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I note the Opposition’s position. They had the chance to make the franchise public in 2007; they did not, and they went into the last election promising a refranchising in 2011. The Public Accounts Committee, of which I am a member, reviewed the east coast fiasco in mid-2011. It mainly considered the National Express failure, which was a familiar story of unrealistic bidding, poor due diligence, poor contracting and wasted taxpayers’ money. Since then, the Department’s franchising team has caused the west coast train disaster with another huge loss of taxpayers’ money. Will the Minister give us confidence that a proper job will be done this time?
Although I understand the commercial sensitivity, I feel that the whole bidding review process should be as transparent as possible. Independent experts should be involved from the start to provide scrutiny to avoid unrealistic assumptions producing the wrong answer. Taxpayers should not have to wait for the National Audit Office to pick over the entrails again. Furthermore, if the offers are not good value for travellers and the taxpayer, continuing public ownership must be a realistic alternative. As the hon. Member for Middlesbrough said, we should not start with the answer and allow political dogma to decide.
I hope that the bid review process will also be stress-tested. For example, there should be no assumptions about tax recovery from companies, which then avoid tax, as we constantly see in the world of the private finance initiative.
With its inherent profitability, and given that the 250-mile journey from Darlington to London takes as little as two and a quarter hours, the east coast line should be the jewel in the crown of the UK rail network. However, with two bungled franchise deals behind us, the Minister has a lot to do to convince us and the public that this will be third time lucky.
3.10 pm
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab): I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on securing this important debate.
I also congratulate my hon. Friends the Members for Edinburgh East (Sheila Gilmore) and for City of Durham (Roberta Blackman-Woods) on leading a campaign that has widespread backing inside and outside Parliament. It is not surprising that it is so well supported; as we have heard, the facts speak clearly for themselves. By the end of this financial year, East Coast estimates that it will have returned about £800 million to the Exchequer since the line was nationalised. The net public subsidy in the past financial year was just 1% of turnover, compared with an industry average of 32%.
A recent report commissioned by the TUC reveals that the firms receiving the largest state subsidies spend more than 90% of their profits on average on shareholder dividends. Of those firms, the top five recipients received almost £3 billion in taxpayer support between 2007 and 2011, which allowed them to make operating profits of £504 million. However, more than 90% of that money—£466 million—was paid straight to shareholders.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op):
It is also worth while pointing out that the taxpayer has been getting this money back from Directly Operated Railways in a context where the company has
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been able to operate only on a fairly short-term basis, because there is no certainty for the long term about the franchise. Is it not highly possible that, if the current operators had the security of knowing they were going to operate the railway system for a considerable number of years to come, they might make even better returns for the taxpayer and run the system even more efficiently?
Mrs Hodgson: I agree. That was a good point, and it was well made.
I am a regular user of the service, as are many Members, constituents and people across the north-east, and the improvements in service and punctuality have been plain to see. That is not to say that there are not occasional causes for complaint; of course there are, and we all know what they are—often, it is the toilets. However, the service has improved, without the need for the private sector ethos that we often hear about from advocates of privatisation.
In a written answer to my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), the Minister said:
“The Government remains committed to benefitting from private sector innovation and operational experience in its railways.”—[Official Report, 22 April 2013; Vol. 561, c. 590W.]
Given the improvements since the line was nationalised and the low reliance on subsidy, which is 1% of turnover, as well as East Coast’s returns of £800 million to the national coffers, the private sector organisations running other franchises could learn a thing or two from Directly Operated Railways.
The east coast line is getting increasingly busy, and it needs constant investment in maintenance and capacity improvement. Incidentally, one way that we could improve capacity—I and other north-east Members recently met the Minister to make this case—would be to bring the Leamside line back into use in the north-east to take some of the freight off the main east coast line. The Minister and I have discussed that at length. The proposal would have the added bonus of providing the means to extend the Tyne and Wear Metro to Washington, in my constituency, which would bring great benefits to the town and its residents.
However those improvements are made, they do need to be made, and that will require money. The benefit of keeping the franchise in public ownership is that that investment can be made by ploughing the generous profits generated—£800 million so far—back into the service, instead of giving them to overseas shareholders. Our network sees hundreds of millions of pounds disbursed to shareholders of private companies every year, despite the fact that those companies receive state subsidies to keep going. East Coast’s performance over the past three years has shown us the folly of that model. Why send profits generated from British passengers to foreign owners abroad, when some of those owners are subsidising rail fares in their own countries? We could and should use those profits here to improve our services and to help keep our fares down.
The East Coast arrangement is not hurting my constituents; it is working. It is not broken, so it does not need fixing—apart from the toilets, of course. If anything, based on the performance of East Coast, it would be desirable to see more of our key lines under public control. What the service needed was the stability to carry on planning for the future and improving
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performance and service standards further, while maintaining the return to the taxpayer. What it has, however, is the uncertainty caused by being put out to the market once again, where it may even be the subject of a tender by the company that failed to run it properly last time. That would cost taxpayers millions.
Given the shambles over the west coast line, I would have thought that the Government would at least leave a successfully operating line well alone—
Dr William McCrea (in the Chair): Order.
3.15 pm
Stephen McPartland (Stevenage) (Con): I, too, congratulate the hon. Member for Middlesbrough (Andy McDonald) on securing such an important debate.
Every franchise is operationally different. East Coast runs 155 services per day, with six trains per hour from London in the peak. It essentially serves two main destinations from London: Leeds and Edinburgh. The west coast operator runs 321 services per day, with 11 trains per hour from London in the peak. It serves five main destinations: Birmingham, Manchester, Chester, Glasgow and Liverpool. I have used both services; I use East Coast and First Capital Connect daily, and both work quite well.
It is impossible to argue that the private is sector is bad and the public sector is good. Many speakers so far have focused on an ideological debate, but I want to focus on what will lead to improvements in passenger satisfaction. The east coast operator could remain public, it could become a mutual-type organisation run by its own staff and members or it could be moved into the private sector, but passenger satisfaction should be the main reason for any change and the main driver of any innovation.
Stevenage is on the east coast main line. It is a category C station, with more than 4 million passenger movements a year. It is an important hub for Hertfordshire, with Stansted on one side and Luton airport on the other. That will be the subject for a separate debate between me and the Minister, because there is a proposal to expand Luton airport, with the result that a plane would fly over Stevenage every minute or so.
East Coast is used by many commuters—20,000 to 30,000—to go from Stevenage into London every day. It is a different type of service for us than it is for many Members in this room, who want it to be a long-distance operator. One of our concerns is that as it opens up more services in the north and more direct lines, it will shave minutes off the journey to London by cutting services to places such as Stevenage.
Jason McCartney (Colne Valley) (Con): It is always a pleasure to pass through my hon. Friend’s constituency on my way up and down to Yorkshire every week. Will he join me in congratulating the Government on their record of investment in our railways? In my patch, there is the northern hub rail investment and the electrification of the trans-Pennine route. Does he agree that franchising is about where our railways—our east coast main line—will be in five, 10 or 15 years, not the adequacy of the service at the moment?
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Stephen McPartland: I was disappointed to hear my hon. Friend say that he passes through Stevenage without stopping—I would prefer him to stop an awful lot more. However, I, too, congratulate the Government. This Government and the previous Government have done a lot of good work on the rail industry, and we could look at the way in which King’s Cross is being changed.
Grahame M. Morris: Will the hon. Gentleman acknowledge that the privatised rail operators are costing the public purse—the taxpayer—£4 billion a year in subsidy? Since the east coast service has been nationalised, it has cost only £1 billion a year.
Stephen McPartland: I would not be able to acknowledge that, because I do not know the figures, but I can take the hon. Gentleman’s word for it.
Many people have said that the private sector ethos is not something we want to introduce to East Coast. In May 2011, I was fortunate enough to persuade East Coast to increase the number of services stopping in Stevenage by 18 per day. The number of services rose from 40 to 58 a day, which means an extra 9,000 seats a year. That all sounds great. It was the biggest rise in services to any location on the east coast main line. I did an awful lot of work on that. The individual I spoke to, who was the chairman of East Coast at the time, was previously the chief executive of First Capital Connect, and she took the private sector ethos that she received and learned at First Capital Connect and introduced it to the east coast main line. The reason First Capital Connect is important is that it shares the Stevenage station, effectively, with East Coast, and one of the main problems on a franchise that is 960-odd miles long is that it deals with so many other local operators. The point has been made that an interaction with local services would be hugely important and beneficial to many of our constituents. Fortunately for us, it works well in Stevenage.
Stevenage is only 30 miles from London, and the debate seems focused very much on services between London and the constituencies of some Opposition Members, and London and my constituency. A couple of years ago there were almost 40,000 journeys a year from Stevenage to Newcastle; a year ago there were nearly 50,000 journeys from Stevenage to Leeds; there are 11 services a day from Leeds to Stevenage and back. Stevenage is the capital of the UK space industry. We employ more than 10,000 scientists and engineers and build 25% of the world’s telecommunications satellites. A couple of days ago a satellite built in Stevenage went up, which will be responsible for broadcasting everything back to the UK. Interacting with a high-technology area such as Stevenage is important. People who engage in debate about this issue always seem to focus on the idea of a long-distance operator running the service, with Peterborough as the closest place people could get to—where they would have to change. As my hon. Friends have explained, that gives rise to the question whether it is cheaper to do that, or just to go on a plane or drive. Many of my constituents will drive to Heathrow airport and fly to Scotland, because that is cheaper than going by East Coast train. That is ridiculous. Sadly, it is faster. That is another problem. The debate and our efforts should focus on passenger satisfaction. Whether the service remains private or becomes public, or a mutual, that should be the whole idea.
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In my final 30 seconds I have something to put to the Minister. Wherever the future of east coast ownership lies, it should include a mechanism for the removal—or, in today’s language, the recall—of the rail franchises, if any rail passengers are dissatisfied.
3.22 pm
Hugh Bayley (York Central) (Lab): I, too, congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on securing an important debate.
The headquarters of the east coast main line has been in York ever since the line was built in the 19th century, and hundreds of skilled jobs in my constituency depend on its staying there—jobs at the headquarters and in the Network Rail management of the east coast main line, and hundreds of jobs in private civil, structural, signalling and electrical engineering firms that work for the railways. There have been two private sector-created hiatuses, caused by franchise collapses, on the east coast main line. Now there is a Government-created hiatus—a refranchising. I urge the Minister to make sure that there is stability and that those jobs stay in York.
In February, I asked my right hon. Friend the Minister—I call him my friend because we sat next to each other at the Democratic convention, cheering Obama to the hilt; he is one of us—at Transport questions:
“Before the Government announce their franchising schedule will they look at the feasibility of running a public sector franchise on the east coast for a period to compare like for like with a private franchise on the west coast to resolve the issue”
of whether privatisation works?
“I am afraid that he is not going to tease out of me in advance what my right hon. Friend the Secretary of State will announce”.—[Official Report, 28 February 2013; Vol. 559, c. 463-4.]
I wish that the Government had given the idea consideration before they announced that they intended to go ahead with franchising, but since they deliberately did not, and told the House they were not going to do so, I ask them to consider the proposition now.
There are three fundamental questions for the Minister. Do the Government want lower fares on the railway, so that the railways become more affordable and passengers get out of their cars and on to trains? Does he want a high return on the public investment that there has been in railways for decades? Does he want ever-improving quality and safety? I am sure that his answer to all three questions would be yes. Has privatisation delivered on those dimensions? On fares: no, it clearly has not. On the return on investment, track charges now being obtained by Network Rail are lower than they were 20 years ago. The East Coast train company is giving the Government a higher return than its predecessor private companies. In round terms, it turns over £650 million a year and gives the Government a profit of £200 million. In the middle of a downturn, for East Coast to provide the Government with a 30% return is doing pretty well, and I do not think the Government should put that in jeopardy.
Ian Murray:
I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on a wonderful speech. My hon. Friend the Member for York Central (Hugh Bayley) is getting to the crux of the matter. I travel on the east coast line—400 miles, for four hours
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20 minutes—about twice a week. Does he agree that if a private operator returned that amount of money to the Government, they would champion it as a great way for the private industry to run the railways?
Hugh Bayley: They would, and rightly so but they should also do so for a public sector operator.
I was on the Public Bill Committee—they were called Standing Committees in those days—that considered the Railways Act 1993. We were told that the railways had to be privatised because there would then be masses of new private sector investment in the railways. Sadly, that has not happened. I totted up the investment for the first two years in which the Government were in power: 2010 and 2011. Network Rail invested more than 10 times as much as all the private rail companies put together. It invested £9,739 million and the private sector invested £780 million. In truth, the jury is still out on whether rail privatisation works.
Mrs Hodgson: Will my hon. Friend give way?
Hugh Bayley: No; I think I will make progress, because I have only a few minutes.
I ask the Minister to consider whether it makes sense to run a private franchise on the west coast main line, which he is obliged to do—Richard Branson will sue him if he does not—and continue, for a full franchise period of 15 years, a public sector operation on the east coast main line, and to compare like for like. Which delivers better value for money to the Government, gives a better service to the public, and does better at reducing fares? I put a final challenge to him: let the Government follow what the passengers want—put out a leaflet on East Coast trains and ask the public whether they want refranchising or to stick with East Coast. If they go for East Coast, give East Coast a whirl.
Dr William McCrea (in the Chair): Order. I intend to start the winding-up speeches no later than 3.40 and there are still four hon. Members who have said they want to speak. To allow that to happen I impose a three-minute limit, and hope to get everyone in.
3.28 pm
Ian Mearns (Gateshead) (Lab): It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on the fantastic speech he made in opening the debate.
Like many of my colleagues, given the recent history of the east coast main line—not to mention the Government’s failure on the west coast franchise—I am deeply concerned about their plans for the impending privatisation of the east coast main line. The announcement by the Secretary of State for Transport about the start of a tendering process for the east coast main line and nine further franchises pays no regard to the public interest, and a profitable rail service will return to private hands within the next two years. The plans will no doubt be a recipe for disaster.
My hon. Friend the Member for Middlesbrough established in his speech that Government Members support state ownership of the UK rail network, but
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importantly, that does not mean UK state ownership. Instead, they support German, French and Dutch Government ownership of the UK rail network. It has been interesting to hear about the lack of understanding of the complex interrelationships in the way our rail franchising system works, such as the relationship between Network Rail, the train operating companies and the rolling stock leasing companies, and about the failed diffuse franchising model established by the Tory Government from 1979 to 1997.
We are promised new rolling stock on the east coast main line, but initially only the diesel trains will be replaced, and that will not happen until 2018. No one denies that the line suffers from chronic underinvestment, particularly as there is now very tired rolling stock. However, let us not forget the burden that East Coast inherited from the privately owned rail firms, GNER and then National Express. Those problems were exacerbated, given the limited amount of rolling stock available on the line, by the Hatfield and Selby rail crashes. When full train sets are taken out of a service of that nature, it means that the operator is operating on very tight margins indeed.
The only way to run an effective rail service is to ensure that infrastructure is up to scratch through continued investment, yet from a private sector perspective the overriding objective seems to be not investing in maintenance and providing customer satisfaction, but retaining funds for shareholders.
Like the travelling public, I am deeply concerned about what is being proposed for us. If we acted on the proposal that my hon. Friend the Member for York Central (Hugh Bayley) has suggested and asked the travelling public on the east cost main line what they want for the future, we would get proof of the undoubted fact that the vast majority of them want the franchise to stay exactly where it is—in public ownership.
3.31 pm
Sheila Gilmore (Edinburgh East) (Lab): The ideology in this debate is clearly not on the Labour side, as is shown by the speeches we have heard. What is puzzling many of my constituents is why it is somehow so urgent to put the east coast line out to franchise now, when East Coast is working well and when the franchise process for the west coast main line was such a disaster so recently. It sounds like the answer is ideology.
A couple of misconceptions have arisen in the debate so far. One of the previous speakers suggested that refranchising would fund improvements such as electrification, but during the past few years Network Rail has made infrastructure investment from public money. It is clear that refranchising will not bring about that kind of investment. I also say to the hon. Member for Redcar (Ian Swales) that, instead of perpetuating the notion that somehow East Coast is uniquely expensive, if he took his Government’s advice to benefit claimants and became “digital by default” he could considerably reduce fares by booking in advance. That is no different from the situation with any of the other rail operators.
There is now a good argument for looking at the situation. I am sure the Minister will say, as some Government Members have already said, “Oh, but the
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Labour Government were going to refranchise.” We learn from experience, and we have learned that there is no inherent reason why a publicly operated railway company cannot make a success of things. One reason for that is that such a company will be operated not by some anonymous Department, but by rail professionals; it will not be run from the Department for Transport. Those rail professionals are clearly motivated to make things work, which is why we are seeing the improvements that we feel are happening on the east coast line.
The time has now come for us to look again at some of the assumptions that were made at the time of privatisation.
Mark Lazarowicz: Will my hon. Friend give way?
Sheila Gilmore: I am sorry; I do not think I have time to give way.
There was a view that the track should be separated from the trains and that the network should all be split up. However, we know from the McNulty report that the unit cost of railways in this country is 40% higher than in countries in Europe where there are publicly owned, integrated rail services. The time has come not to be ideological about this issue, nor even defensive about what anybody’s Government did in the past, but to look at what is actually happening out there.
In the first instance, we should say of the east coast line, “No, we will not put this out to franchise again at this stage. There is no need to do so.” Secondly, we should look at the whole process and analyse what is happening. Thirdly, we should perhaps look again at having an integrated rail system—
Dr William McCrea (in the Chair): Order.
3.34 pm
Ian Lavery (Wansbeck) (Lab): As ever, Dr McCrea, it is a pleasure to serve under your chairmanship, and I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on making an excellent contribution to the debate.
I have only three minutes to speak, which does not give me much time to consider the privatisation or nationalisation of the east coast main line; I would need a lot of time to do that. Quite simply, I will focus on saying that the privatisation of the railways—some might even say the theft of the railway infrastructure—is totally unacceptable. It has been an unmitigated disaster, and franchise after franchise on the east coast main line has been a shining example of that.
I have looked at the results of the east coast main line. Since it has been in public ownership, it has been absolutely outstanding and there have been some things that private companies would be absolutely delighted with: increased passenger numbers, profits, premium payments and passenger satisfaction, and better turnover and punctuality. Also, passenger fare revenue has increased by 34% to £820 million. In 2012, turnover was £665.8 million, which was an increase of £20 million, leaving a profit before tax and service payments to the Department for Transport of £195.7 million, which was an increase of £13 million. Passenger journeys with
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East Coast, which runs trains from London to Yorkshire and from the north-east of England to Scotland, increased by 2.1% in 2012.
In addition, there is another important point, which I think has been agreed on by Members of all parties today. Customer satisfaction with East Coast has risen by 2%. Also, the company’s latest punctuality figures are the best since records began in 1999. What a credit to East Coast that is, and why on earth the Government are hoping to privatise the east coast main line quite frankly beggars belief. Again, it is about absolute ideology and absolute dogma, and who will benefit from this privatisation? It will not be the passengers and it will not be the work force; the financial bonanza will be distributed between shareholders.
I ask the Minister why on earth National Express—a company that threw the keys back at the Government because it could not cope with privatisation last time—will be allowed to bid for the east coast main line for a second time. If it could not cope the first time, why is it even being allowed to put itself forward a second time?
3.37 pm
Grahame M. Morris (Easington) (Lab): It is a pleasure to serve under your chairmanship, Dr McCrea, and I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on the timely and comprehensive speech that he gave on this very important subject.
Government Members have accused Labour Members of making this an issue of ideology. Well, in Westminster Hall today we have a Minister who oversaw the architecture to privatise the NHS and who is now overseeing the privatisation of a successful publicly owned rail franchise in the north-east. Indeed, this process is an experiment. Under the previous Conservative Government, the rail network was broken up and a new model devised in a way that any objective commentator must acknowledge was a failure.
We have seen a decline in the quality of service, a lack of investment, higher public subsidies and inflation-busting fare increases since privatisation. In fact, a report by Just Economics showed that UK rail services were less affordable, less comfortable, slower and more inefficient than publicly owned rail services in Germany, France, Italy and Spain. British train tickets are now the most expensive in Europe. A typical season ticket in the UK now costs 14p per kilometre, compared with just 8p per kilometre in Germany, Holland and France, which are the next most expensive countries in Europe. So, if we are making comparisons on price or value for money, the privatised franchise model that we have here just does not stack up.
I do not wish to go off the rails in terms of time, Dr McCrea, but I am under a bit of pressure and we have had some first-class contributions from Members. I do not want to repeat what has been said. However, I am perplexed about why, after four years of stability, rising passenger satisfaction and significant returns to the Treasury, the Government are rushing through the privatisation of the east coast main line, if not for reasons of ideology and dogma, ignoring the evidence. Conservative Members ask, “Would you nationalise the industry?” Well, in public polling, not just of Labour
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voters, but generally, those in favour of nationalisation poll in excess of 70%, by MSN and NOP and 93% in
The Guardian
. There is nothing more ideological than privatisation for privatisation’s sake. This is a privatisation too far, and it is not fit for purpose.
Dr William McCrea (in the Chair): Order.
3.40 pm
Lilian Greenwood (Nottingham South) (Lab): It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on securing this important debate. We have heard about the many improvements that have been made on the east coast since 2009. My hon. Friend set out the hard facts. East Coast has made real progress since Directly Operated Railways stepped in. Yes, there is more progress to be made, but I struggle to recognise the picture of East Coast treading water. A number of puns have made, but I am not sure that the metaphor of a railway treading water, used by the hon. Member for Cleethorpes (Martin Vickers), is one that I would use. However, hon. Members have provided examples of hard facts that support the call for the east coast main line to remain as a not-for-private-profit operator.
My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) noted the improvements to punctuality that she and her constituents have benefited from. My hon. Friend the Member for Edinburgh East (Sheila Gilmore) noted the improvements in targeting business travellers, who might otherwise travel by plane, with worrying environmental consequences. There has been a 19% increase in those using the first-class service.
The hon. Member for Stevenage (Stephen McPartland) described a huge improvement in services to his constituency. He also said that passenger satisfaction should be a key measure. Of course, East Coast is getting better and better. Passenger Focus, the independent watchdog, recently recorded 92% satisfaction with East Coast—the best score found in its survey on that line since it was launched in 1999, better than under GNER or National Express.
As my hon. Friend the Member for Easington (Grahame M. Morris) suggested, the hard facts point to this being a dogmatic, ideological privatisation, rather than one based on the service.
Stuart Andrew (Pudsey) (Con): I take it that the hon. Lady would want completely to dissociate herself from the comments made by the former Labour Transport Secretary, Lord Adonis, who said:
“I do not believe that it would be in the public interest for us to have a nationalised train operating company indefinitely.”—[Official Report, House of Lords, 1 July 2009; Vol. 712, c. 232.]
Lilian Greenwood: I do not know when the hon. Gentleman last spoke to Lord Adonis, but sensibly, like the rest of us, he responds to a change in circumstances. Over the past four years, we have seen East Coast perform well under Directly Operated Railways. Therefore, now is the time to keep it as a publicly operated service.
Mr Simon Burns: The hon. Lady has said something important. I do not know when she last spoke to her noble Friend Lord Adonis, but when she did, did he tell her that he had changed his mind?
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Lilian Greenwood: I last spoke to my colleague probably two weeks ago. Certainly, he has changed his mind.
Andy McDonald: Does my hon. Friend recognise that Lord Adonis made his remarks some years ago on the basis of a National Audit Office report that looked at only eight franchises? That report underestimated the 2011-12 subsidy necessary from the taxpayer to those eight franchises by £224 million. We cannot rely on those comments, which were made in good faith at that time on false information.
Lilian Greenwood: The noble Lord is not here to set out his position, but I am sure that we will hear from him in due course.
Mr Burns: Can I help the hon. Lady on that point?
Lilian Greenwood: No, I have too little time.
Dr William McCrea (in the Chair): Order.
Lilian Greenwood: I agree that we should be paying tribute to the work of East Coast staff. They stepped into the breach at a difficult time. The two previous franchise holders failed, with one operator walking away from its obligations entirely. Yet East Coast, run as a not-for-dividend operator, has achieved what its predecessors could not: stability and constantly improving services. This Government’s actions are putting that progress at risk.
It is worth briefly highlighting how strong East Coast’s performance has been. Passenger satisfaction is up by 12% over the last year; 3 million more seats per year have been provided; punctuality has improved and a new timetable has been established; and the service has more than held its own financially. As a not-for-dividend operator, East Coast has already returned £640 million in premium payments to the taxpayer, while recording a £40 million profit.
Fiona O'Donnell (East Lothian) (Lab): I am sure that my hon. Friend is aware that the east coast main line passes through my constituency. It not only gives passengers a beautiful view of East Lothian, but is an essential part of the community of Dunbar. The instability is worrying people who use that service both to commute to London and into Edinburgh.
Lilian Greenwood: My hon. Friend is right. That instability is causing concern. Another thing causing concern is the fact that that £40 million profit, which has been reinvested in the service, would, under this Government’s plans, be split with shareholders instead.
I know from my own region how better services have made a real difference to passengers. In the east midlands, more services now stop at Newark; direct trains have been established daily between Lincoln and London; and two weeks ago a new commuter service was launched from Grantham. Bearing all this in mind, it is difficult to recognise the Government’s description of East Coast’s performance. Indeed, the Minister has said that punctuality on the east coast has plateaued. He even said that East Coast was the worst operator for punctuality when he
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appeared before the Transport Committee in April. He was then quoting from a very narrow, four-week window. Will he acknowledge today that this picture is not representative? According to Network Rail’s most recent punctuality figures, East Coast outperformed Virgin in both the last quarter and over the whole year, without the benefits of a £9 billion upgrade of its infrastructure. So this privatisation cannot be about punctuality, given that the Government have announced an extension to the operator’s contract on the west coast main line, where delays are more common.
It has been said that the Government are seeking a commercial partner to deliver investment, but will the Minister confirm today that the cost of upgrading the east coast main line and procuring new rolling stock will be met through public spending? In April, the Minister said that franchises should be measured
“by the premiums that are paid to the Government”,
as well as by reliability and overcrowding. But East Coast has made improvements in all those areas and grown the business, on a route that was last upgraded in the 1980s. The operator has developed a five-year plan and could deliver further success, if only the Government took the sensible step of backing it. Instead, we have seen an ideological decision to re-privatise the service. This is a damning indictment of this Government’s priorities at a time when the franchising system has collapsed and the National Audit Office has questioned the Department’s ability to deliver major projects.
The collapse of franchising has cast a long shadow over the rail industry. The fiasco has cost the taxpayer at least £55 million. Orders for rolling stock are on hold and the supply chain has been hit, threatening jobs and skills. The Government should be putting their house in order, so it is worrying to see Ministers instead, devoting their time to this unnecessary and unwanted privatisation, which suggests that they have not learnt the lessons from the recent past.
East Coast is working. The Office of Rail Regulation recently confirmed that East Coast receives virtually no subsidy and makes the second highest contribution back to the Treasury. We should not be undermining a successful service that has delivered real benefits for passengers. There has been enough instability on the line and the network as a whole benefits from having a public sector comparator, as my hon. Friend the Member for York Central (Hugh Bayley) suggested. I hope that the Government will now do the right thing and cancel this costly and unnecessary privatisation.
3.49 pm
The Minister of State, Department for Transport (Mr Simon Burns): It is a pleasure to serve under your chairmanship yet again, Dr McCrea.
I congratulate the hon. Member for Middlesbrough (Andy McDonald) on securing the debate. The east coast franchise competition has become a subject of keen interest to many, not only in this room but beyond. The presence of so many hon. Members in the Chamber today to take part in and listen to this debate is a reflection of that keen interest.
The east coast main line serves a huge number of communities and businesses, as a number of hon. Members have made clear, and it connects industries in the north with commerce in the south, provides cross-border services
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to Scotland and helps to drive the development of tourism and the success of Edinburgh and Leeds as key financial centres outside London. That is why it is at the forefront of our new rail franchising programme, which was announced by my right hon. Friend the Secretary of State in March.
The programme that we announced is the right one. We want to secure the best possible rail services for both passengers and taxpayers, and the programme confirms our belief that franchising is the right way to do so. By publishing the programme, we have provided the whole rail industry with a long-term plan covering every rail franchise for the next eight years. That gives certainty to the market and supports the Government’s major investments in the country’s vital rail network. It is also exactly the same policy that the last Labour Government operated for 13 years when running our railways.
I think it was the hon. Member for Middlesbrough who seemed to be a little confused as to when the noble Lord Adonis made his comments on franchising being the right way, which have been quoted during this debate, so I will help him by saying that they were made in another place and repeated by the right hon. Member for Tooting (Sadiq Khan), who was the senior Transport Minister in the House of Commons at the time, during the debates on having to take the east coast main line into DOR.
Hugh Bayley: Will the Minister give way?
Mr Burns: I will briefly give way, but I will do so only once because I do not have much time.
Hugh Bayley: I am grateful to the Minister. Lord Adonis was saying that we would not want to run the east coast as a public operation indefinitely. No Opposition Member is asking for the east coast to be run as a public sector operation indefinitely; we are asking that it remain with the public sector for a franchise period so that we can compare like with like—public performance against private performance. We will then not have to rely on ideology because we will have some facts.
Mr Burns: I will return the compliment the hon. Gentleman gave me earlier by saying that he is on the reasonable wing of the parliamentary Labour party. I have to tell him, though, that Members from the more exotic wing of the Labour party were not saying that in their speeches; they want the east coast main line to be permanently in the public sector, not the private sector.
Grahame M. Morris: That is what the public want.
Mr Burns: The hon. Gentleman is a dinosaur in health, and he has now moved to transport. I hope he is not following me around.
Lilian Greenwood: In 2009, the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker) said that if a franchise holder walks away, a public sector comparator should be maintained. Is the Minister in agreement with his departmental colleague?
Mr Burns:
The hon. Lady anticipates the very point I am about to make, which is that, under the Railways Act 1993, the Secretary of State has a statutory duty to
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ensure the continuous, seamless provision of rail services. That is why the Department for Transport has Directly Operated Railways. It is a body of last resort when there is a problem; it is not a permanent company, for want of a better term, to run a rail franchise indefinitely. My hon. Friend the Under-Secretary was correct in 2009, and the noble Lord Adonis was also correct.
Ian Mearns: Will the Minister give way?
Mr Burns: I am going to make progress, because I have only six minutes.
We have ensured that the delivery of the key inter-city franchises, both on the east coast and the west coast, is staggered so that they are not let at the same time in the economic cycle. The east coast is the first of those franchises to be let, and it is being returned to the private sector, as hon. Members know, after an extended and successful period of public ownership through force of necessity because of the fiasco with National Express. No one doubts that.
Ian Lavery: Will the Minister give way?
Mr Burns: No, I do not have time. I am not giving way.
When my right hon. Friend the Secretary of State announced the new franchise programme, he set out three key principles that we want rail franchising to follow: first, that passengers gain; secondly, that the rail industry thrives, with growing companies and new competitors coming into the market; and thirdly, that the taxpayer gains through more efficient use of public money and less waste in the industry. We believe that letting the east coast main line back to the private sector in line with those three principles will deliver the best possible long-term outcome for passengers and taxpayers.
I am aware of a number of concerns raised by hon. Members, including the hon. Member for Aberdeen North (Mr Doran), on services to Scotland. Mindful of that, officials from the DFT who are developing the proposition for the future inter-city east coast franchise are meeting a number of interested parties along the route, including Transport Scotland, as I am sure he would expect, and other transport bodies in Scotland, as well as local authorities, to understand their concerns. The specification for the new franchise will address both current and potential markets along the franchise route, including those between London and Scotland and up to Aberdeen.
East Coast has delivered a great deal in the past three-and-a-half years of public ownership, which provides the foundations for more to be done by a private sector company that has certainty of ownership, longer planning horizons and an innovative and entrepreneurial approach to doing more for passengers and taxpayers. The operation of the east coast by the public sector was never intended to be a permanent arrangement.
Lord Adonis himself, when he was Secretary of State, said that he did not believe it was in the public interest for us to have a nationalised train operating company indefinitely, and I believe he still believes that. I would be fascinated if the hon. Member for Nottingham South (Lilian Greenwood) intervened to tell me exactly what he said when he told her that he had changed his mind,
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because I have great difficulty believing that someone as intellectually astute and consistent as the noble Lord Adonis has changed his mind now.
The announcement that we will return the franchise to the private sector in February 2015 provides the certainty that is needed so that longer-term plans for the business can be made. We now need a strong private sector partner.
Fabian Hamilton (Leeds North East) (Lab): Why?
Mr Burns: If the hon. Gentleman listens, I will tell him.
A strong private sector partner is needed to build on what has been done and take forward our exciting plans for the route as part of the next franchise. The Government are making a significant investment in the route over the coming years, as a number of hon. Members mentioned, with new trains provided by the substantial inter-city express programme and new capacity provided by infrastructure projects. To ensure that that is managed and delivered so that those investments are put to best use, with minimal disruption for passengers, the inter-city east coast franchise needs a long-term partner that is able to deal effectively with the risks and challenges that come with such huge investment and change. That is best provided by the private sector.
Much of the debate has centred on the idea of privatised railways versus nationalised railways. The implication is that the running of the east coast by the public sector through DOR represents an alternative model to normal franchised services. That is not the case. The operation of train services by DOR is an essential part of the privatised franchising model. The Secretary of State has a statutory duty to maintain and ensure continuous provision of service, which is why DOR exists, but it is a short-term mechanism to meet immediate problems. Once those problems have been sorted, the intention is always to return to franchising.
Time is running out. Hon. Members have mentioned a number of issues, and I will write to them with answers to their questions, but I have to conclude by saying that it is almost Alice in Wonderland to believe in the so-called halcyon days of British Rail. I do not remember them; I believe things have improved under the franchise system.
4 pm
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Welfare Benefits (EU Citizens)
4.30 pm
Mr Christopher Chope (Christchurch) (Con): It is a pleasure to serve under your chairmanship, Dr McCrea, and to know that my hon. Friend the Minister will respond to the debate. I hope he will answer all the questions I ask.
The topic of this afternoon’s debate is very important to people not only in my constituency, but in many others. Almost all the British public are concerned, because too many British citizens are out of work, and taxpayers resent their money being used to fund welfare for foreigners. That is why my constituents wish to restrict access to out-of-work benefits that are currently being paid to non-UK nationals from other EU countries. I think that is the wish of the vast majority of the British people, and also, I hope, of our Government. Whatever the gravity of the situation now, it is nothing like as bad as it will be after 1 January next year, when the group of non-UK nationals from other EU countries will include Romanians and Bulgarians, who hitherto have been prevented from getting full access to welfare benefits and the employment market.
Does the Minister agree with the basic proposition that if someone from another European country decides to move to the United Kingdom, they should not expect to receive taxpayer-funded assistance for their housing, health care, education or living expenses? Does he accept that freedom of movement under the EU treaties should be defined as being a freedom to leave, as well as to arrive? If a person who is a non-British EU national cannot afford to live in the United Kingdom without recourse to taxpayer-funded services, should not that person return to his own EU country, rather than rely on UK taxpayer handouts?
How much money is being spent on those handouts? Unfortunately, the Government cannot tell us, because, as the Minister told the House in a written answer,
“the UK’s benefit payment systems do not currently record details of a claimant’s nationality. Looking forward, the Government is considering ways of recording nationality and immigration status of migrants who make a claim to universal credit”.—[Official Report, 14 January 2013; Vol. 556, c. 466W.]
I think it will come as a shock to many that after three years of a Government led by a Prime Minister who says that he is determined to take action on this subject, we have not even begun to collect the most basic information necessary to inform public debate. When are we going to start? Why can we not start right now and record the nationality of people when they claim benefits?
Only two months ago, the Prime Minister assured us that he was going to get tough on benefits being claimed by foreigners in the United Kingdom. A month ago, the Home Secretary, along with her counterparts from Germany, Austria and Holland, wrote to Alan Shatter, president of the EU Justice and Home Affairs Council, demanding tighter restrictions on immigrants’ access to welfare handouts and other state-funded services.
We are told that the Prime Minister is actively engaged in negotiating a new relationship between the British people and the European Union. I asked him a written question for answer on Monday this week about his top priorities for reforming the UK’s relationship with the
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EU. Unfortunately, the Prime Minister transferred the question to the Foreign Office, and the Minister for Europe’s reply makes no mention whatsoever of either welfare or immigration as being among the top priorities for reforming our relationship with the EU. That is despite a recent ComRes/Open Europe poll showing that 55% of voters regard those issues as a top priority, and despite the Prime Minister’s recent speeches in which he has indicated that he also sees them as a top priority.
I shall be grateful if the Minister can explain in detail which aspects of access to British taxpayer-funded welfare are currently being negotiated in the EU. What is the state of those negotiations, their time scale, their prospects for success and why, at the moment, are they not a top priority for our Prime Minister?
Please can the Minister also explain how confident he is that we can resolve the issue to our satisfaction, when the European Union Commission is saying that the UK, far from being too generous in welfare payouts to foreigners, is not being generous enough? That was the effect of the decision six days ago, on Thursday 30 May, by the EU Commission, when it announced that it is launching a prosecution against the United Kingdom in the European Court of Justice, because we have different and less favourable rules for access to out-of-work benefits for EU nationals, compared with British citizens. Even the EU-loving Financial Times described, in its leader on 31 May, the EU Commission as having
“lobbed a hand grenade into the political discussion about Britain’s membership of the EU”.
Does that episode not illustrate perfectly the utter contempt in which the EU Commission holds Ministers in our elected Government? In the 20 months since the EU Commission first threatened such action, there has been much huffing and puffing by our Government, but all apparently to no avail. If it has taken 20 months to make zero progress with the Commission on that issue, what hope is there that other issues we wish to renegotiate will be dealt with any quicker or with any greater success?
The background to the debate is the question I asked the Minister on 20 May, which was, what steps are the Government taking to reduce the eligibility to United Kingdom benefits of nationals of other European Union states? In his careful response, he told me:
“We are strengthening the habitual residence test; the Home Office is creating a statutory presumption that European economic area jobseekers and workers who are involuntarily unemployed will not have a right to reside here after six months unless they can demonstrate they are actively seeking work and have a genuine chance of finding a job; and we will prevent those with no entitlement to work in the UK from claiming contributory benefits.”
Analysing each element of the Minister’s response in turn, one can see the credibility gap between his precise words and the overall impression of toughness, which I am sure he was seeking to give. The habitual residence test was introduced on 1 August 1994. I recall my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), as Secretary of State for Social Security, telling the Conservative party conference in 1993 that he wanted to curb spending on benefit tourists. It is almost 20 years later, and have we succeeded in doing so? No. The situation has got worse rather than better.
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This coming weekend, it will be 30 years since I was first elected to the House, and it is a pity that all I have to report over those 30 years is a continuing decline in UK sovereignty, and ever more powers and decisions over our lives being taken away from us by the EU, despite the brave words of successive Ministers.
In 2004, the habitual residence test was supplemented with the requirement that a person has to satisfy a preliminary test of a right to reside in the UK, but that does not apply to EU and European economic area nationals who are classed as workers or self-employed persons under EC directive 2004/38 and the family members of such persons. On analysis, therefore, how is the Minister proposing to strengthen the habitual residence test, and how will it do anything to reduce the eligibility of nationals of other EU member states to access UK benefits? It does not seem to me as though it will achieve anything.
The second point that the Minister made in his answer, about jobseekers and workers who are involuntarily unemployed having to leave after six months, invites the question as to what is meant by “involuntarily unemployed”. How will one assess whether they have a genuine chance of finding a job? Are we going to introduce a language test? If so, how would that be compatible with current EU legislation? What about those who are self-employed, such as Romanian Big Issue sellers?
The third part of the Minister’s answer is perhaps the most disingenuous. He says that
“we will prevent those with no entitlement to work in the UK from claiming contributory benefits.”—[Official Report, 20 May 2013; Vol. 563, c. 890.]
How many people fall into that category? Every EU national who moves to the United Kingdom has the same entitlement to benefits as a UK national, regardless of their previous tax or national insurance contributions. That principle applies, without qualification, to all those who are “workers” or self-employed, while the qualification of “worker” is so broad as to include those not working but purportedly seeking work. Would it be unfair and going too far to summarise the Minister’s position as tantamount to an admission of impotence in the face of this crucial issue?
Let me emphasise that I do not blame the Minister at all, but do not his answers and the concerns of the Prime Minister, the Home Secretary and the Secretary of State for Work and Pensions amount to little more than spitting against the wind and grandstanding? What prospect is there of being able to change the European Union treaties to enable us to discriminate on the grounds of nationality in the way in which we distribute our welfare payments? Indeed, what is parliamentary sovereign democracy if it is not about the ability to treat our own citizens differently from the citizens of other countries?
One of the fundamental freedoms that lie at the heart of the EU treaties is “freedom of movement”. That was sold to the British people on the basis that we would be able to move to another country in the EU without impediment. We would be able to work there and live there and, through reciprocity, citizens of other EU countries could do the same in the United Kingdom. But what has happened is that, as with so many other aspects of the United Kingdom’s relationship with the European Union, freedom of movement has been applied as if to a federal superstate where there is no distinction
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between a British citizen and a Romanian or Bulgarian. The European Union Commission has continued to apply its ratchet of integration—ever closer union—systematically undermining our ability even to decide to whom we give British taxpayer-funded services.
Does this issue not illustrate the fundamental chasm between the European Union and us? The European Union sees itself as one country, with all its citizens sharing the same European nationality. Meanwhile, the United Kingdom sees itself as one of 27 separate countries within a free trade area, but with control over its own destiny and, in the context of this debate, control over those to whom it does and does not pay taxpayer-funded benefits. Does this not illustrate perfectly why my noble Friends Lords Lawson and Forsyth and Michael Portillo, all former Cabinet Ministers with a wealth of experience in negotiating with the European Union, are spot-on in pointing out the utter futility of the renegotiation exercise on which the Prime Minister has embarked? Does this saga not illustrate graphically the extent to which this Parliament has lost control over the most basic elements of national policy?
The starting point for the right to vote in a UK parliamentary election is being a British citizen. Citizenship confers privileges for citizens over non-citizens. Why cannot the same basic principles apply to the allocation of taxpayer-funded welfare benefits? Please can the Minister tell me how we will be able to restore control over our own affairs and give preference to our own citizens over foreigners without leaving the European Union? It seems to me that actions such as we have seen from the European Commission in recent days are driving more and more people to the conclusion that there is no alternative but to leave the European Union and that we would be much better off out, and in control of our own destiny.
There is a big issue about the fact that the European Union originally started off with a whole lot of countries that each had relatively similar standards of living, but now there are countries that are new entrants, particularly Bulgaria and Romania, where the standard of living is infinitesimal compared with that which we are lucky enough to enjoy in this country.
Figures I have obtained from the Library show that the annual household net income of a single-earner couple on the average wage with two children in 2011 was, using purchasing power parity exchange rates, €31,616 in the United Kingdom but only €7,750 in Bulgaria and even less—€7,514—in Romania. That means we have an average annual household net income of more than four times that of citizens in Bulgaria and Romania, so why will the Bulgarians and the Romanians not come to the United Kingdom in large numbers from next January? Apparently, there are already about 1 million of them in Spain, so it will not be very expensive for them to get here from Spain if they want to do so, and once they get here, unless something is done to the existing rules, they will basically have free access to as many benefits as they choose to apply for. They can come. They can try to get work. Even if they are unsuccessful at getting work, they can say that they are trying to get work and then access our benefits system. That can include other benefits that they can
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then export back to their families in their own countries. Is this not a state of complete farce? Have the Government grasped the political significance and importance of it?
Answering questions in the careful way that the Minister has answered them is absolutely right, because he wants to be intellectually honest in answering them, but could he also ensure that much fuller answers are given and that the areas where we obviously do not have any control at the moment are highlighted? I hope that as a result of this debate, he will assure us that the Prime Minister is serious about trying to do something about all this and that it is not just huffing and puffing, because we cannot carry on like this. There was 20 months between the European Commission saying that it was going to start taking infraction proceedings against us, and the matter now being referred to the Court. Will it take two years—three years?—before the Court decides? Many of us hope that we will have an in/out referendum long before then, but in any event, does this not show that the whole renegotiation process is a complete charade?
One example can be worth a thousand generalities, and the example highlighted in this short Adjournment debate is one the Government need to take really seriously.
4.47 pm
The Minister of State, Department for Work and Pensions (Mr Mark Hoban): I congratulate my hon. Friend the Member for Christchurch (Mr Chope) on securing the debate and trying to highlight some of the challenging issues we have to deal with. The Government are rightly concerned that our rules on migrants’ access to benefits should be robust. We already have strong rules to protect the taxpayer and the public purse from abuse and fraud. Those rules are fair and just, and I think they are entirely consistent with the freedom of EU citizens to work and to look for work here—I will come back to the issue of those who come here with no intention of working and the controls that are in place in that regard. The rules rightly ensure that migrants cannot get benefits if they have never worked here and have no intention of doing so.
Let me set out a bit of the background to assist my hon. Friend. European law says that an EU citizen can move to another member state if they are a worker, self-employed or a student, if they are seeking work or if they are self-sufficient. When EU nationals come to work in the hotels and guest houses of Bournemouth and Christchurch, it is that right that they are exercising, in the same way that UK nationals exercise their right when they go and work in other European Union countries.
European law also says that we must treat EU nationals who come here to work in the same way as we treat British nationals. We comply with that principle. EU nationals who work here and then lose their job can claim jobseeker’s allowance and housing benefit and, if they are temporarily unwell and unable to work, they can claim employment and support allowance.
EU nationals who come here to seek work are expected under EU law to be actively seeking work and to have a genuine chance of getting a job, and if they do, we say that they can claim jobseeker’s allowance. When people try to claim JSA, we apply a fair test to assess whether they are genuinely here to seek work—the habitual residence test. That test is applied to jobseekers whether they are EU nationals or UK nationals.
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My hon. Friend is absolutely right that no member state can afford to support migrants who have no intention of working and contributing economically to the community in which they choose to live. There is no requirement under EU law to provide such support, nor should there be. EU law has not sought to harmonise benefit regimes, nor should it. As he rightly points out, those are matters for national Governments. Member states have their own benefit regimes, some of which are more or less generous to their citizens than ours. It is easy to see why some people feel that they can move, not to work, but to take advantage of what they think is more generous welfare support in another country.
EU law sets out rules for co-ordination between member states to ensure that people who are genuinely exercising their free movement rights are not disadvantaged. There is no free movement right for those who are economically inactive and have no intention of working but want to be supported by state funds. We cannot be expected to support those who move just to take advantage of different benefit regimes, and the public are rightly concerned that that is what would happen if we were not allowed to check the legal basis for someone’s residence in this country, which is the basis of the infraction proceedings against us.
Mr Chope: My hon. Friend the Minister uses the expression “no intention of working”, but all they need to do is show that they are applying for jobs and that they hope to be able to work. It is very hard to prove that they are not intending to work, particularly when his Department does not even have the information on whether they are British nationals.
Mr Hoban: I just say to my hon. Friend that when someone seeks to claim jobseeker’s allowance, they go through vigorous tests to identify whether they are looking for work. The only basis on which people receive benefit is by demonstrating that they are looking for work, which is why we have the habitual residence test. It tests not whether someone has popped across on holiday and decided to sign on while they are here, but whether they have any real intention to be here and work. That is why we ask a range of questions and why we are trying to strengthen the test, which I shall come on to in a moment. It was one of the commitments the Prime Minister made. I want to say more about the habitual residence test and the infraction process.
The Commission says that we discriminate against EU citizens when we apply the habitual residence test. We believe that we are following EU law correctly when we apply those rules. Rules in the residence directive explicitly allow us to protect our national finances and prevent migrants from becoming an unreasonable burden on our welfare system. When we ask people to satisfy the habitual residence test, we do so not on the basis of their nationality but on the basis that they have moved to the UK from abroad, even if they have previously lived here. We do so to protect our system from abuse. Why would a member state not want to protect its benefit system from abuse by checking that someone is legally resident before they make a claim? The advocate-general of the European Court, in giving his opinion on an Austrian case called Brey, said that
“the Court has held in various circumstances that Member States may require lawful residence before granting social assistance benefits, providing that such a requirement complies with EU law.”
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That is exactly what we do when we assess someone’s right to reside as part of our habitual residence test. We treat each case on its own merits and consider the individual circumstances of the claimant. Our test is fair; it legitimately requires that a benefit claimant has a reasonable right of residence here and a degree of interconnection with and integration into UK society.
This is not the first time that someone has sought to challenge the habitual residence test. We have already successfully defended challenges to our test in our Supreme Court and the domestic courts. They found that the habitual residence test does not discriminate on the grounds of nationality and that its use is justified because it protects the public finances of the UK and prevents benefit claims by people who have no intention of working here at all. My concern and that of the Government, and the reason why we are fighting the case, is that if the Commission is successful in arguing its interpretation of the rules, it will open a new door that will mean that member states can no longer check that migrants meet national residence laws, thus extending free movement to inactive migrants who believe they can move to any member state and get social assistance benefits soon after arriving. That cannot be right, which is why the Government, the Secretary of State and I are determined to defend the test. We believe that we have strong grounds to win the argument in the Court.
My hon. Friend mentioned the measures that the Prime Minister announced to strengthen our position. I shall highlight two announcements, the first of which was on time-limited access to benefits. Under EU law, someone has a right to reside as a worker or a jobseeker only if they are “continuing to seek employment” and have a
“genuine chance of being engaged”.
It is not unreasonable to take the view that if someone has not found a job within six months, that right should terminate. At the moment, we expect that most jobseekers will find a job within six months. The Home Office will amend the regulations to create a statutory presumption that EEA nationals who are coming to look for work in the UK or who have lost their job will no longer be exercising their free movement right of residence as a jobseeker after six months, unless, in line with EU law, they demonstrate that they are actively seeking work and have a genuine chance of getting a job. Most jobseekers will find work quite quickly—within six months. It is hard to demonstrate after six months that they have a genuine chance of getting a job.
The other announcement was on strengthening the habitual residence test. We will continue our work to ensure that our decision making when assessing whether someone satisfies the test is consistent and fair. We are improving the test, as the Prime Minister said, by increasing the range and depth of evidence that advisers collect from claimants and making it easier for advisers to tailor the questions to someone’s circumstances. Those improvements will support our argument that our test is robust and that our decisions are fair and comply with EU law.
My hon. Friend asked about language skills and the assessment of the genuine chance of finding a job. We will assess whether language skills are a barrier to work, as part of the habitual residence test—it is built into the test. He also commented on the fact that we are in discussions with our European neighbours. My right
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hon. Friend the Secretary of State for Work and Pensions has been in Germany to meet his opposite number, the Deputy Interior Minister. The Home Secretary will raise these issues with other Interior Ministers at the Justice and Home Affairs Council over the next week. I am going to the Netherlands this evening to talk to my opposite number about how we can work together more closely. There are clear concerns in a number of member states that the Commission is seeking to extend its influence in this area and subvert the right of free movement, which is widely supported in member states. We need to continue to work with our allies, demonstrate a need for change and recognise the concerns expressed across a wide number of member states about the Commission’s role.
My hon. Friend started his speech by talking about the broader issues of access. I am sure that he will welcome the immigration Bill announced in the Queen’s Speech, which will tighten access to the NHS and controls on private landlords letting property to tenants from overseas. The Government are taking steps to tighten access to not only welfare benefits but other public services, which is an important part of our approach.
Mr Chope:
Does my hon. Friend not agree that it would be much better if we could do all that under our own control? If we were outside the European Union, we would be able to make such decisions ourselves, instead of being beholden to the European Commission, which, from the way he has described the infraction proceedings, is wholly intransigent. I sympathise with him. For all the effort he is making, he is banging his
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head against a brick wall; there is no give on the part of the European Commission. Does there not come a time when the British people have to say, “Enough’s enough. If you do not concede anything, we will leave”?
Mr Hoban: My hon. Friend is being uncharacteristically defeatist. We can make progress, which is why we are engaging with other member states. The support among other member states—we were party to the Brey case—demonstrates to the Commission how much concern there is. Member states can take the initiative to change the regulations, and we need to demonstrate to the Commission that there is support for that. I fully support the Prime Minster’s policy. We need to have the renegotiation and put the outcome of that renegotiation to the people in a referendum when we win the next general election. That is the right approach. We need to build alliances with other member states; we are not alone in our concerns. My hon. Friend will be relieved to know that other member states share his concerns exactly.
I hope that from my remarks this afternoon my hon. Friend sees that the Government are actively taking steps to protect our position not only in domestic law, by strengthening the habitual residence test through the new rules and the presumption about someone being out of work for six months, but by defending the matter strongly in the Court and building alliances with other EU countries. Our approach is right.
Mr Chope: If it does not give in, will we leave the European Union?
5 pm
Sitting adjourned without Question put (Standing Order No. 10(13)).