9.23 pm

Mr William Bain (Glasgow North East) (Lab): This has been a fascinating debate for Members of the House, but perhaps a perplexing one for the public. A recent study by Democratic Audit showed that the public are increasingly distrustful of our political institutions and of corporate power, and are saying in ever-larger numbers that we face a crisis of democracy. That speaks to one conclusion: there must be a major democratic resettlement, with democratic reform of the second Chamber a key component.

10 July 2012 : Column 266

Labour has always recognised that a programme of radical economic and social justice in government can take place alongside strong political reform. In the second general election of 1910, Keir Hardie stood for re-election in Merthyr Tydfil on a manifesto of introducing a minimum wage, home rule, votes for women and ending, not mending, the House of Lords. At the last election, our prescription for the democratic chasm that is the unelected second Chamber was a different one, and I am proud to stand tonight on an agenda of putting a wholly elected second Chamber to the people of the country in a referendum.

As the Executive have tightened their control over this House, a democratic second Chamber to offer an enhanced check and balance has become increasingly vital. We need only heed the lessons from Scotland, where the Scottish National party has been able to exert complete command over the single-chamber Scottish Parliament and all its Committees through an overall majority obtained with 45% of the vote at the last Scottish general election, even under a system of proportional representation. Unicameralism without electoral reform or a redistribution of power between Parliament and the judiciary would risk strengthening Executive power in Parliament, far from limiting it.

The current unelected second Chamber is a hangover from a mediaeval era of democratic illegitimacy. It has mushroomed from 666 Members in 1999, when nine out of 10 hereditary peers were ejected, to more than 830 now. The other place is one of only three second chambers in the world, alongside those in Kazakhstan and Burkina Faso, whose size outstrips that of the first chamber.

The second Chamber is also wholly unrepresentative of the modern United Kingdom. It fails to provide a sufficiently strong voice to the different nations and regions of the UK, as well as to working-class people, young people, the disabled, women, ethnic minorities and the lesbian, gay, bisexual and transgender community.

We are told that an unelected Chamber is more independent-minded than this partisan House, but a detailed analysis of results in the other place between 1999 and 2006, by Meg Russell of University college London’s constitution unit, shows that the Government were more likely to suffer a defeat because of partisan voting than because of the presence of independents in the second Chamber.

In February, 71% of people outside this House backed the principle that those who make the laws should do so on some form of electoral mandate, and 39% believed that the unelected principle should end entirely. The Bill is far from perfect, which is why it needs more scrutiny than the Government were prepared to concede before this afternoon. A 15-year term without a right of recall is an odd mandate to confer upon an elected Member, and the Bill still reserves seats for clergy from the Church of England. The UK would remain one of only two legislatures in the world, along with Iran’s, to continue such religious representation, even though 60% of the public say that bishops should not sit in Parliament.

I suspect that a long tussle faces this House and the other place.

Mark Lazarowicz: My hon. Friend refers to a long tussle. Is it not fair to say that it is right that there should be such a long tussle and long debate, precisely because the Bill would make such a fundamental change?

10 July 2012 : Column 267

Mr Bain: Indeed, and in the period of that long tussle we have to decide whether we are prepared to accept that an 80% elected second Chamber is better than a second Chamber that has no elected Members. It would be risible for us to continue with an anti-democratic Chamber that has 92 hereditary peers, with vacancies filled in bizarre parodies of by-elections with electorates comprising as few as two peers and the public completely excluded.

It has been 100 years since the passage of the first Parliament Act. We have had a century of debate. Now is the time for action, and I encourage all Members to support the Second Reading of the Bill this evening.

9.29 pm

Nick de Bois (Enfield North) (Con): I am grateful for this opportunity to share a few words with the House. I made a simple promise to my electorate in May 2010. I said: “I will always put first my country; second my constituency and third my party and serve you in that way.” There are few other causes than voting against the Bill that serve both my constituents and my country so well. I cannot support the Bill.

When I stood in 2010, I did not realise that it could be the last election when voters would elect a House of Commons in the knowledge that they were, in effect, electing the Government. In 2015, they could very well simply be electing one of two Chambers that will ultimately lead them to gridlock.

I am certainly not prepared to rush legislation on a major constitutional issue. I am pleased the Government have seen sense today and withdrawn their attempt to time limit the debate, but they must heed the House and not attempt to do that at a later stage. This is a constitutional issue, make no mistake about it. I hope the House sends a signal tonight that the Government do not have the authority to proceed on their timetable as opposed to the timetable of this House. That is another reason why I will vote against the Bill tonight.

Chris Huhne: When the hon. Gentleman faced the electorate in his constituency at the general election, did he draw attention to the fact that he disagreed with his party’s manifesto on urging a mainly elected second Chamber? That is what the Conservative manifesto said.

Nick de Bois: Let me nail the myth that the Liberal Democrats continually present: there was no consistency among the three major parties in the House. We agreed to work for a consensus. If nothing else has been shown in the House today, it has been shown that there is no consensus for electoral reform—I suggest the right hon. Gentleman has not been listening.

I shall not detain the House much longer. My regret is that the debate has been about the composition of a second Chamber and not about its function, outcomes and what we want it to do. I was shocked to find myself agreeing with the right hon. Member for Holborn and St Pancras (Frank Dobson), who used the analogy of selecting a team before knowing what game is to be played. We have spent time debating whether we should have an elected Chamber, but we have given no thought to its role and the relationship between both Houses and the Executive. Until we answer that question, it is impossible for us to determine the form of any proposals.

10 July 2012 : Column 268

I support the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Forest of Dean (Mr Harper) and draw attention to what he said in 2007. In saying that he could not accept the content of the Bill being debated at that time, he said:

“A democratic upper House would challenge…conventions, and because we would not have had a debate about the proper role of the two Houses and the relationship between Parliament and the Executive, we would not be in a good position to make decisions”.—[Official Report, 7 March 2007; Vol. 457, c. 1587.]

I accept that, as result of the Bill, we have discussed some elements of what we expect from a second Chamber, but we are starting at the wrong end.

Sadly, to the many Opposition Members who declare how concerned they are about the Bill but who are not prepared to vote against it and then work to form a consensus on a Bill that we can all accept, I say, “Shame on you.” This is a lost opportunity for our Parliament, our democracy, our constituents and, above all, our country.

9.34 pm

Nia Griffith (Llanelli) (Lab): My comments are not intended to be judgmental about the many Members of the other place who do such good work; instead they are directed at how those Members are selected. The current method of selection is not appropriate for the 21st century. Labour reduced the number of hereditary peers by 90% back in 1999, but we need to go further: we need to abolish appointed peers and have a properly democratic and elected second Chamber.

As time is short, I shall confine my comments to two issues. The first concerns the bishops, who are not representative of all Christians in the UK, never mind those of different faiths or no faith at all. The Church of England is not the established Church of the United Kingdom. The Church in Wales was disestablished in 1920, in Northern Ireland there has not been an established Church since 1871 and the Church of Scotland Act 1921 acknowledged that the Kirk had never been the established Church of Scotland and so could not be disestablished. Many countries specifically separate Church and state, even countries with a clearly dominant religion, such as Italy or Spain.

Equality legislation in this country outlaws discrimination between men and women, yet for this reformed 21st century second Chamber, the Bill proposes to include bishops from the Church of England, which has fudged on equal rights. After years and years, yet again this week the Church is fudging on women bishops, and we have had nothing but exceptions and excuses, and a ridiculous amendment—[Interruption.]

Mr Speaker: Order. I apologise for interrupting the hon. Lady, but hon. Members should calm down. Those who have just spoken—and it is great that they have—should extend the courtesy of a decent hearing to the person who is now speaking.

Nia Griffith: We have had nothing but excuses and a ridiculous amendment that would allow parishes that do not accept women bishops to request a male bishop. This would not be allowed in other workplaces and would be a disgrace even within a non-established Church or religion, but it is utterly deplorable that a so-called established Church chooses to flout the spirit of the law

10 July 2012 : Column 269

of the land. It is totally unacceptable to give 12 places with voting rights in a reformed 21st century second Chamber to bishops in an organisation that still does not give equal rights to women to allow them to become bishops and which has actually contemplated an amendment that would undermine their authority.

I oppose reserving the 12 places for bishops of the Church of England in the second Chamber because it is not the established Church of the whole UK, because the appointment of bishops does not conform to the spirit of equality legislation and because it is high time that we separated Church and state. If this is really a reform for the future, it is a good opportunity not to include bishops. I ask the Government seriously to consider that issue.

I also have considerable concerns about the proposal in the Bill to appoint, rather than elect, 20% of the Members of the reformed second Chamber. What system of appointing Members could command the confidence of the public? Whoever does the appointing and whatever the procedures, it would be difficult to eliminate all trace of suspicion. We are also told that appointing Members brings in expertise, but what sort of expertise and for how long? Someone who is an expert today might not be a leader in their field in 15 years. There are other ways in which Parliament could bring in experts to advise when necessary, so what is the point of appointing 20% of Members?

Another odd argument is that not electing part of the new second Chamber would preserve the primacy of this House. As my hon. Friend the Member for Foyle (Mark Durkan) said, there are many ways of defining powers and processes that would ensure the primacy of this House. I would far prefer a 100% elected second Chamber, but this at least is a start, and even though there might be flaws in the current proposals, I shall be voting for Second Reading.

9.39 pm

Wayne David (Caerphilly) (Lab): There are many of us in the House this evening who believe that reform of the House of Lords is not the most important issue facing our country. With all the problems our country faces, reform of the other place should not be a Government priority. However, the Government have placed a Bill before us and it is our duty to ensure that it is debated properly and thoroughly. That is what we have sought to do.

Over the past two days this House has had a good debate. More than 60 Members have caught your eye, Mr Speaker. Indeed, such has been the demand for speaking time that the length of Members’ speeches has been limited. Some Members have been against change, but many more have made a good case for reform of the other place. I, too, honestly believe that there is a powerful case indeed for democratic reform. That was a commitment that we on the Labour Benches expressed in our general election manifesto, and it is a view to which we still hold firmly.

However, to believe in reform is not to argue in favour of any kind of reform. The details of how the biggest change in our constitution for 100 years will come about are vital. It is all the more important that the details of the Bill, which Members on both sides of the House have seriously questioned, are thoroughly examined.

10 July 2012 : Column 270

A number of Members have raised their concerns about the primacy of this House. They include, for example, my hon. Friend the Member for Middlesbrough (Sir Stuart Bell), the hon. Member for Bournemouth West (Conor Burns), whom I commend on his statesmanlike resignation speech, and the hon. Members for Portsmouth North (Penny Mordaunt) and for The Cotswolds (Geoffrey Clifton-Brown), as well as many others. Apart from some Liberal Democrats, few would deny that the primacy of the House of Commons must not be jeopardised, but the Bill, as many Members have pointed out, is woefully inadequate on this crucial issue. Indeed, only yesterday Lord Pannick drove a coach and horses through the Government’s flimsy argument.

Unbelievable though it may seem, the Government seem to believe that referring to the Parliament Acts in the Bill, combined with a large dose of wishful thinking, will be enough. I do not believe that it will be, and there are very few people who share their misplaced optimism. Keeping one’s fingers crossed is not a sound basis on which to embark on Lords reform. As a number of Members have said, the issue is as follows. At present, the primacy of the House of Commons rests on the Parliament Acts, a set of conventions and the fact that the House of Commons, because it is elected, has a legitimacy that is lacked by the House of Lords. The Government have said that the Parliament Acts will remain in force, but also that they believe that the existing conventions will simply continue and that the post-reform relationship will therefore be unproblematic. That view flies in the face of virtually all informed opinion and it defies common sense. Once we have an elected Chamber without clear rules or conventions, it is inevitable that its Members will feel that they have the democratic authority to challenge the House of Commons.

Charlotte Leslie (Bristol North West) (Con): Does the hon. Gentleman share my concern that although there exists a rough set of plans in Lord Steel’s reforms which could command consensus in this House, a consensus for House of Lords reform is being held hostage because of a determination to talk about one aspect, namely elected Lords?

Wayne David: It is indeed important to establish a consensus. I will come to that crucial point.

It is also important to have a comprehensive view of how our constitution must change, but the essential point is that the Government’s proposals will, I believe, result in the two Chambers of Parliament being locked in endless conflict, resulting in government grinding to a halt. That is not in the interests of democracy.

Members have raised a wide range of other concerns in this debate. A number expressed concerns about the issue of hybridity. Some have expressed bewilderment at why the Liberal Democrats favour it when they argued for a wholly elected Chamber in their manifesto. However, as a number of Labour Members have pointed out—they include my hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty)—we are, after all, talking about the Liberal Democrats, and principle is not one of their strong points. I will make an offer to the Liberal Democrats tonight. I say to them: work with us and we will support you in working for what is in the Liberal Democrat manifesto—a fully elected second Chamber.

10 July 2012 : Column 271

Members have expressed concerns today about the voting system, and about the particular kind of proportional representation that is being proposed. The hon. Member for The Cotswolds referred to the weakness of the d’Hondt system. Many Members are also perturbed about the proposed size of the second Chamber, and the proposal for part-time and full-time Members. Then there is the cost. The Government were reluctant to come forward with accurate figures, but we know that reform will not be cheap.

Significantly, a number of Members have already begun to dig down into the details of the Bill. They have expressed their unease about ministerial appointments and about the vagueness of the Government’s intentions. Several Members have also questioned the complex transitional arrangements that would take us from 2015 to 2025, but one of the biggest concerns that Members have expressed relates to the single, non-renewable, 15-year terms. My right hon. Friend the Member for South Shields (David Miliband) made a powerful case in favour of such terms, but other Members made the point that only an accountable system can be fully democratic. It is said that if there is no re-election, there can be no accountability, and the House clearly needs to examine that issue in greater detail.

In the course of this excellent two-day debate, hon. Members have pinpointed with accuracy and passion the wide range of complex and important issues that we, as legislators, have a duty to get right. As we have heard time and again from Members on both sides of the House, a major constitutional change such as this requires a referendum. As we all know, referendums have been held on devolution in Wales, Scotland and Northern Ireland. They have also been held on proposals for a Mayor of London and a Greater London assembly. There was a referendum to decide whether there should be an assembly for the north-east of England, and a referendum last year on the alternative vote system. There have been referendums on whether to have mayors in nearly 50 towns and cities, and on whether the Welsh Assembly should have more powers. There was even a referendum in Wales on the opening of pubs on Sundays, yet the Deputy Prime Minister says that there cannot be a referendum on the most important constitutional change in 100 years.

Ian Swales: Will the shadow Minister tell us whether there was a referendum on the House of Lords Act 1999?

Wayne David: I shall respond to the hon. Gentleman by making two points. First, that was hardly a profound constitutional change. Secondly, the provisions were in our manifesto, and we implemented them.

Let us not forget that the Joint Committee on the draft House of Lords Reform Bill came to a forceful conclusion. The last paragraph of its report states:

“The Committee recommends that, in view of the significance of the constitutional change brought forward for an elected House of Lords, the Government should submit the decision to a referendum.”

That was the unanimous view of the Joint Committee. We heard yesterday that the Deputy Prime Minister had accepted some of the Committee’s recommendations.

10 July 2012 : Column 272

That is to be welcomed, but we have to question why he did not accept its most powerful recommendation. Surely it cannot be the case that he favours referendums only when it suits him.

The Government have claimed that there is no need for a referendum because Lords reform was in all three party manifestos. It is true that a commitment to Lords reform was in our manifesto, along with a promise to hold a referendum on the matter. It was also in the Liberal Democrats’ manifesto. I respectfully point out—[Interruption.] No doubt the Chancellor has come to say sorry, Mr Speaker. I respectfully ask the Deputy Prime Minister, who has obviously had someone come in to give him advice, to acknowledge that we need consensus. I believe that that is true; we do need consensus for Lords reform. That is said in the Conservative party manifesto, which brings me to my next point.

Important constitutional change can be brought about only through consensus. That was the view of the last Labour Government and it is our view today. Despite repeated offers by us to work with the Government to establish common ground, those overtures have been greeted with a deathly silence. That is a great shame, but it helps explain why this Bill is seen by so many as partisan.

Finally, this has been an interesting and indeed historic couple of days. There is a lack of clarity about where we go from here. I look forward to hearing the Minister provide that clarity, but I say to the House that Labour Members stand ready to be positive and to work effectively for reform of the second House, and I hope that the Government will respond to our positiveness.

9.51 pm

The Parliamentary Secretary, Cabinet Office (Mr Mark Harper): I was very pleased that my right hon. Friend the Chancellor of the Exchequer joined us because he is, along with many other Conservative members of this Government, one of the sponsors of this coalition Bill to reform the House of Lords.

I made it clear in 2007 that I thought that the most important relationship was between the Executive and Parliament, and that the Executive were too powerful. I am happy to reaffirm that now as a member of the Executive, as the right hon. Member for South Shields (David Miliband) also said. I still believe that, and I believe that what we are about here is making Parliament stronger to keep the Executive under control.

This coalition Government have made important reforms to strengthen this House of Commons. We implemented the Wright reforms, we have elected Select Committee Chairmen and we have introduced the Backbench Business Committee—not always a comfortable experience for the Government, but the right thing to do. This Session, we will introduce a House business Committee. Now it is time to get on to reform the other place, and my right hon. Friend the Member for Charnwood (Mr Dorrell) set out clearly in his speech and in his article in The Guardianexactly why we should do so—to make sure that a stronger Commons will make life more difficult for Ministers and make Ministers think harder about legislating. That was an argument that my right hon. Friend the Leader of the House set out clearly, as well.

We have heard from many members of the Joint Committee. The hon. Member for Stockport (Ann Coffey) reminded us in an excellent speech that we should pay

10 July 2012 : Column 273

attention to the views of our constituents. In a recent YouGov poll, 39% of the public said that the way peers are elected to—I mean get to—the House of Lords


I would be very happy to elect them. The public say that they do not like the way in which peers are currently selected. That is the top thing they do not like about our political system. Whenever people are asked in polls, the overwhelming majority want to elect a significant number of Members of the other place.

Mr Straw rose

Mr Harper: No, the right hon. Gentleman did not leave me any time to take interventions, so I am afraid I am not giving way to him. He spoke for far too long.

The right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) set out clearly in his excellent speech the trends over the last decade whereby this Government have built on the work done by others, including the right hon. Member for Blackburn (Mr Straw). His White Paper of 2008 was similar to the proposals we have set out, which is why Labour Members will, I hope, support the Bill on Second Reading.

The proposal in the Bill is very simple—that those who make the laws should be elected. I thought that my hon. Friend the Member for New Forest East (Dr Lewis) demonstrated beyond doubt in his example that Members of the other place influence and make the law. He and I, however, draw opposite conclusions from that. He draws the conclusion that we should keep an appointed House; I draw the conclusion that those Members make the laws, so they should be elected.

We have adopted a consensual approach. We established a cross-party Committee chaired by my right hon. Friend the Deputy Prime Minister, and when we finished that process, there were only three areas of disagreement with the Labour party. Labour Members wanted a referendum—we were very clear about that—they wanted 100% and not 80% of Members to be elected, and they preferred a list system to the single transferable vote. We have moved on the latter in a spirit of consensus, which I hope will be reflected.

Mr Straw: Will the hon. Gentleman give way?

Mr Harper: No, I will not.

We then established a Joint Committee which considered our draft Bill for nine months, giving it exhaustive scrutiny. The Committee agreed with its central propositions, but recommended a number of changes, more than half of which we adopted. One of its most important recommendations was that the reformed second Chamber should have an electoral mandate. In a Division that was won by 13 votes to nine, nine Members of the House of Commons voted for an elected second Chamber and only one did not. That was a very clear result, and I think that we should accept it. [Interruption.] We will have a debate about the referendum in Committee. [Interruption.] My right hon. Friend the Leader of the House will set out the next steps for the timing of the Committee debates—which will take place when the House returns in the autumn—during business questions on Thursday in the usual way, following what I hope will be a very clear and decisive vote in support of Second Reading tonight.

10 July 2012 : Column 274

Let me now touch briefly on the proposed alternatives. Many Members have mentioned a Bill presented by Lord Steel. That Bill would achieve only two things. It would allow peers to retire, but even Lord Steel recognises that significant numbers are unlikely to do so without what he called a bronze handshake and what I call redundancy pay. I am afraid that, given the current financial times, our constituents would not understand it if we spent public money on rewarding some of the better-off members of society for leaving the other place, and without such payments the Bill would not achieve its objectives. It would also not remove any of those in the other place who have been convicted of criminal offences. On the basis of the two propositions that it advances, it will fail.

Finally, let me say something about the way in which we will proceed. The Leader of the Opposition said that he wanted the Bill to be out of the House of Commons in sufficient time for it to be debated seriously by the other place. The programme motion that we placed on the Order Paper, which will not be moved, would have meant our debating the Bill in the House of Commons until November. If the Opposition want the Bill to leave this House and go to the other place, they need to agree on a sensible number of days for debate. The only alternative is for Members to be willing to sit during the summer, or overnight, or for the House to do nothing but debate this Bill. That is not the right way in which to proceed. The hon. Member for Brighton, Pavilion (Caroline Lucas) approached the matter in a constructive way by tabling an amendment. She did the right thing: she engaged in the debate.

I hope that, following the lead given by the hon. Member for Nottingham North (Mr Allen), the Chairman of the Political and Constitutional Reform Committee, there will be proper negotiations between the usual channels, and we have allowed time for that to happen. I also hope that every Member who votes for the Bill’s Second Reading tonight and agrees to its principle will ensure that we can get it out of the House and into the other place and achieve reform, because I believe that there is a consensus in favour of that reform. We will test the opinion of the House tonight, and I am confident of the result. I commend the Bill to the House.

Question put, That the Bill be now read a Second time.

The House divided:

Ayes 462, Noes 124.

Division No. 47]

[9.59 pm


Abbott, Ms Diane

Abrahams, Debbie

Adams, Nigel

Ainsworth, rh Mr Bob

Aldous, Peter

Alexander, rh Danny

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Anderson, Mr David

Andrew, Stuart

Ashworth, Jonathan

Austin, Ian

Bacon, Mr Richard

Bain, Mr William

Baker, Norman

Baldry, Sir Tony

Baldwin, Harriett

Balls, rh Ed

Banks, Gordon

Barclay, Stephen

Barker, Gregory

Barwell, Gavin

Bayley, Hugh

Begg, Dame Anne

Beith, rh Sir Alan

Bellingham, Mr Henry

Benn, rh Hilary

Benton, Mr Joe

Benyon, Richard

Berger, Luciana

Berry, Jake

Birtwistle, Gordon

Blackman-Woods, Roberta

Blenkinsop, Tom

Blomfield, Paul

Blunt, Mr Crispin

Boles, Nick

Bottomley, Sir Peter

Bradley, Karen

Bradshaw, rh Mr Ben

Brake, rh Tom

Brennan, Kevin

Brokenshire, James

Brooke, Annette

Brown, rh Mr Gordon

Brown, Lyn

Brown, Mr Russell

Browne, Mr Jeremy

Bruce, rh Sir Malcolm

Bryant, Chris

Buck, Ms Karen

Burden, Richard

Burnham, rh Andy

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, Paul

Burt, Alistair

Burt, Lorely

Byrne, rh Mr Liam

Cable, rh Vince

Cameron, rh Mr David

Campbell, Mr Alan

Campbell, rh Sir Menzies

Carmichael, rh Mr Alistair

Carmichael, Neil

Carswell, Mr Douglas

Caton, Martin

Chapman, Jenny

Clark, rh Greg

Clark, Katy

Clarke, rh Mr Kenneth

Clarke, rh Mr Tom

Clegg, rh Mr Nick

Coaker, Vernon

Coffey, Ann

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Connarty, Michael

Cooper, rh Yvette

Corbyn, Jeremy

Crabb, Stephen

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Crockart, Mike

Cruddas, Jon

Cunningham, Alex

Cunningham, Sir Tony

Curran, Margaret

Dakin, Nic

Danczuk, Simon

Darling, rh Mr Alistair

Davey, rh Mr Edward

David, Wayne

Davidson, Mr Ian

Davies, David T. C.


Davies, Geraint

Davies, Glyn

De Piero, Gloria

Denham, rh Mr John

Djanogly, Mr Jonathan

Dobbin, Jim

Docherty, Thomas

Doran, Mr Frank

Dorrell, rh Mr Stephen

Doyle, Gemma

Dromey, Jack

Duddridge, James

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Dunne, Mr Philip

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Ellis, Michael

Ellison, Jane

Ellman, Mrs Louise

Ellwood, Mr Tobias

Elphicke, Charlie

Engel, Natascha

Esterson, Bill

Evans, Chris

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Fallon, Michael

Farrelly, Paul

Farron, Tim

Featherstone, Lynne

Field, Mark

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Foster, rh Mr Don

Fovargue, Yvonne

Fox, rh Dr Liam

Francis, Dr Hywel

Francois, rh Mr Mark

Freeman, George

Fullbrook, Lorraine

Galloway, George

Gardiner, Barry

Garnier, Mr Edward

Garnier, Mark

Gauke, Mr David

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Gilmore, Sheila

Glass, Pat

Glen, John

Glindon, Mrs Mary

Goodman, Helen

Goodwill, Mr Robert

Gove, rh Michael

Graham, Richard

Grant, Mrs Helen

Grayling, rh Chris

Greatrex, Tom

Green, Damian

Green, Kate

Greening, rh Justine

Greenwood, Lilian

Grieve, rh Mr Dominic

Griffith, Nia

Gummer, Ben

Gwynne, Andrew

Gyimah, Mr Sam

Hague, rh Mr William

Hain, rh Mr Peter

Halfon, Robert

Hames, Duncan

Hamilton, Mr David

Hamilton, Fabian

Hammond, rh Mr Philip

Hammond, Stephen

Hancock, Matthew

Hands, Greg

Hanson, rh Mr David

Harman, rh Ms Harriet

Harper, Mr Mark

Harris, Rebecca

Harvey, Nick

Hayes, Mr John

Healey, rh John

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Hendrick, Mark

Hendry, Charles

Herbert, rh Nick

Heyes, David

Hillier, Meg

Hilling, Julie

Hinds, Damian

Hoban, Mr Mark

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hollingbery, George

Hopkins, Kris

Horwood, Martin

Hosie, Stewart

Howarth, Mr Gerald

Howell, John

Hughes, rh Simon

Huhne, rh Chris

Hunt, rh Mr Jeremy

Hunt, Tristram

Huppert, Dr Julian

Hurd, Mr Nick

Irranca-Davies, Huw

Jackson, Glenda

James, Margot

Jamieson, Cathy

Jarvis, Dan

Javid, Sajid

Johnson, rh Alan

Johnson, Diana

Johnson, Joseph

Jones, Andrew

Jones, Mr David

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Jones, Mr Marcus

Jones, Susan Elan

Jowell, rh Dame Tessa

Kawczynski, Daniel

Keeley, Barbara

Kendall, Liz

Kennedy, rh Mr Charles

Khan, rh Sadiq

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Lamb, Norman

Lammy, rh Mr David

Lancaster, Mark

Lansley, rh Mr Andrew

Lavery, Ian

Laws, rh Mr David

Lazarowicz, Mark

Leadsom, Andrea

Lee, Jessica

Leech, Mr John

Lefroy, Jeremy

Leslie, Chris

Letwin, rh Mr Oliver

Lewis, Brandon

Lewis, Mr Ivan

Lidington, rh Mr David

Lloyd, Stephen

Long, Naomi

Lopresti, Jack

Loughton, Tim

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

Luff, Peter

Macleod, Mary

MacNeil, Mr Angus Brendan

MacShane, rh Mr Denis

Mactaggart, Fiona

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

Maude, rh Mr Francis

May, rh Mrs Theresa

Maynard, Paul

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McDonnell, Dr Alasdair

McDonnell, John

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

McLoughlin, rh Mr Patrick

McVey, Esther

Meacher, rh Mr Michael

Meale, Sir Alan

Mearns, Ian

Menzies, Mark

Metcalfe, Stephen

Michael, rh Alun

Miliband, rh David

Miliband, rh Edward

Miller, Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moore, rh Michael

Morden, Jessica

Morgan, Nicky

Morrice, Graeme


Morris, Anne Marie

Morris, David

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munn, Meg

Munt, Tessa

Murphy, rh Mr Jim

Murray, Ian

Murray, Sheryll

Murrison, Dr Andrew

Nandy, Lisa

Neill, Robert

Newton, Sarah

Nokes, Caroline

O'Brien, Mr Stephen

O'Donnell, Fiona

Ollerenshaw, Eric

Onwurah, Chi

Opperman, Guy

Osborne, rh Mr George

Osborne, Sandra

Ottaway, Richard

Owen, Albert

Paice, rh Mr James

Paterson, rh Mr Owen

Pearce, Teresa

Penrose, John

Perkins, Toby

Perry, Claire

Phillips, Stephen

Phillipson, Bridget

Pickles, rh Mr Eric

Poulter, Dr Daniel

Pound, Stephen

Prisk, Mr Mark

Pugh, John

Qureshi, Yasmin

Raab, Mr Dominic

Randall, rh Mr John

Raynsford, rh Mr Nick

Reckless, Mark

Reed, Mr Jamie

Reeves, Rachel

Reid, Mr Alan

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Ritchie, Ms Margaret

Robathan, rh Mr Andrew

Robertson, Angus

Robertson, Hugh

Rogerson, Dan

Rotheram, Steve

Roy, Lindsay

Ruane, Chris

Rudd, Amber

Ruddock, rh Dame Joan

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Sarwar, Anas

Scott, Mr Lee

Seabeck, Alison

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Sharma, Mr Virendra

Shelbrooke, Alec

Shuker, Gavin

Simmonds, Mark

Simpson, Mr Keith

Skidmore, Chris

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Smith, Nick

Smith, Owen

Smith, Sir Robert

Soubry, Anna

Spellar, rh Mr John

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stephenson, Andrew

Stevenson, John

Stewart, Iain

Straw, rh Mr Jack

Stride, Mel

Stuart, Ms Gisela

Stunell, Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Swinson, Jo

Swire, rh Mr Hugo

Syms, Mr Robert

Tami, Mark

Teather, Sarah

Thomas, Mr Gareth

Thornberry, Emily

Thurso, John

Timms, rh Stephen

Timpson, Mr Edward

Tomlinson, Justin

Trickett, Jon

Truss, Elizabeth

Turner, Karl

Twigg, Stephen

Tyrie, Mr Andrew

Umunna, Mr Chuka

Uppal, Paul

Vaizey, Mr Edward

Vara, Mr Shailesh

Vaz, rh Keith

Vaz, Valerie

Vickers, Martin

Villiers, rh Mrs Theresa

Wallace, Mr Ben

Walley, Joan

Ward, Mr David

Watkinson, Angela

Watson, Mr Tom

Watts, Mr Dave

Webb, Steve

Weir, Mr Mike

Wharton, James

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Wiggin, Bill

Willetts, rh Mr David

Williams, Hywel

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Williamson, Chris

Williamson, Gavin

Wilson, Phil

Wilson, Mr Rob

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Wollaston, Dr Sarah

Wood, Mike

Woodcock, John

Woodward, rh Mr Shaun

Wright, David

Wright, Mr Iain

Wright, Jeremy

Wright, Simon

Young, rh Sir George

Tellers for the Ayes:

Mr Brooks Newmark and

Jenny Willott


Afriyie, Adam

Amess, Mr David

Bailey, Mr Adrian

Baker, Steve

Baron, Mr John

Barron, rh Mr Kevin

Bebb, Guto

Beckett, rh Margaret

Bell, Sir Stuart

Bingham, Andrew

Binley, Mr Brian

Blackman, Bob

Blackwood, Nicola

Blunkett, rh Mr David

Brady, Mr Graham

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Burns, Conor

Byles, Dan

Cairns, Alun

Campbell, Mr Gregory

Campbell, Mr Ronnie

Cash, Mr William

Chope, Mr Christopher

Clappison, Mr James

Clifton-Brown, Geoffrey

Clwyd, rh Ann

Cox, Mr Geoffrey

Crouch, Tracey

Cunningham, Mr Jim

Davies, Philip

Davis, rh Mr David

de Bois, Nick

Dinenage, Caroline

Dodds, rh Mr Nigel

Donaldson, rh Mr Jeffrey M.

Dorries, Nadine

Dowd, Jim

Drax, Richard

Eustice, George

Field, rh Mr Frank

Freer, Mike

Fuller, Richard

Gapes, Mike

Goldsmith, Zac

Gray, Mr James

Griffiths, Andrew

Harrington, Richard

Hart, Simon

Haselhurst, rh Sir Alan

Havard, Mr Dai

Hepburn, Mr Stephen

Hermon, Lady

Hoey, Kate

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kelvin

Howarth, rh Mr George

Jackson, Mr Stewart

Jenkin, Mr Bernard

Johnson, Gareth

Kaufman, rh Sir Gerald

Kelly, Chris

Laing, Mrs Eleanor

Lee, Dr Phillip

Leigh, Mr Edward

Leslie, Charlotte

Lewis, Dr Julian

Liddell-Grainger, Mr Ian

Lilley, rh Mr Peter

Lord, Jonathan

Lumley, Karen

Main, Mrs Anne

McCartney, Jason

McCartney, Karl

McCrea, Dr William

McDonagh, Siobhain

McIntosh, Miss Anne

Mensch, Louise

Mercer, Patrick

Miller, Andrew

Moon, Mrs Madeleine

Mordaunt, Penny

Morris, James

Norman, Jesse

Nuttall, Mr David

Offord, Dr Matthew

Paisley, Ian

Pawsey, Mark

Percy, Andrew

Pincher, Christopher

Redwood, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Rifkind, rh Sir Malcolm

Robertson, Mr Laurence

Robinson, Mr Geoffrey

Rosindell, Andrew

Roy, Mr Frank

Ruffley, Mr David

Shannon, Jim

Sheerman, Mr Barry

Shepherd, Mr Richard

Simpson, David

Skinner, Mr Dennis

Soames, rh Nicholas

Stewart, Bob

Stewart, Rory

Streeter, Mr Gary

Stringer, Graham

Stuart, Mr Graham

Tapsell, rh Sir Peter

Tredinnick, David

Turner, Mr Andrew

Twigg, Derek

Walker, Mr Charles

Walker, Mr Robin

Walter, Mr Robert

White, Chris

Whittingdale, Mr John

Wilson, Sammy

Zahawi, Nadhim

Tellers for the Noes:

Mr Peter Bone and

Craig Whittaker

Question accordingly agreed to.

10 July 2012 : Column 275

10 July 2012 : Column 276

10 July 2012 : Column 277

10 July 2012 : Column 278

Bill accordingly read a Second time.

10 July 2012 : Column 279

House of lords reform bill (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the House of Lords Reform Bill, it is expedient to authorise-

(1) the payment out of the Consolidated Fund of any amounts which, by virtue of the Act, fall to be charged on and paid out of that Fund in relation to-

(a) the provision of training relating to functions of returning officers or local returning officers in relation to a House of Lords election,

(b) the recovery of charges by such officers in respect of services rendered, or expenses incurred, by them in relation to such an election, and

(c) the provision of free postal services to candidates at such an election, and

(2) the payment out of money provided by Parliament of—

(a) any expenditure incurred by the House of Lords Appointments Commission or a Minister of the Crown by virtue of the Act,

(b) any expenditure incurred by virtue of the Act in respect of pay and allowances of members of the House of Lords, and

(c) any other increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Mr Francois.)

Question agreed to.

House of lords reform bill (Ways and means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the House of Lords Reform Bill, it is expedient to authorise—

(1) the imposition of charges to tax as a result of a person’s membership of the House of Lords, and

(2) the payment into the Consolidated Fund of any increase attributable to the Act in the sums payable into that Fund under any other Act.—(Mr Francois.)

Question agreed to.

Business without Debate

Electoral commission

Motion made, and Question put forthwith (Order, 12 June, and Standing Order No. 118(6)),

That an humble Address be presented to Her Majesty, praying that Her Majesty will re-appoint as Electoral Commissioners-

(1) Rt. Hon. Sir George Newlands Reid with effect from 1 October 2012 for the period ending on 30 September 2014; and

(2) John McCormick with effect from 1 January 2013 for the period ending on 31 December 2016.—(Mr Francois.)

Question agreed to.

delegated legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Financial Services

That the draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2012, which was laid before this House on 14 June, be approved.—(Mr Francois.)

Question agreed to.

10 July 2012 : Column 280

European union documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Recognition of Professional Qualifications

That this House takes note of European Union Document No. 18899/11 and Addenda 1 to 3, relating to a Draft Directive amending Directive 2005/36/EC on the recognition of professional qualifications and regulation on administrative co-operation through the electronic Internal Market Information System; and supports the Government’s aims of reducing disproportionate regulation of professions across the EU, by arguing for flexibility in relation to minimum standards of training for health professions, improving safeguards for patient safety when EU professionals cross borders, in particular through the introduction of a system of alerts identifying professionals who are suspended from practice and ensuring that, where appropriate, language checks can be performed before a health professional starts to practise.—(Mr Francois.)

Question agreed to.



10.18 pm

David Morris (Morecambe and Lunesdale) (Con): I am extremely proud to present this petition on behalf of nearly 1,000 of my constituents. I am very proud to say that, despite the lateness of the hour, the lead petitioners are in the Public Gallery. They are Philipp Von Der Wippel, who is a German exchange student from Munich, Sean Brearton, Joe Bird and Leandro Rispoli. They are ably led by a young man called Ibrahim, who is from a Syrian family. Sadly, the security situation in Syria is so dangerous that I cannot give his surname for fear of reprisals against his family. They are joined by Ibrahim’s brother, Karim, who has also been very active on the issue. Once again, to protect his family, I will not state his surname. These petitioners started their campaign in Heysham high school in my constituency, and have signed up fellow students, along with their friends and family.

The petition says that Her Majesty’s Government

“must do everything in its power to assist in the removal of President Assad of Syria and support the humanitarian effort to aid the people of Syria.

Wherefore your Petitioners pray that your Honourable House shall urge the Government to consider taking steps to support the people of Syria in their ambition to build a free, stable and safe country.”

That is a reminder of the strength and depth of feeling on the Syrian issue. We in this House and beyond must do everything that we can to help bring about regime change in Syria, and to try to alleviate the horrendous situation faced by the Syrian people.

Following is the full text of the petition:

[The Humble Petition of pupils from Heysham High School and others,


That the petitioners believe that the Government must do everything in its power to assist in the removal of President Assad of Syria and support the humanitarian effort to aid the people of Syria.

Wherefore your Petitioners pray that your Honourable House shall urge the Government to consider taking steps to support the people of Syria in their ambition to build a free, stable and safe country.

And your Petitioners, as in duty bound, will ever pray, et cetera.]


10 July 2012 : Column 281

South Bank Royal Mail Delivery Office

10.20 pm

Ian Swales (Redcar) (LD): The Royal Mail proposes to close the South Bank delivery office in my constituency and move its activities to its Cannon Park office in Middlesbrough. This will cause great inconvenience to local residents and will result in job losses in a hard-pressed area.

I present a petition from 3,420 of my constituents which states:

The Petition of residents of Redcar Constituency,

Declares that the Petitioners are opposed to the closure of the South Bank Delivery Service.

The Petitioners therefore request that the House of Commons urges the Department for Business, Innovation and Skills to ask Royal Mail to listen to residents and reconsider proposals to close the South Bank Delivery Office.

And the Petitioners remain, etc.


10 July 2012 : Column 282

Credit Unions (Modernisation)

Motion made, and Question proposed, That this House do now adjourn.—(Mr Francois.)

10.21 pm

Mrs Madeleine Moon (Bridgend) (Lab): I declare an interest as a member of Bridgend Lifesavers credit union. Bridgend Lifesavers is a community-based credit union founded in 2000. It has gone from strength to strength, with 3,000 people benefiting from its services and an expanding network of collection points, including a high street collection shop in Bridgend town centre. Last year the union had savings of more than £1 million and had made loans of more than £500,000. I would like to put on record my admiration for the hard work of everyone connected with Bridgend Lifesavers who have made it such a success. I would also like to put on record the fact that I am the vice-chair of the all-party parliamentary group on credit unions.

This debate has come at an important time for credit unions and the financial services sector. Not a day seems to go by without another story of mis-selling, rate fixing or large bonuses, and it is little wonder that trust in banks has dropped to an all-time low. A ComRes poll at the end of June found that only 10% of people trusted bankers to tell the truth. Increasingly, people are looking for financial services that have the sense of social responsibility and the credibility that credit unions represent. Credit unions already fulfil a vital role helping people who ordinarily struggle to get a bank account or affordable credit.

With the publication of the Department for Work and Pensions feasibility report on credit union expansion, credit unions are at a crossroads. I want to use the time that I have to examine that expansion and to seek assurances from the Minister that any changes that he makes will be carefully made and considered to avoid the goose that laid the golden egg meeting an untimely and scrambled end. The feasibility report concluded that no change is not an option, and it is clear from credit unions themselves that they feel that they are not reaching their full potential.

The report picked up on the gap in the financial services market. Financial exclusion needs to be addressed urgently. Some 1.4 million people in the UK do not have a transactional bank account, but credit unions can fill that gap where banks appear unwilling to do so. Around 7 million people in the UK use high-cost credit. A survey carried out by Unite concluded that the third week of every month is rapidly becoming Wonga week, with 82% of the 350,000 respondents saying that their wages cannot last the month and 12% saying that they turn to payday loan companies to see them through to the end of the month. The House has heard frequently of the exorbitant rates of interest those companies charge and the financial hardship that that can lead to. A survey carried out by Save the Children on the costs of child care found that a third of parents in severe poverty have had to go into debt in order to meet those costs.

Jessica Morden (Newport East) (Lab): Does my hon. Friend agree that it is easy to understand how child care costs can push people into debt, because for many families those costs are equal to the cost of their mortgage or rent?

10 July 2012 : Column 283

Mrs Moon: My hon. Friend is completely right. We must take on board the fact that those are families who want to work and who get into debt in order to continue working, because they know that continuing to work will give their children a better start in life. They need support, and credit unions can give them a better level of support.

Greater competition for the high street banks and the more widely available source of affordable credit are both things that credit unions can offer. Therefore, what should be done to nurture credit unions and ensure that they can fill the gap while achieving long-term sustainability? The main recommendations of the feasibility report can best be summarised as the need to increase efficiency, to increase revenue and to increase skills. I understand that the Government plan to take forward the report’s recommendations and that the additional earmarked investment of £38 million will be conditional on the credit union industry meeting a number of agreed milestones for collaboration, modernisation and expansion. I hope that the Minister will elaborate on how that will work in practice.

I shall look at the changes in turn. Increasing efficiency, from the point of view of greater automation, reorganisation and collaboration, makes sense. Close working among credit unions and the ability to provide a greater variety of services to a larger customer base is clearly important, but I want to sound a note of caution. Part of the appeal of credit unions is their ethos of independence. In the section, “The Way Forward”, the report recommends that the Government select the best performing credit unions, which make commitments to fulfil certain requirements. The Department for Work and Pensions has suggested that, for that to work, credit unions would need to form consortiums of 15, with a joint minimum membership of 120,000.

Jim Shannon (Strangford) (DUP): I thank the hon. Lady for bringing this matter to the House. In my constituency credit unions play a vital role in local communities and deliver to the people who really cannot afford banks. Does she agree that the Government changes should take into full consideration the importance of small credit unions and what they deliver to local communities?

Mrs Moon: I thank the hon. Gentleman for his intervention. That is exactly where I was going in my speech. The average size of a credit union is around 8,000 members, but many fall below that, including Bridgend Lifesavers. Its membership is growing, but it is still about 3,000, so it would be excluded from the modernisation plans. In fact, it would be impossible to meet the target of 120,000 members given that we do not have that total membership across Wales. Wales is a vibrant and active country for credit unions, and I have no problem being ambitious about what they can achieve, but I would like an assurance from the Minister that smaller credit unions that provide valuable services to their communities, such as Bridgend Lifesavers, will not get lost in a stampede aimed at economies of scale. Perhaps we could hear about the measures to be introduced to protect smaller, but still valuable, credit unions. I recognise the need to increase revenue through the expansion of membership and by increasing the products available and the interest rate that credit unions are able to charge.

10 July 2012 : Column 284

Demand for credit unions is certainly not a problem, as the feasibility report’s research found. Of 4,500 consumers on a low income who were contacted, 60% expressed a desire for local trusted services, such as those provided by credit unions. The crunch came when they were asked about their awareness of local credit unions, with only 13% of those surveyed being aware of the services that unions provided. That might in part be explained by the previous links required for membership, so the legislative reform order that came into force in January will, I hope, tackle that issue, and I thank the Government for taking the measure forward.

The feasibility report emphasises the need to raise consumer awareness and to develop a strong credit union brand. A national marketing campaign is needed not only to reach those on lower incomes, but to broaden the appeal of credit unions generally. In the United States and in Canada, 40% of people are members of credit unions. The credit union is not just a low-income organisation; it is active across the income spectrum.

Damian Hinds (East Hampshire) (Con): Will the hon. Lady give way?

Mrs Moon: I will most certainly give way to the chairman of the all-party group on social mobility.

Damian Hinds: The hon. Lady has mentioned a couple of countries and could have also mentioned Northern Ireland. We have just heard from a colleague from Northern Ireland, where credit unions are widespread, well understood and well known, and, notwithstanding her point, which we all accept, about the benefits of small credit unions, that demonstrates the benefits of scale. If lower-cost operations are to reach out to more people, including to low-income customers, scale will have significant benefits.

Mrs Moon: I thank the hon. Gentleman for his intervention. Of course scale has benefits, and I recognise that, but we must not kill off small credit unions that are going to grow—and perhaps the publicity campaign will help them to grow. We must not say, “Credit unions cannot expand; we are only going to service the large ones and stick with them,” otherwise unions in countries such as Wales, where they are growing, will find themselves isolated and unable to meet the growing needs of those who want the low-cost credit that they offer.

Tessa Munt (Wells) (LD): The critical thing, which the hon. Lady mentioned a moment ago, is that credit unions should not take up just those who really need the help that they offer. It is important that people with funding are able to invest in credit unions, so that there is a much wider investment base for those who can afford to place their money there, and so that unions do not just soak up the difficult situations of people in difficult circumstances.

Mrs Moon: The hon. Lady is right. I gave the example of 3,000 members in Bridgend Lifesavers, with a balance of £1 million and loans of £500,000. Such membership and a balance of £1 million shows commitment and what can be achieved by even small credit unions, and that is why it is important that we continue to support them and allow them to expand.

10 July 2012 : Column 285

I should like the Minister to provide more details of how his Department, perhaps working with colleagues in the Treasury and in the Department for Business, Innovation and Skills, intends to address the issue of awareness. Will he commit to working with credit unions to develop a national marketing campaign?

Another way to help credit unions is by linking them to the post office network, which would help them to raise awareness and to achieve a boost in revenue. Consumer Focus, in its report “Credit where credit’s due—The provision of credit union services through post offices”, highlighted the potential value of that link-up and how it could be achieved. People trust and value the Post Office brand, and there are 12,000 post office branches—more than bank and building society branches combined—which would offer a nationwide, visible platform for credit unions and greatly increase the availability and diversity of services.

Looking at what needs to be done, the report suggests that credit unions would need to develop shared back-office functions with Post Office Ltd and shared banking platforms. Credit unions might also be required to pay a fee to Post Office Ltd. That idea has widespread support, but it is a big step for all concerned, so will the Minister elaborate on what role his and other Departments will play in facilitating it, and on the stage that has already been reached in making it a reality?

The feasibility study suggested that long-term financial sustainability could be achieved if the interest rate ceiling of 2% that credit unions can charge on loans is lifted to 3% on reducing balances. The modelling included in the study suggests that the 3% loan rate would need to apply only to loans below £1,000. The 3% rate would make credit unions more sustainable, but at the same time they would not lose one of their biggest attractions—affordability. That is important, because this is often about the small purchases of essential items such as cookers and freezers that families need. That is borne out by what Brian Rees of Bridgend Lifesavers said to me:

“A regulation for 3% maximum interest would be very helpful. As you appreciate, lending very small amounts of money is very expensive and we presently don’t cover costs below £500. 3% is nowhere near ‘a door step rate’ but it would help us to sustainability.”

I understand that the Government are planning to consult on this measure, and I hope that the Minister will listen to those concerned about the pros and cons of adopting it. Should it be decided that it offers a short-term solution, I hope that legislation can be brought forward as soon as possible. Credit unions can achieve what we want them to achieve, and they themselves want to achieve, only if they are given the capacity to do so.

Finally, I turn to the demand for credit unions to develop a broader skills base and, by extension, better qualifications for their staff and directors. The Association of British Credit Unions, which is a great supporter of the all-party group on credit unions, has identified that as a challenge to the sector. Some progress has been made, but while the feasibility report suggests that for credit unions to demonstrate that they are worthy of Government support they need to have appointed a director to work with their board, it does not offer much detail on the time scale or how it expects that to be achieved. I would be grateful if the Minister could furnish us with further details.

10 July 2012 : Column 286

Credit unions offer a ready-made solution to many of the problems that we are facing, but in supporting and enabling them to grow and expand services we must not lose sight of what they stand for and their value to the communities they serve. I, and the many Members who support their local credit union, look forward to hearing the Minister tell us about the support that can ensure that these valuable community-based sources of financial aid are encouraged to grow, develop and prosper.

10.37 pm

The Minister of State, Department for Work and Pensions (Steve Webb): The fact that this is a well-attended debate notwithstanding the fact that Parliament’s focus has been on other matters today reflects the importance of the issue, and I congratulate the hon. Member for Bridgend (Mrs Moon) on raising it. I pay tribute to the work of the all-party group on credit unions. I see that its chair and vice-chair are here, and, I sense, some of its other members. We as a Department very much support and welcome the work of that group. My noble Friend Lord Freud is closely engaged with it, and he will continue to be so.

The hon. Lady paid tribute to Bridgend Lifesavers, her local credit union. I am happy to add my tribute to the work that it and many other small, medium-sized and large credit unions do in providing affordable credit at a time when there are, as she said, many sources of unaffordable and exploitative credit. I think that we are united across the House in wanting the credit union movement to prosper. That is why the Government have identified a further £38 million for the credit union expansion programme to which she referred and to which I will return in more detail. She asked that the goose that laid the golden egg should not reach a scrambled end, so we will take a gander at the evidence.

The hon. Lady made the important point that the difference between the United Kingdom and other countries is that we have massive potential for expansion of credit unions. As she said, 2% of the adult population of this country are in credit unions, while that figure is 40% in America and 70% in Ireland. I am pleased to say that credit union membership has just broken through the 1 million barrier. That is a significant milestone, and we praise everyone who has been involved in reaching it. The question is how we move on to the next million.

There is a balance to be struck between cherishing the historical traditions and roots of the community credit union, and recognising that the small community credit union will not survive indefinitely without ongoing state subsidy, unless we do something about revenues, costs and awareness, which the hon. Lady also raised. The working group that we set up, which was expertly chaired, identified a number of things that had to happen.

We are asking groups of credit unions to work together as part of this process not so that they lose their individual identity, which is crucial, but so that they benefit from scale in the things that they all have to do, such as their back-office functions, publicity, branding, the automation of decision-making or working on their websites. Notwithstanding the individual characteristics of each credit union, much that credit unions do is common to all of them.

10 July 2012 : Column 287

Through the expansion project, we are not trying to help an individual credit union in a local place to expand; we want the entire movement to expand. That is why we want to support significant projects that will be of benefit across the sector. There is no reason why Bridgend Lifesavers or any other credit union should not be part of that, but they have to see themselves as part of a bigger project. We are trying to generate a step change in the scale, efficiency and activity of credit unions.

The hon. Lady is right that there is no shortage of demand, but a big shortage of awareness. She asked about publicity campaigns. I can confirm that we anticipate supporting national marketing campaigns for credit unions. We see a value in branding and marketing via the collaborative process that I have talked about.

The hon. Lady asked about the link with post offices. One of the challenges is that if we want post offices across the country to provide access to credit unions, it will only be viable if there is a common brand. While there will still be Bridgend Lifesavers, there might be a common credit union brand so that there can be standardised stationery in post offices and standardised training for people behind the counters. The Bridgend post office will not deal only with the local credit union. That is how we see the link with post offices working, but we are not at that stage yet. Part of the point of the expansion project is to create the scale and branding that would enable the post office link-up to be more effective than it currently is.

We see great potential for expansion in the credit union movement. To give just one example, when universal credit comes in and payments not just of regular benefit, but of housing benefit, are made direct to claimants, budgeting skills will be critical so that people can manage their money and ensure that it gets through to the landlords. Credit unions in a local area will be well placed to assist people with things such as jam jar accounts to ensure that although the individual sees the money and becomes familiar with it, just as they would with a wage, it gets through to the landlord. I am aware of credit unions that are generating a business from that by saying to social landlords that they will run such accounts when the money is paid direct to the claimant to ensure that the landlords get their money, obviously with the consent of the account holder. Social landlords are willing to pay for that service because it is valuable in guaranteeing their rent. That we are moving the entire working-age housing benefit system over to the universal credit platform offers huge potential for the expansion of credit unions, which I am sure the movement will harness.

The hon. Lady asked specific questions about the feasibility study. The proposition was that, as I have said, £38 million would be required between 2012 and 2015. We are looking for tight project management and discipline to maximise the chances of success. In a sense, it is a payment-by-results model. In the past, when the Department has funded growth funds, they have helped and the money that has gone in has been lent, but there has not been a step change in the infrastructure. That is what we are trying to achieve. We want to keep the values and ethos of the credit unions,

10 July 2012 : Column 288

but are also keen to see professionalism and efficiency, because the point of all of this is to achieve value for money for the lower-income saver.

The hon. Lady raised the issue of interest rates, which we have considered. It is a sensitive issue. We have the rather strange situation at the moment in which credit unions are the only financial institutions that are regulated for interest rates. That seems anomalous in a sense, considering the interest rates that the same client group routinely pays—we have heard about Wonga week. We therefore believe that there could be a modest change, perhaps from 2% to 3%. It would be a permissive change—if credit unions did not want to make it or did not feel they needed to, they would not have to—but we believe it would be a move in the right direction.

That change is a sensitive and difficult issue and will take a bit of time to make, not least because two separate Departments hold the reins of the legislation. If credit unions are ready for the challenge of modernisation and expansion, we will support them. The Treasury will start the process of the rate cap consultation this autumn, which will lead to the Treasury and the Department for Business, Innovation and Skills making any regulatory change next summer. The credit unions will then need time to prepare for and implement the change, so provisionally we are looking at the following April. That is quite a long time away, and if the process can be speeded up we will certainly be willing to consider it, but we need proper consultation because it is a sensitive issue. However, the hon. Lady said that her credit union supported raising the cap, and we are sympathetic to that and want to make progress as rapidly as we can.

For projects to qualify, we will want them to include automated decision making, which is much more efficient, integrated and centralised services and the provision of new financial products. I mentioned jam jar accounts, but there are many more. We will want partnerships to be developed to expand projects such as payroll deductions. As my hon. Friend the Member for Wells (Tessa Munt) said, credit unions are not just about low-income households, and it will help if we can get a spectrum of people using credit unions and make them more mainstream, I imagine with a bit of cross-subsidy. We also want projects to improve marketing, and in due course there will be the potential for working with post offices. Cumulatively, those approaches will lead to a major uplift in membership and create the delivery capacity required to deal with demand.

As the hon. Member for Bridgend said, the credit union expansion project report was recently published. We have already engaged with the credit union sector this month to inform it of the project’s requirements. Early next month we will advertise the procurement process for the exercise, and we anticipate that it will move fast, with proposals being received perhaps the following month. We want to get on with it. Ideally, we want to have contracts in place by January. Although the interest rate change is perhaps happening a bit slower than she would wish, it is a priority of the Government to get the money through, get the contracts in place and get things moving. We want that to happen by the turn of the year or not long thereafter.

The hon. Lady mentioned some research that she had seen on the scale of the demand for credit unions. The credit union expansion project commissioned its own research, and we were struck by the fact that of the

10 July 2012 : Column 289

4,500 people surveyed, three in five said they would use credit union services if such were available. As she and the chair of the all-party credit unions group, my hon. Friend the Member for East Hampshire (Damian Hinds), will know, credit union use is still patchy. There are still places where nobody is aware of a local credit union, and one of the challenges of the project is to improve geographical coverage so that even if someone does not have a local credit union they can access one through, for example, a local post office. We want people to be aware of the credit union brand through national advertising, because credit unions will not get their next 1 million users in good order without breaking out geographically.

On the good that credit unions can do, the evidence that we have shows that 1.4 million people do not currently have a transactional bank account. I was impressed when I met a representative of my local credit union in Bristol. I must admit that before I spoke to her, I was not aware of the range of services that it offered. She described how online access and other things that we take for granted in our regular banking are now becoming far more normal in credit union accounts. We have to get away from the image of credit unions as the poor man’s banks and recognise that low-cost lending by an organisation and people who are familiar is attractive to people, particularly given the current reputation of some of the banks. We need to build on that trust and confidence and expand awareness, and that is what the current project is about.

10 July 2012 : Column 290

It is very striking—this is also from our research—that up to 7 million people are using sources of high-cost credit. Even with a higher interest rate of 3% a month rather than 2%, people would save hundreds of pounds by borrowing from credit unions compared with borrowing from Home Credit, and far more compared with borrowing from other institutions.

It was crucial for our research to involve credit unions as well potential consumers. We were encouraged that four in five of those we consulted

“recognised the need for fundamental change in their organisation and that they wanted to offer a wider range of modern financial services to…consumers.”

This is a decision point for the movement. In the past, we have subsidised some credit unions and felt that they did not modernise and move forward when they had that public subsidy. When the public subsidy was withdrawn, a number of them closed or had to merge to avoid closure. We do not want that to happen. Therefore, we are both standing alongside the credit union movement and inviting it to take up the challenge.

The Government believe credit unions have a bright future. I am sure hon. Members on both sides of the House will work together to ensure that it happens.

Question put and agreed to.

10.50 pm

House adjourned.