, in order to get into the country, and then moving within the country.

Tom Brake (Carshalton and Wallington) (LD): The coalition Government must be firm but fair on immigration, so I welcome the income threshold that was eventually agreed. What flexibility or discretion will be available for those who, for example, might not be able to pass the intermediate language test—perhaps for medical reasons—or who, for exceptional reasons, might have to apply for family reunion while they are in the UK?

Mrs May: Obviously we are conscious that some people will find it difficult to deal with the income threshold—perhaps a sponsor here who is disabled and may not have the same expectations of income as others—so there will be some ability to be flexible on that. The English language test is an important part of the scheme we are putting in place. I acknowledge what my right hon. Friend says about people who, for a medical reason, may have difficulty with that, but overall I think it is right that we have the test in the scheme.

Stephen Timms (East Ham) (Lab): I was contacted by a constituent this morning. He is engaged and he earns £16,000 a year. He says:

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“I have never relied on the state…I would like to live a happy life with my wife in my country of birth, why should the amount I earn be a reason not…to”?

How does the Secretary of State answer my constituent?

Mrs May: I say to the right hon. Gentleman what I have said previously. When someone wants to bring a partner or spouse to the UK, it is right that we have an expectation that they will be able to do so without relying on benefits. The income threshold set by the Migration Advisory Committee is the level at which people are generally able to support themselves and a dependant, which is the circumstance that pertains when someone brings in a spouse or partner. The figure has not been plucked out of the air by this Government. The Migration Advisory Committee looked at it very carefully and this is the threshold that it proposed.

Paul Uppal (Wolverhampton South West) (Con): Some years ago, a prominent immigration lawyer told me that the two main drivers of immigration are, first, the perception—right or wrong—that we have an overtly generous welfare system in the UK; and secondly, lax human rights legislation. Does my right hon. Friend agree that in this statement and through our welfare reforms, we are tackling those issues head-on?

The shadow Home Secretary talked about a bond. Does my right hon. Friend not find that ironic and perhaps politically opportunistic, given that, when in power, Labour considered such a measure but chose to put it to one side, but in opposition they sing a different tune?

Mrs May: My hon. Friend makes an important point, and he is absolutely right: when people look at which country to move to, there are issues to do with their perception of the laxity or otherwise of the regimes operating in that country. What we are doing today on the immigration rules and article 8, our measures on all the other aspects of immigration, and the welfare reform we are putting through, will have an impact.

As for the bond, not only is it ironic that that is something that the previous Government looked at, but of course it would make it even harder for the people to whom the Chairman of the Home Affairs Committee and the right hon. Member for East Ham (Stephen Timms) referred.

Glenda Jackson (Hampstead and Kilburn) (Lab): It is not unusual for individuals to have been brought to this country as small children by their parents from former British colonies and then to have lived for 40, 50 or, as in one instance in my constituency, 60 years in this country under the misapprehension that they had automatic British citizenship. If one of these individuals—someone who has lived all their life in this country, been educated here, created a family here and, as in many instances, created businesses here—commits a crime and has to serve a prison term, should they be deemed to be foreign and therefore be deported?

Mrs May: I made clear in my statement the thresholds that we believe should pertain in this instance, and that only in exceptional circumstances should somebody who is committed to prison for four years or more, having committed a crime, be able to claim family

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rights here in the UK and that deportation is normally proportionate for those who have been imprisoned for 12 months or more. I say to the hon. Lady about the individuals concerned: I am sorry but if they do not want to risk the possibility of being deported as a foreign national offender, they should not commit a crime in the first place.

Mrs Helen Grant (Maidstone and The Weald) (Con): These proposals will help to tackle the scourge of the sham marriage. What other action is my right hon. Friend taking to address such issues?

Mrs May: Sham marriage is a problem and it is right that we should look at it. We are examining some further steps that could be taken to deal with it, such as combining some of the powers of the UK Border Agency and the registrars to ensure that they have greater ability to deal with what they consider to be sham marriages, should they appear. We have also stepped up our enforcement activity. As a member of the Church of England, I am sad to have to say that, as my hon. Friend may have seen, there have been cases where Church of England vicars have been undertaking sham marriages. I think that is appalling, but we have been identifying those cases and taking action.

Jeremy Corbyn (Islington North) (Lab): May I ask the Home Secretary to think again about the answers she gave to my right hon. Friends the Members for East Ham (Stephen Timms) and for Leicester East (Keith Vaz) on spousal visas and family reunion? When she carries out this impact assessment, will she examine the impact on communities and on families on modest incomes, who have every right to be together as a family? In her impact assessment, will she also give some credibility to the enormous contribution made to the economic success of this country by 60 years of migration to our society and the great benefits given to us? Could she not say something positive about the role of immigrants in our society, rather than always repeating what the Daily Mail says?

Mrs May: If the hon. Gentleman were to look back at the speeches and comments I have made on immigration over the past two years, he would see that I frequently say that immigration has been a positive benefit to this country. But what I think is not good for this country is uncontrolled immigration. That is why this Government are bringing some control into our immigration system. We made it clear two years ago that we would look at every aspect of immigration, and we have done so. We continue to look at issues associated with immigration, and it is absolutely right that we set out clearly what we believe are the parameters within which it is right for someone to be able to bring a spouse or partner here to the UK.

Chris Heaton-Harris (Daventry) (Con): I congratulate the Secretary of State on making one of the most important announcements of this Session in this House today. It is so important that I am here to ask a question about it instead of watching England against France. [Interruption.] I am doing my bit. There is a distinct lack of public confidence in our immigration system. Is not the best way to tackle that by introducing these sorts of measures, which strengthen public confidence as a result of strong, robust immigration measures?

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Mrs May: I thank my hon. Friend for his commitment to this issue, such that he is in the Chamber now. [Interruption.] I have noticed that there have been one or two leavers since the statement started, which may have something to do with what is happening in Ukraine. He is absolutely right to say that the issue of confidence is important, and I think that members of the public will be pleased to see that the Government have taken yet another step to bring some control into our immigration system.

Dame Joan Ruddock (Lewisham, Deptford) (Lab): Among the two categories of people who come to me most frequently in my constituency are parents seeking to bring often teenage children to this country because the grandparents who are looking after them in Africa have either died or become unwell. Will the right hon. Lady say what the impact of these new measures will be on that kind of family reunion? Am I right in thinking that she has said that very elderly people who may not have had the opportunity to learn English but are dependants of people in this country will have to pass the new intermediate English test?

Mrs May: In relation to the right hon. Lady’s first point, we have made it clear that there is an income threshold for people who want to bring a spouse, a partner or a child to the UK. On her second point, which was on dependent relatives, we are tightening up the system, but making it clear that it may be possible to bring in an elderly dependant who requires a degree of care that is not available to them in the country in which they live. In such circumstances, it must be shown that they will not be a burden on the state and that the personal care can be provided by the family.

Dr Julian Lewis (New Forest East) (Con): What will be the effect of the package on asylum seekers who come without their spouse or children? In particular, some asylum seekers fail to get asylum but cannot, for one reason or another, be sent back. There are also genuine asylum seekers to whom we are happy to grant asylum. Will they be able to bring their families to join them?

Mrs May: Asylum seekers will have the same rights to apply to be here in the UK as they have currently. The package is for those who want to bring non-EU people as spousal partners; it does not affect people who are here genuinely as asylum seekers and who have been given the protection of this country.

Fiona Mactaggart (Slough) (Lab): Before the election, the Home Secretary said compellingly that she wanted to be part of a family-friendly Government, but the proposals put a means test on family life for many people and mean that some parents cannot be in the same country as their children or their spouse. She will be aware that, currently, if a spouse applies for a visit visa, they are automatically refused, because it is said that they should be able to get a settlement visa. She is ending the appeal against the refusal of visit visas, but will she change the arrangements so that, for example, fathers can at least come and be at their children’s graduation ceremonies as a visitor when families cannot afford to settle here together?

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Mrs May: The hon. Lady refers to ending family visit visa appeals. It is right that we do that. It is the only immigration route that has a full appeal. It will be quicker for people to put in a separate application for a decision rather than appeal. All too often, appeals cases are lost because further evidence is brought forward when it might have led to a different decision had it been available in the first place.

Duncan Hames (Chippenham) (LD): Young newlyweds in Britain are often supported financially by their parents. Would it not therefore be appropriate to allow the parents of sponsors to demonstrate such financial commitment by contributing to meeting any income thresholds applied under the new rules?

Mrs May: I understand the hon. Gentleman’s point. We are giving some allowance within the rules—with qualifications—for individuals’ savings, but we do not think that it is appropriate to include money that somebody just says they can give to the sponsor. The measures are about the sponsor showing that they can support the spousal partner and/or children that they are bringing into the UK.

Nia Griffith (Llanelli) (Lab): Many in my constituency working in both the public and the private sector bring up a family on less than the proposed threshold. What equality impact assessment has the Secretary of State carried out on whether the threshold will have a disproportionate effect on groups such as younger people, British women who want to bring in a foreign husband, or those living in less prosperous regions?

Mrs May: The hon. Lady echoes an earlier question about impact assessments. As I said, all the impact assessments will be published when the immigration rules are laid.

Nick de Bois (Enfield North) (Con): The Home Secretary’s proposals are very welcome, and my constituents will welcome them. Can she confirm whether the English language test will be held under test conditions, and whether identities will be checked, to avoid cases such as those in which people have had other people take tests for them?

Mrs May: We are conscious of the problems that have existed in relation to some tests in the past, which is why we have already tightened up the rules. We will continue to examine the tests to ensure that they genuinely assess whether an individual—and the right individual—fulfils the language requirements that the Government set out.

Alison Seabeck (Plymouth, Moor View) (Lab): The right hon. Lady may be aware that my constituency has a strong military presence, including overseas servicemen and women. We have a significant number of Fijians serving in the Royal Navy and Royal Marines, for example. What discussions did she have with the Ministry of Defence about the ability of those servicemen, who often sign up for more than 10 years at a time and are obviously on lower incomes, to bring their families here and keep them here?

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Mrs May: We have indeed discussed the issue with the Ministry of Defence, and the current rules will continue for the time being for both serving UK personnel and foreign and Commonwealth personnel. We are considering how we can revise what are called the part 7 rules, which relate to foreign and Commonwealth personnel serving in Her Majesty’s forces, and in the coming months we will consider very carefully what arrangement should apply in future. At the moment, transitional arrangements mean that the current situation will pertain for those personnel.

Mr Edward Leigh (Gainsborough) (Con): I warmly commend the Home Secretary for her statement today. It shows that we can come up with good, strong, Conservative statements and be popular with the British people. Our Liberal friends, take note.

May I say to the Home Secretary that the reality must match the rhetoric? We gave a solemn promise at the last general election that we would get immigration down to tens of thousands, and there has been far too little progress. Will she recommit herself today to appointing officials of sufficient quality and in sufficient numbers to achieve that aim? Otherwise, there will be a huge democratic deficit.

Mrs May: The figure of tens of thousands continues to be the aim that we are working towards. My hon. Friend is right that, as I indicated in response to the shadow Home Secretary, the figures to September 2011 have still not shown a fall. If he looks at the subsequent student visa figures through to March 2012, however, he will see a significant fall in allocations. That should have an impact on net migration figures in due course.

My hon. Friend tempts me down a route that I will not go down, but I make fairly and squarely a point that I should have made in response to an hon. Friend earlier: these proposals have been put forward by the coalition Government.

Jonathan Ashworth (Leicester South) (Lab): I entirely reinforce the point that my parliamentary neighbour, my right hon. Friend the Member for Leicester East (Keith Vaz), put to the Home Secretary. Even if the threshold has been suggested by the Migration Advisory Committee, surely she must recognise that it is entirely arbitrary and that many people in Leicester and other parts of the country are on earnings of nowhere near £18,000. Does she not recognise that many families who settle in cities such as Leicester make a huge contribution to the economy? What economic modelling has she done of the wider economic implications of these restrictions?

Mrs May: A question that starts off by referring to the fact that the figure has been produced by the Migration Advisory Committee cannot, in the same breath, say that it is “entirely arbitrary”. It is not arbitrary. The committee considered very carefully the level at which people can normally support themselves and not depend on income-related benefits, and that is the figure we selected.

Andrew Bridgen (North West Leicestershire) (Con): From the Brighton conference reforms to the changes announced today, does my right hon. Friend agree that

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this Government have done more to address the legal misuse of human rights legislation in the past 13 weeks than the previous Government did in 13 years?

Mrs May: I can give my hon. Friend a very simple and easy answer to his question, and that is yes.

Kate Green (Stretford and Urmston) (Lab): What discussions has the Home Secretary had with her colleague the children’s Minister, the Minister of State, Department for Education, the hon. Member for Brent Central (Sarah Teather), about the implications of the announcement on the best interests of children? Will the Home Secretary assure me that when she publishes the draft regulations and the Government’s impact assessment there will be a full analysis of the implications for compliance with the UN convention on the rights of the child?

Mrs May: We have considered that aspect of the proposals’ impact and I can assure the hon. Lady that every relevant Department was involved in considering these issues, including the Department that contains the children’s Minister.

Mr Stewart Jackson (Peterborough) (Con): I welcome my right hon. Friend’s announcement and believe that her proposals bear comparison with the robust policies pursued by the Labour party in Australia. She will know that notable human rights lawyers such as Geoffrey Robertson QC have already said that in the absence of primary legislation, an indicative motion in this House would not fetter the discretion of or bind the European Court of Human Rights. Is it not therefore right that we should still keep open the option of reviewing our membership of that body, with a possible option of doing what Sweden did and temporarily suspending our membership?

Mrs May: I am aware that there are those who have indicated that they think that the courts will not pay the attention that I expect them to pay to the framework set

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out by Parliament. We are talking about the decisions that the UK courts will take. On some aspects of the immigration rules—my hon. Friend might not like my saying this—the European Court has taken a tougher view than the courts in the UK. Our intention is that the courts in the UK should now have a clear framework so that they know when and how to operate and how to balance the public interest with individual rights under article 8.

Mel Stride (Central Devon) (Con): Does my right hon. Friend agree that it would be beneficial if, as a result of her statement, we sent a clear message to the judiciary that the right to a family life is a qualified right that must be qualified in the public interest?

Mrs May: I entirely agree with my hon. Friend. The European convention is absolutely clear that the right to a family life is a qualified right. What we are doing today and will do in due course when Parliament has its debate—and, I trust, supports the motion the Government will propose—is saying very clearly to the judiciary, “Here is the framework and the balance you should be striking between the public interest and that of the individual.”

Neil Carmichael (Stroud) (Con): I warmly welcome the statement. On the question of sham marriages, is it not conceivable that a forced marriage could fall into that category? What measures does the Home Secretary have to deal with that and what are her thoughts on that subject?

Mrs May: As a Government, we are very concerned about forced marriages. We have decided to take the step of criminalising forced marriage, which we believe will send a clear message to people that it is wrong. It is right that the Government send that clear message because forced marriage is wrong, it leads to abuse and we should ensure that it does not take place.

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Point of Order

5.43 pm

Caroline Flint (Don Valley) (Lab): On a point of order, Mr Deputy Speaker. Today, workers protested against the possible closure of Coryton oil refinery, which would result in more than 850 job losses and cost the local economy nearly £100 million. We understand that a deal to keep Coryton open as a fully functioning refinery could still be possible with the provision of state aid, as has happened in France. With just days left until Coryton ceases to function as a refinery, have you had any indication from Ministers at the Department of Energy and Climate Change that they plan to come to the House to make a statement on the steps they plan to take to secure the future of the refinery?

Mr Deputy Speaker (Mr Nigel Evans): I have received absolutely no indication at all that any Minister intends to come to the House today to make a statement. I am sure that if that is the case, the House will be informed in the usual manner.

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Enterprise and Regulatory Reform Bill

Second Reading

Mr Deputy Speaker (Mr Nigel Evans): The amendment on the Order Paper has been selected.

5.44 pm

The Secretary of State for Business, Innovation and Skills (Vince Cable): I beg to move, That the Bill be now read a Second time.

I recognise that we face serious competition this afternoon, but let me begin by putting the Bill in the wider economic context. Our economic strategy has two key elements, one of which is to maintain a credible fiscal policy. That policy has led to this country’s borrowing costs dipping to record lows in recent weeks. If we were without a believable deficit reduction strategy, we would have been forced to adopt one by market panic. Although fiscal credibility is necessary, it is not sufficient. A lasting recovery has to be built on the back of sustainable sources of demand and, above all, exports and stronger business investment. We are seeking to bring that about in extremely difficult international conditions, though some encouragement can be derived from the fact that 630,000 private sector jobs have been created in the past two years—almost twice the number lost in the public sector.

We also need to deal with the persistent imbalances that the previous Government did so little to address. Gross financial imbalances, a bloated banking sector and property speculation are not a basis for a sustainable recovery. A reliance on domestic demand and the neglect of exports has meant that we have been left behind in international markets. Legislation cannot, of itself, remedy those problems and generate economic activity, but the Enterprise and Regulatory Reform Bill is an important building block none the less. This far-reaching package of measures will scrap the unnecessary bureaucracy that is holding back companies, overhaul the competition framework, and boost business and consumer confidence.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Will the Secretary of State give the House categorical assurances that this House and the other House will not use the Bill to include the recommendations of the Beecroft review, with specific reference to sack-on-the-spot?

Vince Cable: I can give a categorical assurance. Of course, as the report has now been published, the hon. Gentleman may be aware that it contains a number of proposals, many of which are admirable, sensible, and being implemented, but on the particular proposal that he mentions, we will most definitely not be proceeding in the way that he outlines.

Joan Walley (Stoke-on-Trent North) (Lab): I am concerned that the Secretary of State could bring forward proposals in the Beecroft report that would make this an even more scrappy Bill. Does he think it important that his Department looks to bring about growth in the context of the green economy? I do not see the background for that in this scrappy Bill that he is bringing to the House of Commons tonight.

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Vince Cable: We do see that as part of our mandate; indeed, it is the first item that I will discuss in detail. Specifically to support enterprise, we propose legislating for a green investment bank—that, I think, is the issue that is of concern to the hon. Lady. We propose improving the employment tribunal system and promoting resolution of disputes—that, I think, deals with the first intervention. We propose giving shareholders of UK quoted companies binding votes on directors’ pay; promoting competition through a single competition and markets authority; strengthening powers to address anti-competitive behaviour; and encouraging innovation and investment in design by enabling copyright owners to prevent the importation of replica products.

To simplify regulation and strip away unnecessary red tape, we propose extending the primary authority scheme to more businesses, for one-stop advice; repealing unnecessary regulatory requirements on business; and providing greater powers to time-limit new regulations—that is, to apply sunset clauses to new measures.

Mr John Whittingdale (Maldon) (Con): Does the Secretary of State accept that copyright is the legal expression of intellectual property rights, and is not a regulation? Is he aware of the widespread concern among the creative industries about clause 56, which will allow copyright to be amended by statutory instrument without full parliamentary debate? Will he assure the House that the Government will not change copyright in that way without proper parliamentary scrutiny?

Vince Cable: Yes, I can give assurances on that. We will deal with this subject later, but I totally accept the hon. Gentleman’s crucial point: intellectual property rights are a key part of a market economy. They are not “regulation” in the pejorative sense in which we normally refer to it—absolutely not; but we have to strike a balance between access to information and copyright protection. We think we are striking the right balance, and we are proceeding to implement the Hargreaves report, which has many of those ideas at its heart. On a personal level, I introduced the private Member’s Bill that strengthened criminal penalties for copyright theft, so I have a long-standing interest in upholding that legislation.

Let me deal with the first issue I mentioned—the green investment bank. The transition to a low-carbon economy is a very big challenge. Some analysis suggests that there will be demand for more than £200 billion of investment in the next decade to develop the innovative technologies and products that will underpin it. The challenge is all the greater, given the novelty of these markets and the long-term nature of returns on green infrastructure investment, which may deter private sector investors. There is a market failure here that the green investment bank will address. The bank will break new ground in the financing of projects, while demonstrating to the market that such investments can deliver commercial returns.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op) rose—

John Healey (Wentworth and Dearne) (Lab) rose—

Vince Cable: Let me finish, and then I will take interventions.

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The bank will also demonstrate the Government’s lasting commitment to important green objectives. For these reasons, I am sure the Opposition will welcome and support its objectives, as I am sure the hon. Lady will.

Luciana Berger: The Secretary of State may be aware that a number of months ago the Deputy Prime Minister committed money from the green investment bank to capitalise the initial run of loans for the green deal, which is supposed to launch in a few months, yet we heard at the end of last week that a number of companies, including British Gas and Kingfisher, are halting their plans to proceed with the non-profit-making green deal finance company because the money that they are expecting from Government has not been forthcoming. Will the Secretary of State say when they should expect those funds to come forward?

Vince Cable: I am aware that the team currently working on this, UK Green Investments, has been looking at the green deal proposal. Of course it must be commercially viable, as well as environmentally sound, and I cannot give the hon. Lady a precise answer as to when the team will have completed its analysis. I think a good deal more information is still required.

John Healey: Will the Business Secretary confirm that the green investment bank will be able to raise funds from the capital markets? In other words, will it be a bank that is able to borrow? If not, it cannot be described as a bank, and it is really just a fund.

Vince Cable: It has been described as a bank by the Financial Services Authority, which is the relevant regulatory body, and it will be able to borrow after 2015 in capital markets, subject to the overall debt position of the Government at that time. It is a bank.

Joan Walley: Is it not the case, though, that without the certainty that it will be possible for the bank to borrow on the open market, the first few years of the green investment bank will be uncertain? We will not know definitely that it will be able to borrow when the time comes.

Vince Cable: The bank will have the certainty of knowing that it has £3 billion committed to it from the Government and it is in the process of developing the projects to utilise that efficiently. I shall point out to the House some of the steps that have been taken to provide that concrete certainty about which the hon. Lady asks.

We have formed the bank as a public company, called the UK Green Investment Bank plc. It will be headquartered in Edinburgh. I have appointed Lord Smith of Kelvin as the chair and Sir Adrian Montague as the deputy chair. The bank will be funded with £3 billion to 2015, and the first £200 million of that has already been allocated by UK Green Investments. It will have borrowing powers from 2015, subject to a quite proper test of improving public finances. The Bill specifically provides for complementing this work by ensuring that the bank must have a statement of objectives clause in its articles of association.

The Bill also embeds the bank’s independence, which is crucial for its success. To achieve this, the Bill requires me as Secretary of State to lay an undertaking before

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Parliament not to interfere with the bank’s operational independence or commercial activities as a condition of designation. I provided this undertaking to the bank on its incorporation. This will ensure that the bank operates on commercial terms, funding these nascent and important environmental markets.

Dr Eilidh Whiteford (Banff and Buchan) (SNP): I welcome the establishment of the green investment bank in Edinburgh. What measures are the Government putting in place to ensure that small and medium-sized businesses can benefit from the green investment bank? Will there be a procurement code, as requested by the Federation of Small Businesses?

Vince Cable: I do not think a specific procurement code is required for this institution, though of course Government procurement raises wider questions. If the hon. Lady looks at the first tranche of commitments—the £200 million—she will find that that is for a fund dealing with a substantial number of waste projects, which have small-scale enterprises as part of their supply chain. That is the way that SMEs will benefit.

Simon Hughes (Bermondsey and Old Southwark) (LD): Will the Secretary of State confirm that not only are the Government committed to the green investment bank, which is a very good thing and has long been called for, but that there is a wider strategy in his Department, the Department of Energy and Climate Change and the Department for Communities and Local Government to make sure that we develop the green economy, producing a significant number of extra manufacturing jobs and apprenticeships and growth, and that that is a very significant part of the Government’s policy as a whole? It is not just about a bank and £3 billion being lent over a certain number of years.

Vince Cable: My right hon. Friend is right. We have the Green Economy Council, which is an over-arching body representing the key Departments in the Government to make sure that our work in this area is integrated and properly joined up.

John Healey: If the referendum on Scottish separation is successful, will the Secretary of State relocate this green investment bank from Edinburgh back to England? May I recommend that he considers Leeds and re-examines the case for locating the bank in Yorkshire?

Vince Cable: I have every confidence in the sense of the Scottish people, and I have every confidence that the bank’s headquarters will remain viable and expanding in Edinburgh.

On employment law, the Government are acutely aware of the need to do all they can to support business expansion and job creation. That is why the Bill contains provisions to reform the employment tribunal system and encourage dispute resolution through conciliation. Smaller businesses have consistently told us that the fear of ending up in a tribunal is high up their worry list and is a real disincentive to taking on staff. I have made it absolutely clear that I have no truck with the idea of a free-for-all hire-and-fire culture, and responsible British businesses do not want to go there either.

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Mr David Evennett (Bexleyheath and Crayford) (Con): I congratulate my right hon. Friend on his introductory comments on this important Bill. Government Members strongly believe in business, and we do not want to hold it back. On the other hand, we want regulation that is necessary to protect the work force, and we want to help them. We need a change in the law to help businesses grow and flourish.

Vince Cable: My hon. Friend makes the point in a fair and balanced way, and he defines exactly what we are trying to achieve.

Richard Fuller (Bedford) (Con): I am grateful to my right hon. Friend for saying that he will have no truck with compensated no-fault dismissal, but with many businesses, through the Institute of Directors and the Federation of Small Businesses, making the case for compensated no-fault dismissal, what representations has he had on that? Why has he been so strenuous in saying that he will have no truck with it?

Vince Cable: I am happy to go back and look at the correspondence, but the Federation of Small Businesses, as well as the Engineering Employers Federation, made it absolutely clear that they did not think that was a sensible approach for business.

Julie Hilling (Bolton West) (Lab): When the Secretary of State says that a great number of people have made representations about employment regulation curtailing business growth, does he agree that it is only 6% of employers who stated that employment regulation is an issue that concerns them?

Vince Cable: I think the hon. Lady is referring to a survey of small business that my Department did. Indeed, roughly that order of businesses ranked that as their top priority, as opposed to market demand and bank lending. Even though it may not be at the top of everybody’s concerns, for many small companies there is a legitimate fear, as my hon. Friend the Member for Bexleyheath and Crayford (Mr Evennett) pointed out, about the tribunal system and the way it functions.

Several hon. Members rose

Vince Cable: I will take one more intervention, then I will move on.

Geraint Davies (Swansea West) (Lab/Co-op): Does the Secretary of State agree that the Beecroft proposals about no-fault dismissal amount to a charter for intimidation and harassment, including sexual harassment? A boss could say to an employee, “Will you sleep with me?”, and if she said no, she could find herself sacked.

Vince Cable: That is going rather further than I would want to go with the argument or the evidence.

Kate Green (Stretford and Urmston) (Lab): The Bill does not contain measures on some of the matters on which the Government are consulting in respect of employment law, following the red tape challenge. Does the Secretary of State intend to bring forward more proposals during the passage of the Bill—in relation,

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for example, to employer liability for third-party harassment, to the ability of an employment tribunal to make a decision that will then apply to all staff, or to the statutory questionnaire?

Vince Cable: I have no such proposals. There is nothing stopping the hon. Lady proposing amendments for us to consider.

Mr David Ruffley (Bury St Edmunds) (Con): In 2004 Germany exempted micro-businesses from unfair dismissal-style protections. Has the Secretary of State looked at the German experience and noted, as I have, that youth unemployment there has halved, from just over 12% to just over 6%, in the seven years since the changes were made?

Vince Cable: As it happens, I was in Germany a few weeks ago—I unfortunately had to miss Business, Innovation and Skills questions—and one of the points clearly made by the various employers I met was that their procedure is far more cumbersome than ours, even for small companies. Indeed, small companies are required to adopt the two-tier system, a works consultation, which is very cumbersome indeed. There is no evidence that the German model, although admirable in many ways—I wish we had many of its aspects here—in any way helps to deal with this problem.

Mr Brian Binley (Northampton South) (Con): I had hoped to see in the Bill further measures taken from the German book, particularly the exclusion of micro-businesses from many of the regulations that hamper them right at the start of their life. Is the Secretary of State willing to consider that and perhaps accept an amendment to that effect in Committee or on Report?

Vince Cable: We will obviously look at any proposals on their merits, but our current regulatory system does have a micro-business exemption and we test all our proposals against that possibility. My hon. Friend should perhaps look at the FSB’s submission, because one of the problems the small business sector often highlights is that it does not wish to be regarded as a second-rate tier of employment that is colonised by cowboy employers. It makes it very clear that it is small businesses that resist the segmentation of the labour market.

Mr Sam Gyimah (East Surrey) (Con): Does the Secretary of State agree that the current employment tribunal system is not simple, transparent or inexpensive for employers, because for many of them dealing with an individual case or a class action-type case is incredibly expensive and long-winded, and that serves as a barrier to businesses hiring new staff? They know that if things go wrong it is very complicated, so simplifying the system and enabling them to deal with it without resorting to disputes should be the way forward in the Bill.

Vince Cable: I totally agree with my hon. Friend, who anticipates many of the things I will say. He is absolutely right that the process is very cumbersome and time-consuming. There is currently an enormous backlog of 430,000 cases and it is very costly, particularly for small companies. The whole thrust of the changes I want to introduce relates specifically to making the tribunal system much simpler and avoidable where possible.

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John Healey: May I say how welcome the Secretary of State’s balanced view is, in contrast to those of some Members behind and beside him? On the question of changing the tribunal system, what increase in resources will he make available to the Advisory, Conciliation and Arbitration Service if everyone who wants to put a claim to a tribunal must first put it to ACAS?

Vince Cable: My experience is that colleagues behind and beside me have a very balanced view of this question—we have no difficulties in this area at all. We will indeed rely heavily on ACAS and it is important that it is properly resourced, so we will obviously have to look at that, but we have had no warnings that it cannot handle the processes that we propose to introduce. If the right hon. Gentleman will let me, I will try to describe what those are.

Our reforms are not about removing individual employment rights; they are designed to ensure that the tribunal system is fair to all parties and supports labour market flexibility. They are meant to improve the prospect of employers and workers sorting out problems through reconciliation—ACAS-based dispute resolution—rather than the adversarial and costly method of going to court, as my hon. Friend the Member for East Surrey (Mr Gyimah) admirably pointed out. Tribunals are a costly and stressful process for everyone involved. Giving all parties a new opportunity to resolve disputes through ACAS will maximise the chances of resolving a problem without going to a tribunal.

We want to do more to encourage parties to reach an agreed solution at an earlier stage. We will therefore introduce an additional clause in Committee to ensure that the offer of a settlement cannot be used against an employer in an unfair dismissal case. That will facilitate the use of settlement agreements, making it easier and quicker for employers and employees to come to an agreed settlement where an employment relationship is not working.

Julian Smith (Skipton and Ripon) (Con): I welcome the decision to move forward with settlements and compensation, which is a really good move, particularly for small businesses, and thank the Secretary of State for listening to many Government Members who have put the case for more clarity for smaller businesses.

Vince Cable: I thank my hon. Friend for his positive response. The Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for North Norfolk (Norman Lamb), who will guide the Bill through Committee, will be able to develop that a little more, and any insights that my hon. Friend has for improving that new idea will be warmly received.

Mr Chuka Umunna (Streatham) (Lab): Of course, if an employee and an employer have “without prejudice” discussions that involve an offer to pay off and for the employee to depart on that basis, at present that cannot be adduced at tribunal. The Secretary of State will know that a relationship of trust and confidence is essential to the existence of an employment relationship. How does he see that working if an employer’s offer to pay off has been refused by the employee who feels that there is no reason why they should leave?

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Vince Cable: If the dispute is then unresolved, which is the implication of the last phrase in the hon. Gentleman’s question, it would of course remain and would have to be resolved either through conciliation or, ultimately, a tribunal, so he is referring to an unresolved dispute rather than a resolved dispute. What we are specifically proposing is that, if there is an agreement and the dispute is resolved, the matter cannot subsequently be raised in a tribunal case—[Interruption.] He shrugs his shoulders, but our understanding, having talked with business groups and trade unions, is that that would be a very helpful step, and I think that that reinforces what we have just heard.

In addition, we are streamlining the tribunal process itself, including providing for the introduction of a rapid resolution scheme, so that straightforward cases can be dealt with more quickly, and reducing the burden of resolution for users of the tribunal system and the taxpayer.

Mrs Helen Grant (Maidstone and The Weald) (Con): Does the Secretary of State agree that the rapid resolution scheme will make it quicker, cheaper, easier and less stressful to deal with those straightforward matters not only for employers, but for employees?

Vince Cable: Yes, and I thank my hon. Friend for making that important point. It is not simply employers who have problems with the existing system; often payments are far less than the people who bring the cases expect, the process is stressful and lengthy and the current system simply cannot handle the volume of claims.

In addition, there will be a discretionary power for employment tribunals to levy a financial penalty against an employer where there has been an aggravating breach of an individual’s employment rights, which will also encourage employer compliance. Taken together, these measures will help shift the emphasis from confrontation to conciliation when resolving workplace disputes and give businesses the confidence to expand and take on new staff.

Steve Baker (Wycombe) (Con): On the point about business confidence and taking on new staff, having worked as a freelance software engineer, one thing I see missing from part 2 is anything to resolve the difficulties and ambiguities with the status of freelancers. Will the Secretary of State use the opportunity in Committee to do something about IR35?

Vince Cable: I am tempted to engage in a long disquisition on that subject, having been involved in the debates on IR35 10 years ago. It is primarily a tax issue. As some Opposition Members will remember, the IR35 measures were introduced primarily to avoid a particular form of tax avoidance using national insurance, so if we have to do more on IR35 we will look to my colleagues in the Treasury, rather than this Bill.

Let me turn to directors’ pay. Fairness is important, and never more so than when the fiscal situation we inherited has forced upon us difficult decisions that affect everybody in society. That principle extends to executive pay, which for some years has behaved in a way that is unrelated to the rest of the economy or performance.

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There is a well-established case for the regulation of directors’ remuneration, given the inherent conflict of interest when directors set their own pay. Moreover, shareholders in a number of companies have shown that they are increasingly angered by soaring pay for top executives that is unrelated to company performance. Their willingness to challenge rewards for failure is admirable, but I want this “shareholder spring” to be more than just a passing, seasonal phenomenon.

In developing our proposals, we have worked intensively with businesses and investors to create a workable package that helps shareholders to hold directors to account, while avoiding unnecessary red tape on business and unrealistic demands for investors to micro-manage pay. Responses to our consultation showed clear support for strengthened shareholder voting rights in order to improve the link between pay and long-term performance, while still allowing boards the flexibility to devise and deliver pay policy.

In the past it has been too easy for companies to ignore a significant adverse vote from their shareholders. That is why the Bill includes a provision to give shareholders binding votes on directors’ pay. We intend to introduce new clauses in Committee, when we have analysed in detail the responses to our consultation and finalised our proposals in that area.

Jonathan Edwards: What consideration has the Secretary of State given to creating remuneration bodies that include company employees? Surely such bodies would have a wider remit and far greater buy-in.

Vince Cable: That is an issue on which we have frequently exchanged views across the House, and we do indeed want to see employee consultation, but we are not mandating employee representatives on boards, which I know some people have called for, and we have made that very clear in the past.

Simon Hughes: This is one of those issues that the Government inherited. It is the scandal, left by the previous Government, of absolutely obscene pay for top executives—uncontrolled by shareholders. I therefore welcome the proposals, but will my right hon. Friend clarify that the Prime Minister and Government still take the view that in the public sector the ratio should be a maximum of 20:1, and that in the private sector, where it is not a matter for Government to determine, all shareholders will have adequate notice of any proposals, so that there is both private and public participation in the debate as well as a binding vote on the remuneration package for the executives at the top of private sector companies?

Vince Cable: There are separate developments taking place that do not require primary legislation, and they will improve the quality of information available to shareholders. The Financial Reporting Council has responsibility for that, and I do not have the powers to direct it, even if I wanted to, but the quality of information is intended to improve, and we certainly want to see a range of information made available, including the aggregates that my right hon. Friend describes, as well as simpler and clearer information. That process is taking place in parallel with this Bill.

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The Bill will improve the way in which competition is promoted and policed. The UK’s support for a free and open trading system remains fundamental to our economic strategy, and the steady pressure from competitive markets ensures that businesses boost productivity and consumers benefit. Our competition regime has been well regarded, but it can be too slow, and recently there have been some worrying criticisms about how it has managed cartel offences.

The reforms that I propose are designed to improve the effectiveness and efficiency of competition enforcement, operating through a new competition and markets authority, backed by streamlined and strengthened powers. The current division of responsibility for the two phases of the markets and mergers regimes, between the Competition Commission and the Office of Fair Trading, can lead to a duplication of activity and the inefficient use of resources. Further, the time it currently takes to complete mergers, markets and anti-trust cases is often far too long, and that in turn imposes additional costs on business, including on those that pose no threat to competition.

Our reforms to the competition regime are designed to create a single, strong voice for competition and a one-stop shop for business; to create greater certainty for business, thanks to faster, clearer and, indeed, statutory time frames; to provide for more effective action to tackle anti-competitive mergers, including the discretion to suspend them; and to provide for robust action to tackle cartels, which can damage business and consumers alike, by removing, for example, the need to prove dishonesty. In addition, it will be easier for businesses to ask the new competition and markets authority to halt uncompetitive practices while investigations are ongoing. These measures go hand in hand with proposals, on which we are currently consulting, to allow businesses to take private actions to stop anti-competitive practices and to achieve redress.

Another aspect of our reforms relates to intellectual property rights, an issue that the Chair of the Culture, Media and Sport Committee, the hon. Member for Maldon (Mr Whittingdale), raised a few moments ago. The modernisation of copyright is critical to investment in the UK’s creative industries, one of our most successful export sectors. Research by Imperial college and the Intellectual Property Office shows that annual copyright investment in artistic originals in film, TV and radio, books, music and art was about $5 billion, twice the original estimate. Spending on UK design amounts to almost £33.5 billion, and there are about 350,000 people in core design occupations of all kinds.

The sale of unauthorised replicas of classic designs, such as a lamp or a piece of furniture, means that firms that depend on design can lose out, so the Bill ensures that those designs that are also artistic works and, therefore, qualify for copyright protection will be protected for 70 years from the creator’s death, instead of for the current 25 years.

The Bill also creates an order-making power that will allow the Government to make any future changes related to copyright exceptions or exceptions to rights in performances. The practical consequence of that will be to maintain the level of criminal penalties, in which as I said earlier I have a personal interest, given that my private Member’s Bill introduced the current maximum penalty level of 10 years’ imprisonment

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In addition, the Government have made a number of proposals in response to the Hargreaves review of intellectual property and growth and subsequent consultation. They are needed to ensure that the copyright system is fit for purpose in the digital age. It has been decades since the intellectual property regime was overhauled, during which time the world has changed beyond recognition. It would be negligent to leave unchanged a system suited to the cassette recorder in an era of iPads and cloud-based music services.

Primary legislation will be required for three of those reforms: the introduction of a scheme to allow extended collective licensing; one to allow the use of orphan works; and, finally, a back-stop power to allow the Government to require a collecting society to implement a statutory code of conduct, should it fail to introduce or adhere to a suitable voluntary code.

The Government’s proposals on extended collective licensing and on the use of orphan works are designed to make it simpler for users to use copyright works legitimately, while protecting the interests of rights holders. At the same time, introducing codes of conduct for collecting societies will provide valuable reassurance to the thousands of small businesses and other organisations, including creators, that deal with them.

The Government are finalising their response to the consultation on those three proposals, and if we decide to proceed we will want to move swiftly. The Bill presents an opportunity to do so, and I shall announce a decision on the matter as soon as possible.

Geraint Davies: How does the strength of law on copyright compare with that on patents? I am thinking of the international duplication of a copyright, such as on a chair, as the Secretary of State said, and how the law will be enforced internationally.

Vince Cable: I do not think that there is any link between patents and copyrights in this case; they are separate systems of law. The hon. Gentleman will know that in the European Union there is already a unified approach to patents and to copyright, but we are trying to ensure that in the UK context copyright protection is properly enforced. That is the purpose of the changes before us.

Mr Whittingdale: The Secretary of State will be aware that in the Hargreaves report a number of the proposals relating to possible extensions of copyright exception are causing real concern in the creative industries. Can he provide an assurance that they will be introduced not by statutory instrument, but in proper, primary legislation?

Vince Cable: I am not going to give the hon. Gentleman a very precise answer because I will need to check on the exact legal position. I am aware of the concerns, and he is one of several people who have expressed them. I will endeavour to reply to him in writing to give him the precise answer to his question.

A further set of reforms accelerates the Government’s drive to tear up unnecessary red tape. We inherited over 20,000 separate rules and regulations affecting business in the UK. Cumulatively, this regulation stifles growth and strangles innovation, and in the past two years we have launched a concerted drive to tackle the problem. We introduced the one in, one out rule to stem the flow

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of regulation to business. The aim of one in, one out is not only to force regulating Departments to deregulate more but to change the Whitehall culture to encourage Departments to use regulation only as a last resort. Under the red tape challenge, 20 regulatory themes have been launched for comment on the website, involving more than 3,700 regulations. Decisions have been announced by Ministers on 1,500 of those, of which well over 50% will be scrapped or improved.

Kate Green: How will the provisions of clause 51 on repealing some of the provisions of the Equality Act 2010 in relation to the general duty and the good relations duty have any impact on business whatsoever?

Vince Cable: I was going to mention that measure at the end of my speech. We see it essentially as a bit of legislative tidying up; we are not going to argue that it has significant impacts on business. However, we can pursue the detailed implications.

The Bill introduces further measures and makes it possible to include a sunset or review clause in any new secondary legislation to ensure that legislation is fit for purpose and is regularly reviewed. It also extends business eligibility for the highly successful primary authority scheme, which allows firms to get assured advice from one local authority on a particular regulatory issue. Often what businesses find most bewildering is not the regulation itself—they recognise that rules are often necessary—but the inconsistent application of the rules so that they have to adjust their systems depending on the whim of a local official. The primary authority scheme deals with that.

Mr Gyimah: On reviewing regulations that have already been passed, one regulation that springs to mind is the agency workers directive, where, on issues such as pay, bonuses and holidays, we have gold-plated what Brussels originally introduced. In so doing, we have made what is supposed to be flexible, temporary work more like permanent work, which it should not be. Would we be able to review that legislation under the sunset clause that the Secretary of State mentioned?

Vince Cable: This would not be the context in which to do it, because it is, of course, now part of the law. We have looked at this in considerable detail because a lot of concern has been expressed about it. The UK’s implementation of the agency workers directive came about as the result of a negotiated agreement between employers and employees and their representative bodies. We explored the possibility of easing some of the burdens on business arising from the directive and came to the conclusion that in practice we could not do so. However, I hear the hon. Gentleman’s concerns, which were expressed by many companies.

Mr Gyimah: I understand that the TUC and the CBI, as European social partners, were very involved in the negotiations between employees and business, but representatives of small businesses were not, despite the fact that the impact of such legislation on small businesses can be particularly draconian. I urge the Secretary of

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State to consider a way of reviewing the gold-plating of such legislation, especially where it applies to small businesses.

Vince Cable: I have an open mind if the hon. Gentleman has good ideas as to how that can be done. We have committed ourselves to removing the gold-plating of European legislation as it applies to Britain, and if he has good, constructive ideas, we are happy to look at them.

Julian Smith: Has the Secretary of State given any further thought to including EU directives and legislation in the quarterly statements that are being produced by his Department? Earlier, he said in answer to a question of mine that he might consider it, and I would be interested to know whether he has done so.

Vince Cable: The Minister of State, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who has done admirable work in progressing this agenda, tells me that we are indeed planning to do that and that it will appear in that form.

Sheila Gilmore (Edinburgh East) (Lab): Following the dialogue that has just taken place, I am left unclear whether the Secretary of State agrees that agency worker regulations are gold-plated. If he thinks that they are gold-plated, in what sense is that the case, and if he does not think so, will he make that statement clearly?

Vince Cable: As I said, that case has been strongly made to us by people in the business community. I also said that the directive’s current form in British law was the result of a consensus among the main social partners. Although the CBI has small business membership, it would not consider that area to be its primary function. If there are specific proposals on how some of the gold-plating, if that is what it is, can be alleviated in a sensible and fair way, I am always willing to look at that. I do not have a closed mind on these issues.

Sheila Gilmore: I am still left unclear about the meaning of gold-plating, which, in my view, is a phrase that is thrown around this House far too often. In what way does the Secretary of State think that there is gold-plating in this respect?

Vince Cable: What small businesses usually mean by gold-plating is that they spend a great deal of time filling in forms, ticking boxes and complying with regulatory measures that impede their business activity. If that is the case in this respect, as in others, we are happy to look at it.

Also in a deregulatory spirit, the heritage measures in the Bill implement commitments to legislation made in the Government’s response to the Penfold review of non-planning consents, which aimed to ensure that non-planning consent regimes operate in the most flexible and simplified way. The measures include bringing greater clarity on what is and what is not protected within listing buildings, and they will enable owners and local planning authorities to enter into voluntary partnership agreements to help them to manage listed buildings more effectively.

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The measures that I have outlined are designed to improve the business environment and to help to restore the UK economy to health by laying the foundations for lasting recovery.

Katy Clark (North Ayrshire and Arran) (Lab) rose

Vince Cable: I am coming to the end of my speech.

I have acknowledged that legislation by itself will not solve the economic challenges we face, but these measures will help to create a platform for sustainable recovery. I commend the Bill to the House.

6.27 pm

Mr Chuka Umunna (Streatham) (Lab): I beg to move,

That this House, whilst supporting the principles of the Green Investment Bank and affirming its belief that active government should work in partnership with business to encourage long-term sustainable economic growth, facilitate enterprise, protect the rights of all, particularly low-paid, workers and simplify regulation where necessary, declines to give a Second Reading to the Enterprise and Regulatory Reform Bill because it does not provide a strategy for economic growth; believes that the Bill contains inadequate measures to boost business confidence, enhance this country’s international competitiveness, increase competition in consumer markets or protect consumers from powerful vested interests; further believes that the Bill fails to provide sufficient support to empower shareholders, investors and employees on executive remuneration to bring to an end excessive rewards for corporate failure; and is concerned that the Bill grants the Secretary of State additional powers to alter compensatory awards for unfair dismissal and contains provisions relating to the conciliation process that could dilute the rights of people at work.

I will deal with each element of the Bill in turn and, in so doing, explain our amendment. Given the very varied nature of the Bill, that will take some time, but I will do it as swiftly as possible because many others want to take part in the debate.

First, I want briefly to consider what the Government claim the Bill will achieve overall. In January last year, not long after the Government’s spending review, the Secretary of State told this House:

“economic growth is now strong. It will become stronger as a result of the work that the Government are doing in stabilising finances”.—[Official Report, 13 January 2011; Vol. 521, c. 429.]

Quite the opposite has turned out to be the case. Since the spending review, the economy has shrunk by 0.4%, we have been tipped into a double-dip recession, over 2.6 million people are now out of work, and 50 businesses are going under every single day. That was not the case back in May 2010; it is now, thanks to the policies of this low-growth Government. When my party left office, the World Bank ranked the UK fourth in the world and first in Europe for ease of doing business. This year, we have slumped to seventh place. Businesses face an increasingly difficult operating environment, not least because of the problems that sound and successful firms have found in accessing finance, with net lending to business contracting year on year in every month since this Government came into office.

In fairness to the Secretary of State, he has recognised his and the Government’s failings. He said that they have no “compelling vision” for the country, that they lack

“a confident message on how we will earn our living in the future”,

and that there is

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“no connected approach across government”

to driving growth. He suggests that the Bill will change all this. Indeed, on the day of its First Reading he said:

“The measures in the Enterprise and Regulatory Reform Bill will help make Britain one of the most enterprise-friendly countries in the world.”

He said that it would resolve the ongoing issue of no growth. That remains to be seen. I sincerely hope that that will be the case for the sake of our country, but I and many businesses doubt it.

Julian Smith: I challenge the hon. Gentleman’s point that Labour left the country in a good regulatory state. The CBI states that 107 of the 152 employment regulations were put on the statute book during Labour’s period in power. Was that leaving the country in a good regulatory state?

Mr Umunna: What I cited was the World Bank’s assessment of the state in which we left the environment for businesses to carry out their work. If the hon. Gentleman reads the guidance that has been issued by his Government, he will see that we have been praised for doing things such as introducing the primary authority scheme, which was supposed to, and did, reduce the regulatory burden on businesses.

Perhaps the Secretary of State’s most damning criticism of his and his Government’s actions is that they are “frankly, rather piecemeal”. At first sight, that is precisely what the Bill is. It is a hotch-potch of measures that provides no discernible overall vision or confident message. There is no evidence of a connected approach across Government to drive growth.

Business was straight off the blocks with its criticisms of the Queen’s Speech, the centrepiece of which was this legislation. The director general of the British Chambers of Commerce said what many people have been saying for many months:

“There is a big black hole when it comes to aiding business to create enterprise, generate wealth and grow.”

He is right. Our amendment makes it clear that the Bill, viewed as a whole, does not change that assessment.

I will quickly go through the parts of the Bill and set out our position on each.

Alok Sharma (Reading West) (Con): Will the hon. Gentleman give way?

Mr Umunna: I will make a bit of progress, because I want to ensure that there is time for others to get in.

Part 1 will set up the green investment bank. I have stated on many occasions, as has the Leader of the Opposition, that it is crucial to long-term economic growth to have an active Government working in partnership with the private sector. In our view, the Government should work with business to identify the sectors from which future demand will come and to ensure that companies are set up to meet that demand. There is and will continue to be a growing demand for green technologies, so we need an active industrial strategy to support the low-carbon economy, as I and my right hon. Friend the Member for Don Valley (Caroline Flint) have argued.

A critical component of that is the green investment bank. That is why we set up the green investment bank commission in 2009 with a view to establishing such a

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bank, and why we committed ourselves to establishing such a bank in our 2010 manifesto. We will therefore not oppose the bank—our amendment makes it clear that we support it in principle. Also, I do not want to add further long-term policy uncertainty in this area, after the huge uncertainty that the Government have heaped on the low-carbon sector since coming to office. I note that the deputy leader of the Liberal Democrats, who has left his place, conveniently ignored the decision on feed-in tariffs, which is perhaps the most glaring example of the uncertainty that has been created.

As the Secretary of State said, Lord Smith of Kelvin and Sir Adrian Montague were appointed as the chair and deputy chair of UK Green Investment Bank plc during the Whitsun recess. We welcome their appointment. Having heard what the Secretary of State has said, I suggest that until this entity is given the power to borrow and to lend, allowing it to leverage its initial equity to make more capital available, it will not be a body that most people would recognise as a bank. It is a fund, whereas it is an operational bank that the country needs. The Secretary of State made has made it clear that it will not be allowed to borrow—he repeated this today—unless public sector net debt is falling as a percentage of GDP in 2015. The earliest it is likely to be able to borrow is therefore 2016. That is a delay of four years from now. Ed Matthew, the director of Transform UK, the business alliance campaigning for the bank to be set up, put it well:

“Allowing the bank to borrow is the key to generating growth and rebooting the UK economy. Delaying this power until the economy has recovered is like a doctor waiting for a seriously ill patient to recover before giving him life-saving medicine”.

David Mowat (Warrington South) (Con): I am listening carefully to the shadow Secretary of State’s comments on the green investment bank. He has talked about the importance of low-carbon industries. Does he agree that the scope of the green investment bank should include the nuclear supply chain, which is far and away the biggest low-carbon industry in our country? That would enable us to lend to Sheffield Forgemasters, a company that I have heard him talk about many times.

Mr Umunna: We will wait to see the detail that the Government come forward with in Committee. We are clear that the bank needs to step in to fill the funding gap if we are to green our economy. It is with that in mind that we will decide our position, as and when the Secretary of State comes forward with the detail.

Joan Walley: To go back one step, what my hon. Friend just read out about the need for borrowing powers was exactly the recommendation of the Environmental Audit Committee. In the Public Bill Committee, will he explore with the Government what progress has been made in respect of state aid rules to ensure that there is no impediment to getting this off the ground?

Mr Umunna: I will be happy to do that. My hon. Friend is, of course, the Chair of that Select Committee.

Ann McKechin (Glasgow North) (Lab): Does my hon. Friend agree that the green investment bank must not be a bank of last resort that simply takes the

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projects that no one else is prepared to take, but must drive investment forward, taking the private sector with it, particularly in areas such as offshore wind, tidal power and carbon capture, which we have plenty of opportunity to develop further?

Mr Umunna: I could not agree more. The Government have committed to additionality and we will look to ensure that that occurs.

Part 2 of the Bill relates to employment law, which has attracted much public concern. As I have said before, we are not in a double-dip recession because of the rights that people in this country enjoy at work. No amount of sabre rattling and nonsense from Government Members about the need to allow employers to fire employees at will is going to get us out of recession. That is a simple fact. We are in a double-dip recession because of a lack of demand. Watering down employee rights will not boost demand. In fact, it is highly likely—

Mr Gyimah: Will the hon. Gentleman give way?

Mr Umunna: I was wondering when a Government Member would seek to intervene. I will give way shortly.

Watering down employee rights will not boost demand but is highly likely to do the opposite. As the Chartered Institute of Personnel and Development said last week, increasing job insecurity is more likely to damage growth and consumer confidence than increase them. I say to the hon. Member for Bedford (Richard Fuller) that the Federation of Small Businesses has been in contact with us today about the Government’s proposals to allow no-fault dismissal, with fewer employment protections for those working in small businesses, for which he has argued. It has said that

“those who do take employment in small firms could be lower skilled, less productive workers willing to accept lower protection, making it even more difficult for these firms to grow”

and that

“there is a question that with weakened rights, employees in small firms would find getting access to credit more difficult. If so, that would make labour recruitment for small firms even harder.”

Mr Brian Binley (Northampton South) (Con): Absolute nonsense!

Mr Umunna: I say to the hon. Member for Bedford and to the hon. Member for Northampton South (Mr Binley), who says that that is absolute nonsense, that I have quoted the Federation of Small Businesses word for word. It has made it clear that replacing the need for good management with a hire-and-fire culture does not fit with its views on good employee relations.

Mr Gyimah: There is a fundamental misunderstanding here. It is a misrepresentation to say that any conversation about making it easier for both employers and employees to exit a relationship that is not working is an attack on workers’ rights. That is simply not true and it is not what the Bill tries to do. The shadow Secretary of State has mentioned that we need growth. It is important to remove everything that stops investors being confident enough to invest. Access to finance is one such thing, but so is the confidence to hire people. That is why the Bill seeks to simplify the employment tribunals system.

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Madam Deputy Speaker (Dawn Primarolo): Order. A lot of Members are waiting to speak, so interventions must be brief.

Mr Umunna: I will expand on that point in more detail later, but what I can tell the hon. Gentleman now is that when I ask businesses what is currently holding them back, most say a lack of orders and demand, not the rights that their employees enjoy at work. If we are looking to encourage businesses to hire people, why not give all micro-businesses a national insurance break—I believe he has a seat in the south-east—when they take on extra workers? That would do more to help them grow their businesses.

Mr Binley: I know that the shadow Secretary of State admires experience. He knows that I founded two companies that collectively employ 260 people. He knows that we deal with many, many small businesses, and I am involved with them on a weekly basis. I can tell him that many small businesses are frightened to take people on because they are frightened of being blackmailed, should it not work out. That is a real problem, which his party needs to face up to.

Mr Umunna: I acknowledge the hon. Gentleman’s great wisdom and experience, but I respectfully disagree with his overall depiction of employees blackmailing their employers willy-nilly. I say that as a former employment law solicitor who has advised business people like him, but employees too.

Richard Fuller: May I point out that this is the Secretary of State’s Enterprise and Regulatory Reform Bill, not mine? I am sure that mine would be somewhat different. The shadow Secretary of State talks about job protection, and about the recession and demand, but does he accept that it goes a little deeper than that? Recent experience in the UK and the US shows that when we have recovered from recessions, we have not created jobs as swiftly as we did in the ’50s, ’60s and ’70s. In that context, does he not think it is worth looking at the recommendation made by Beecroft?

Mr Umunna: I am not sure exactly which proposal the hon. Gentleman thinks it is worth having a look at. If he is talking about the proposal to allow no-fault dismissal in firms of fewer than 10 employees—which I believe is what he spoke about earlier—the answer is no. I do not agree that it is worth looking at, partly because there is no evidence that having no-fault dismissal encourages or helps firms to grow, as was previously made clear in business questions by the Minister responsible for employment relations, the Under-Secretary of State, the hon. Member for North Norfolk (Norman Lamb).

I do not deny that employment law and regulation more generally are matters of concern for small businesses. It would be absurd of me to make such a claim, and I am not making it. However, it is the state of our economy that has been consistently identified by small and medium-sized enterprises as the main barrier to their success. We know this because that is what they have been telling Ministers. In the Government’s latest “SME Business Barometer”—which I think the Secretary of State mentioned earlier—32% of SME employers said that the state of the economy was the main obstacle

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to the success of their business, followed by issues such as cash flow, taxation and finance. Just 7% cited regulation as the main obstacle to their success.

Let me be absolutely clear: we on this side of the House will not countenance watering down the rights that every constituent of every Member of this House enjoys in the name of growth. I should also note that Conservative Members—nobody has made this comment today, but they have before—have been keen to present this as solely a union issue. It is not: it affects just about every working person in this country, regardless of whether they are a member of a trade union. While everyone else has been worrying about losing their job—thanks to the Government’s economic incompetence in my view—their rights at work have, frankly, been used as a political football in the Government, among Departments and between the two governing parties. That does nothing to dispel the overall impression of shambles that hangs over the Government. However, Minsters and those who have been briefing the media on their behalf should also reflect on the huge worry that such briefing on employment law is generating among those who work in our businesses, with all the talk of further liberalising our labour market, which is one of the most liberalised labour markets in the western world.

Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): Will my hon. Friend give way?

Mr Umunna: I will give way shortly.

The Secretary of State has quite rightly said that it is not the job of the Government to “scare the wits” out of people, but that is what the Government have been doing—

Julian Smith: No it isn’t.

Mr Umunna: Yes it is: it is precisely what they have been doing with the promotion of the Beecroft report by the Prime Minister and others. I should say that the Secretary of State is no innocent bystander. His little chat with The Sun on Saturday evening generated an article in that paper yesterday carrying the headline “Quick Cash for Sack”. This hardly reassures vulnerable employees who are anxious about their job security.

That article was, of course, the pre-spin for the new measure—which has been mentioned today—to prevent employees from using a pay-off offer as evidence in a tribunal. The measure will presumably be inserted in the provisions in the Bill that deal with the new settlement agreements. We were notified of the proposal only when I read my copy of The Sun yesterday, as it did not appear in the Bill or the explanatory notes, so we have not had proper time to consider it. At first sight, it is questionable whether it would work in practice. As a former employment lawyer like me, the Minister responsible for employment relations will know that essential components of an employment relationship are trust and confidence between the parties. How on earth can trust and confidence continue to exist if a pay-off offer is made out of the blue when the employee has done nothing wrong and decides to reject the offer? What happens then? This needs further clarification. So too do the Government’s intentions in relation to the employment law provisions of the Bill and the Beecroft

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report, because, further to the questions that Labour Members have asked the Secretary of State, I am no clearer about how many parts of the Beecroft report will potentially be inserted in the Bill.

Julian Smith: I assume that the hon. Gentleman, as a former employer lawyer, was involved in negotiating compromise agreements. Surely the proposals that we are discussing this evening are just simplified compromise agreements for smaller companies which will be much easier to administer and will not involve payment of the fees that I am sure he earned advising bigger companies on such agreements.

Mr Umunna: No, the hon. Gentleman is wrong. As things stand, the position in law is that if a pay-off offer is made during a “without prejudice” discussion between an employee and an employer—which would take place if there was an ongoing dispute—that cannot be adduced as evidence in court. However, if a pay-off offer was made out of the blue where there was no pre-existing dispute, that could be adduced as evidence. What I discern from what is being proposed is that the Government are seeking to ensure that that situation is covered too, so that such an offer could not be adduced in evidence in court either. [Interruption.] I believe that the Minister responsible for employment relations is agreeing with my interpretation. My issue with that is that if an employee in a firm is quite happy and believes that they have done nothing wrong, but the employer does not like them for some reason, decides that they are going to get rid of them and offers them a set sum, the employee should be able to adduce that as evidence to show that the employer was intent on getting rid of them come what may. That is the point that I am seeking to make.

Further clarification will be needed. However, let me once again ask the Secretary of State—I will give way to him on this point—how many parts of the Beecroft report are going to be inserted in the Bill by way of amendment, if any. He has—I think—been clear with us today that the proposal for a no-fault dismissal measure, on which the consultation has just closed, will not feature in the Bill. How many other parts of Beecroft are likely to feature in the Bill through amendments? I am happy to give way to him if he is willing to answer that question.

Vince Cable: As far as I am aware there is none, but the hon. Gentleman will be aware that the Beecroft report covers a wide range of activities, including things such as immigration control, which clearly do not belong in this Bill. However, as far as I am aware, no other provisions are allowed for in this case.

Mr Umunna: I am slightly surprised by that answer because of the equivocation. The Secretary of State commissioned the report—it was his report—and this is his Bill, so surely he can provide us all with a categorical assurance now that no elements of Beecroft will feature in the Bill. I am happy to give way again, if he wishes to clarify that point. No? I think that people will note his failure to reply.

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With regard to what is in the Bill, our amendment makes it clear that the proposals to grant the Secretary of State new powers to vary the limits for compensatory awards in unfair dismissal cases are totally unacceptable. Clause 12 proposes to give the Secretary of State the power to cap the compensatory award, which is currently capped at £72,300, at a maximum of between median earnings and three times median earnings—that is, between £26,000 and £78,000—or one year’s earnings, or whichever is the lower of the two. No advance warning of this measure was given, and there has been no consultation on it. Why? It is also hard to see the justification for the proposal when we consider that the median award for unfair dismissal came in at just over £6,000 in the past year.

The practical effect of the proposal would be that those on average or above-average earnings—middle income earners in particular—would not be properly compensated if they were treated unfairly by their employers. Let us be clear who we are talking about. This would affect accountants, architects, chartered surveyors, insurance brokers, lawyers and mechanical engineers, as well as many other public service professionals. Those people are all in occupations that attract average or above-average earnings. Lower income earners in this country have already been hit hard by the Chancellor’s Budgets since this Government came to office. It is middle income earners who stand to suffer most from this change. Of course, those earning millions every year—who have just been given a huge tax break by the Government—no doubt have plenty in the bank and will not have to worry about this, but that does not apply to the majority of earners in this country.

Julian Smith: Does the shadow Secretary of State think it reasonable that, in 1999, the compensatory award level was £12,000 and that it is now £72,300? Does he think that it has gone up by a reasonable amount over that period?

Mr Umunna: I think it is reasonable, when people have been treated in an appalling and unfair fashion by their employers, that they should be properly compensated.

The Bill contains a related measure to give the Secretary of State the power to vary compensatory awards for employers of different descriptions. The Employment Lawyers Association, of which I used to be a member, said last week that having different rules for micro-businesses, for example, would make people think twice about working for small businesses, knowing that they would have less employment protection than if they worked for a large employer.