Barry Gardiner (Brent North) (Lab): We were indeed at the meeting together. It is a very constructive suggestion that there should be a round table with all the major

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banks, which can then work with Treasury to resolve the problem. It is unfair to load everything on to just one bank, which happens to be the last in line. The Treasury needs to address this issue very seriously. Mr Bayley, let me also apologise for coming late to the debate, owing to another commitment.

Stephen Doughty: My hon. Friend makes the point perfectly. As I said, there was a great willingness on the part of Barclays to sit down with Departments. I hope the Minister can reassure us by telling us what steps have been taken—perhaps in the past week—so that we can know that these conversations are going on and will involve all the crucial Departments. Obviously, numerous Departments, banks, organisations and Members have an interest in resolving this matter. Barclays had a number of technical solutions, which I was unable to comment on, but I hope that Treasury officials and the Minister might be able to.

I second the comments made by the hon. Member for North West Norfolk regarding the need for the Government to engage in urgent discussions with the United States, where a lot of the regulatory pressures are coming from, so that we can secure answers.

In conclusion, this is a huge problem with serious implications not only for my constituents and their families, but, ultimately, for this country’s national interests in international development financing and our security needs. We urgently need to find a solution because time is pressing and will run out at the end of August; otherwise we will find ourselves in a very difficult situation.

Hugh Bayley (in the Chair): I should do a commercial between each speech: the Minister is asking to have a little more time, if possible, so that he can better answer your questions. I leave that thought in your minds.

3.17 pm

Kevin Brennan (Cardiff West) (Lab): Mr Bayley, I will endeavour to get through my speech as quickly as possible, given that request from the Minister.

I thank my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for the fantastic job she has done in leading the campaign on this issue. She has been a brilliant advocate on behalf of her constituents and those of many other Members in the room, and I thank her for that.

Last year, my hon. Friend visited my constituency, which is the neighbouring constituency to that of my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), whom I am following in the debate. She met many of my constituents who use a business in Riverside called Trust Exchange UK Ltd, which is run by Anwar Ali. It is a model of what a small business in our local communities should be—goodness knows, we need more small businesses in Wales, in particular. It is the only business of its kind in Wales. It deals with many of my constituents, my hon. Friend’s constituents and others who want to transfer money to relatives, often overseas.

I will not go through the arguments other hon. Members have given for the importance of such transfers. However, my hon. Friend the Member for Bethnal Green and

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Bow pointed to the huge value of this business and its importance to developing countries, with remittances representing a far larger sum than international aid. That is not something we hear much about in the press, but I hope the debate will help to highlight it, as well as the importance of remittances to the countries involved and to our constituents.

My constituent Anwar Ali approached me some time ago about this matter. I was quite shocked when he told me that, effectively, he would be put out of business by the decision by Barclays bank. His business not only provides a valuable service to my constituents but has been involved in setting up charitable work, aid projects and so on, particularly in Bangladesh, reflecting Mr Anwar Ali’s ethnic origin. It provides a service to people of all sorts of ethnicities and from all sorts of communities.

The point has been made that it is not only Barclays that is involved, and that other banks involved in the business have withdrawn before. HSBC was found guilty by the US authorities of a “blatant failure” in relation to anti-money laundering legislation, and was required to pay a record $1.9 billion fine as a result. Perhaps understandably, it has become extremely risk-averse about the sort of business we are talking about, and businesses such as Barclays have taken notice.

It seems that the principle that applies for large banks is “innocent even if proved guilty”. Being found guilty of money-laundering activity and getting a huge fine means being permitted to carry on business. Western Union, which was mentioned before and which seems to be due to benefit greatly from what is happening, paid $94 million in February 2010 to settle civil and criminal investigations by the Arizona attorney-general’s office, in relation to having turned a blind eye to the movement of illegal funds by drug cartels in Mexico. In the light of that, would not it be ironic if Western Union were to benefit from the decision to withdraw services from the small companies that provide our constituents with financial services on a small scale, and which have done everything to obey the compliance regulations, and if those local businesses were to be put out of business?

The local businesses seem to be subject to the principle that they are guilty when nothing has been proved against them—when they have done all that is legally required to comply with regulations. Small is not beautiful in this case; small is vulnerable, and small businesses are being assumed to be guilty when they have done nothing wrong—even when big businesses have been proved to have acted illegally and have been fined. Is the Minister content that small businesses that have done everything possible to comply with the law and regulations will be put out of business by the decisions of large organisations, which, leaving aside the activities that nearly brought the country to economic ruin, have often been proved to have engaged in activities outwith regulation, and have been heavily fined? If he is not content, what will he do to ensure that the Government, and in particular the Treasury, take a more active role to save those small businesses at the eleventh hour, before they are put out of business?

We have heard about the Barclays letter, and I hope that the Minister will give a positive response from the Government to the proposal for an industry round table. I hope that he will speak up for small British businesses, which have done nothing wrong.

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3.23 pm

Mike Gapes (Ilford South) (Lab/Co-op): I apologise to my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) and to the Minister. I have a Select Committee meeting at a quarter to 4 and hope that they will accept my apologies for having to leave.

I want to comment briefly on two things. First, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) referred to the position taken by Ministers at the beginning of July; but unfortunately, I am going to disappoint him. I have received a letter dated 10 July from Lord Deighton, in response to representations that I made in June on behalf of constituents. He said:

“I hope your constituents will be able to secure banking facilities from another bank, or make alternative contractual arrangements, rather than close. I cannot oblige the banks to make facilities available. The choice of business customer is a commercial decision for banks to make.”

He simply refers to the fact that the Office of Fair Trading will examine support for small and medium-sized enterprises later in 2013.

As for the 12 August deadline, which businesses in my constituency face, I received a letter from a Mr Duale of the largest organisation that transfers money to the Somali community—other Members may have received the same letter—and it pointed out how just a few weeks after the international Somalia conference in London, when we pledged £180 million of support, the damage implied by the decisions that have been made could outweigh that increased support.

Other hon. Members have talked about the effects elsewhere. I have constituents in various organisations who are very concerned about the impact in countries all over the world. My constituent Mr Shah of Zak Money Exchange, Ilford lane says that the business could close and that eight employees would lose their jobs. He raised the same concerns that others have raised: why cannot the nationalised banks do more? Barclays may have got into trouble, and we have heard about Mexican drug barons and money laundering, but why cannot other banks do something?

Barclays’ reputational damage in this country is an issue. I suspect that many people who will be affected by what is happening will have bank accounts—their own commercial bank accounts for their small businesses, or personal accounts. It is not good for Barclays’ reputation if the perception arises among millions of British people that it has a down on the poor and on migrant communities. Barclays should consider that carefully.

As for Western Union, there is a wider issue to do with the relationship between the United States, the US authorities—perhaps in particular US jurisdictions—and their way of dealing with extraterritoriality. We have the potential through the forthcoming European Union-US negotiations, which are to do with trade and international co-operation, to exert pressure back from the European side. Britain is more significant than many European countries in such matters, but we should not ignore the potential to raise with the US authorities, at all levels, the effect of their behaviour globally on communities in the UK, in the wider European context and worldwide. That is a matter for another debate—perhaps tomorrow—but I want to highlight the need for us to be more robust about the issues.

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It is true that we need to eradicate money laundering, crack down on terrorist and drug financing, and all the rest. However, an alternative to the present arrangements is that people will start to take money in suitcases through airports and smuggle it across borders, making themselves vulnerable to being taken prisoner—to hostage taking, banditry and piracy. That is a bigger global threat than some of the other problems that are cited.

Yasmin Qureshi: I should like to comment on the point about fears of money laundering and drug dealing. People in my constituency—I do not know about other parts of the country—who use small companies to send remittances are hard-working people who earn very ordinary amounts of money. They send very ordinary amounts: £50, £100 or £150. They do not send thousands and thousands of pounds, and therefore those small businesses feel insulted that somehow they are being tarnished by the suggestion that they are laundering money.

Mike Gapes: People are right to feel that way, because it appears on the one hand that Barclays and on the other that the Government do not care. The Minister says, “This is a commercial matter and we are not going to get involved.” However, Barclays, without giving reasons to people in small money exchange firms, is simply saying, “Sorry, we are no longer prepared to deal with you.” It is not saying that those people have done anything irregular or illegal; it is saying only that the facility is no longer available. That is terrible.

In a wider context, we have been criticising the banks for their failure to support small and medium-sized enterprises; yet it seems in this context that the Government are not prepared to get off their seat and do anything to help the poorest communities globally and the people in Britain who are trying to transfer money, which, as has been said, is a larger amount than the international development assistance that is transferred from states to countries and people in the poorest countries in the world. Instead, the Government say, “This is nothing to do with us. This is simply a commercial arrangement.” I am sorry, but that is not good enough.

3.31 pm

Chris Leslie (Nottingham East) (Lab/Co-op): It is a pleasure to serve under your chairmanship, Mr Bayley. I join my hon. Friends in congratulating my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) on securing this important and very timely debate: we are coming up to a period when the clock is ticking and those who might be affected are facing the prospect of significant anxiety and a change in the circumstances. It is an incredibly important point that she and others who have participated, on a cross-party basis, have been making.

Given the realities of internationalism these days and the crises that some families can encounter, the ability for people to support their family is part and parcel of the warp and weft of much of society. The role that legitimate small and medium-sized remittance and money transfer companies play should not be ignored; it is absolutely crucial. However, it is no surprise, given what has been happening in financial services in the past couple of years, that a lot of the agenda of the anti-money laundering reforms to deal with particular concerns is

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beginning now to bite. As my hon. Friend the Member for Cardiff West (Kevin Brennan) commented, it is more than ironic that it tends to be the smaller firms that end up being punished most of all, when the anti-money laundering reforms that we require and some of the changes need to be made particularly by the larger organisations. They are the ones where, in my view, there is a significant risk.

My hon. Friend the Member for Ilford South (Mike Gapes) made a pertinent point in the speech preceding mine about the fact that we should not see this only as a commercial matter—we should not take a laissez-faire approach and let the market decide—because ultimately, regulators and public policy are very much part and parcel of what is happening here. It is also not only a UK question, but a global matter, which requires leadership from UK Government authorities to do something now to sort out the problem.

Of course, it is vital that strong steps be taken to deal with the risks of money laundering. Nobody is arguing against that, but we cannot turn a blind eye to the impact that crude, blanket attitudes to these issues might have on real lives and businesses. We do not want to find ourselves with perverse consequences occurring in the endeavour to solve a very real problem. As my hon. Friend the Member for Bethnal Green and Bow said, particularly in this month of Ramadan, when so many of my constituents and hers are making charitable donations—small sums of money—and sending them abroad, it is a good time to be thinking about the solution.

The points that many hon. Members have made about Somalia and Somaliland are very relevant. There is the need to ensure that this is not seen only as a Treasury concern, but as one that touches on policy questions in the Foreign and Commonwealth Office and the Department for International Development. We need to see all those branches of Government working together in co-ordination on the issue. My hon. Friend the Member for Rochdale (Simon Danczuk) made a number of strong points, particularly on the dangers of ending up with a less competitive market here, especially where fees and exchange rates would be higher for the consumer and where access to those services is potentially at risk.

I would be the last person to voice concern for some of the big banks on this one. They can and should do much more, but it would not be right simply to pin this on one banking institution, which might be at the end of a queue on this issue. However, I would like the Minister to say what conversations he has been having with Barclays bank, in particular, about the imminent decision. To me, it seems not only that a long-term problem must be resolved, but that we are facing an immediate short-term crisis. Will the Minister address the discussions with Barclays, in particular, about the grace period and the extent to which there needs to be a different time frame to the approach being taken?

We have to focus on solutions now, and it is important that we give the Minister ample time to address those, so that we can cross-examine him and scrutinise the Government’s attitude. I just want to raise a number of points with him. Does he agree that it should be incumbent on the banks, as well as the regulators, to tell the

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industry—those small firms—what due diligence, improvements and audit checks they feel are necessary to overcome some of the hurdles and concerns? They would be the first to want to put beyond doubt any concerns that might exist about them.

As well as the Minister saying whether he has been able to talk to Barclays, will he address the questions that go beyond the United Kingdom? Clearly, the United States has a slightly different regulatory attitude, which is impinging very much on the larger banks and Barclays in particular. Therefore, we need to know what conversations have happened so far and ought to be happening with the American regulators and with the US Treasury Department and the State Department. Can we have some co-ordination with those other authorities? We do not want to see money laundering risks any more than the Americans do, but they will also be facing their own problems internally in the United States on some of these questions, because they are also a diverse society and a diverse community. Can we align ourselves to ensure not only that we have a gold standard of anti-money laundering practices, but that we do not throw the baby out with the bathwater?

What conversations has the Minister had with the Department for International Development and the Financial Conduct Authority? The FCA is a brand-new regulator, which has been operating for several months. It has a consumer remit and a competition remit. It seems to me that the FCA needs to be firmly involved in the issue and that it may have some expertise to bring to bear.

Suggested solutions have involved guarantees from the state or some sort of underwriting. Should the state-owned banks take that on their shoulders? The Bank of England has been mentioned perhaps as a way to do that in the short term. I am a little wary about the taxpayer ending up always being the one who must bear the burden of the solution; but clearly, as my hon. Friend the Member for Bethnal Green and Bow pointed out, the issue cuts across our international aid and development policies in another bit of the Government. We do not want to see Somalia, for example, retrench in development terms because of something that has been happening in another branch of the Government. I wonder what the Minister’s attitude is to those aspects and, in particular, to whether some aid agencies might be part and parcel of a solution in the interim, until we get some of the regulatory issues ironed out.

Can we have a round-table discussion with the whole sector and particularly with small and medium-sized businesses, involving not just the regulators but the Treasury, the Department for International Development and the FCO, and can we have that quickly? We are coming up to the summer holidays, but that is no excuse. The deadline is expiring very soon, and all hon. Members will want action taken, particularly on the issues that my hon. Friends the Members for Brent North (Barry Gardiner) and for Cardiff South and Penarth (Stephen Doughty) and others have talked about in their contributions.

As I said, I want to give the Minister time to respond, so that we can question him on policy. In summary, this cannot just be left as a commercial decision. We cannot say, “We are walking away from this. We don’t care about it. This is just one company making a particular call on this matter.” It is not just a market question.

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There is a downstream consequence from public policy, and it is therefore incumbent on us to get public policy right—to go the extra mile and ensure that we spend the time and effort necessary to find a solution. I just do not believe that having strong anti-money laundering policies is anathema to having proper facilities for diaspora communities to provide decent family support on an international basis. That is the sort of society that we need to support at this time.

3.41 pm

The Economic Secretary to the Treasury (Sajid Javid): I am grateful for this opportunity to speak under your chairmanship, Mr Bayley. I, too, add my thanks and congratulations to the hon. Member for Bethnal Green and Bow (Rushanara Ali) for securing this important debate. We have had a number of discussions on this issue already, and I look forward to continuing to have those discussions with her. I know that this is a very important issue for her and for all of us in this Chamber and beyond, and I welcome this opportunity to respond.

This issue is of concern to Ministers across Government and to hon. Members on both sides of the House, because a healthy, functioning remittance sector is crucial for the thousands of our constituents up and down the country who use such services to send money abroad. If you will allow me, Mr Bayley, I would like to speak for a moment about my gran. My gran—my mother’s mother—has been receiving remittances regularly for more than 50 years, since my parents first arrived in our great country and settled, first, in Rochdale. She continues to receive the benefit of remittances. When I first visited her while I was growing up, one of the things that I noticed was that she lives in a very remote village in Pakistan that has no bank. I think that the nearest bank is at least 10 miles away. She is unbanked. There were only a few remitters, at least to begin with, many years ago, that could get money to my gran. I mention that only to show that, at a very personal level, I do understand this issue and how important it is in Britain and particularly to British individuals such as myself, who are from an ethnic minority background.

The sector plays a crucial role in supporting the economies of all the developing countries that have been mentioned today that receive these funds. We all want to see a healthy remittance sector, but we also want to see a legitimate remittance sector. Our banks and regulators have a real responsibility to ensure that they are not inadvertently facilitating any kind of criminal activity. That could be money laundering, drug trafficking or the financing of terrorism, some of which we have heard about today. All are activities that pose real threats not just to UK citizens, but to global security. Of course, there is a fine balance to be struck between managing those risks and ensuring that essential services are still available to families in the UK. I would like to reassure hon. Members that we are committed to getting the balance right. This afternoon, I will set out some of the steps that this Government are taking towards ensuring a robust and sustainable remittance sector.

We recognise the role of Government in effectively supervising and regulating the money service business sector to help to drive up standards in this area. Last year, we strengthened the Money Laundering Regulations 2007, with a particular view to helping Her Majesty’s Revenue and Customs, as the relevant regulator, to

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strengthen its supervision, and HMRC is making every attempt to close down those businesses that are engaging in criminal activity and tarnishing the sector as a whole. Last month, it worked closely with the Metropolitan police and the Serious Organised Crime Agency to target organised criminals operating in this sector. However, in the longer term, proactive solutions must be found to avoid the need for such action in the future. The best way to achieve that is by creating a remittance sector in the UK that is trusted by all stakeholders and with which all banks can feel confident about doing business.

I have spoken with several of the leading high street banks—including, of course, Barclays—during the last few days. Some have expressed important concerns on the structural features of the sector and particularly on the issues surrounding transparency. I can confirm that I am looking urgently into what measures the Government might be able to take, and speaking to all relevant authorities to look at what options are open to us to try to allay as far as possible some of the concerns that those banks have expressed.

Separately, work has already been under way for some time through Project Quaver, led by HMRC and SOCA, on developing a healthy and sustainable sector. That project brings together the Government, law enforcement, regulators and industry to help banks and money service businesses to understand the risks that come from abuse of this sector, and to strengthen their compliance.

However, we recognise that having effective anti-money laundering and counter-terrorist financing procedures in place is not only essential to preventing, detecting and disrupting illicit finance. They provide the confidence for foreign investment and stable economic growth in many of the developing countries that have been mentioned. Developing effective regimes requires effective co-operation between the public sector and the private sector to understand and mitigate the threat of illicit finance, so under the UK presidency, the G8 has this year committed to launch a public-private sector dialogue on illicit finance, which will be held in Namibia in September of this year. That will not only help to tackle the issue of robust regimes in the traditional financial sectors, but address the opportunities and the risks posed by new payment methods, such as mobile money services. By bringing together private sector experts from around the world and Ministers and officials, the dialogue will be a unique opportunity to leverage expertise and drive reform that meets the specific needs that countries face, particularly in sub-Saharan Africa.

Stephen Doughty rose—

Kevin Brennan rose—

Sajid Javid: I will give way first to the hon. Member for Cardiff West (Kevin Brennan).

Kevin Brennan: I am sure that some very good initiatives are being developed, but will the Minister be able, in his remarks this afternoon, to give any direct comfort to the businesses that hon. Members here are concerned may go out of business in the next few weeks?

Sajid Javid: I will, but before I respond fully, I will give way to the hon. Member for Cardiff South and Penarth (Stephen Doughty) as well.

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Stephen Doughty: I thank the Minister for being very generous about interventions. Again, I am very interested to hear what is going on at international level—dialogues and so on at the G8—but, echoing the comments of my hon. Friend the Member for Cardiff West (Kevin Brennan), we want to know what will happen in the next couple of weeks, given what is happening on 12 August. I do not want to betray any confidences, but Barclays was offering a meeting at its headquarters. Will we see a meeting of the key stakeholders—the banks, the non-governmental organisations and the diaspora communities—in the next fortnight?

Sajid Javid: I think that both hon. Gentlemen knew that I was coming to this issue next. I am referring to the immediate effect of Barclays’ decision. I recognise that some of the things that I mentioned a moment ago, although very welcome, are long-term projects. In the short term, the Government are committed to doing everything that they can to minimise the impact on individuals and businesses in the UK of any immediate changes in this market. I understand that businesses in this sector will face challenges. That is why we are committed to working with the banks, trade associations and money service businesses to try to find solutions that do not mean extensive business closures. However, the truth is that we do not know what the full impact of some of the decisions that have been discussed here today will be. We are monitoring the situation and will continue to do so in the course of the next few months.

Stephen Pound (Ealing North) (Lab): I am extremely grateful to the Minister for giving way; he is being very generous. In terms of immediacy, does he not agree with this point? My constituent George Boateng has contacted me to say that an entire parallel industry—the so-called hawala system—exists now and is totally and utterly unregulated, and we could end up with a situation in which we have a sort of reverse Gresham’s law: we end up losing money transfer that is legitimate and regulated and going into a completely unregulated system. Surely that cannot be anyone’s intention.

Sajid Javid: The hon. Gentleman raises a fair point. He is correct, to the extent that if individuals cannot find a legitimate alternative that can reach the parts of countries they want to reach at a reasonable cost, they may be tempted to use illegitimate means, which makes the issue all the more important. I accept his general point.

We are committed to ensuring that commercial decisions taken by banks do not inhibit individuals in the UK from remitting money to families abroad, but, once again, there may be challenges. Individuals might need to approach firms other than those with which they are used to dealing. There may be increased charges. Remittance flows to some countries may be affected, specifically those with less developed or non-existent banking sectors, such as Somalia, as we heard from the hon. Member for Cardiff South and Penarth. I share his concern.

Rushanara Ali: I was encouraged to hear the Minister’s reference to his personal experience—his family experience —but I am disappointed at the lack of focus in his response on the fact that we need an urgent solution. I appreciated his time before the debate thinking through a constructive way forward. I hope that he will use the

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last 10 minutes to talk about how he will get his officials, the FCA and interested parties to use their insights to look at how we can solve the problem. He would be commended for making that happen. Across Government —in DFID as well as in the Foreign Office and his Department—and in his party and my party, there are grave concerns, which have been expressed in the debate. I hope he will use the last 10 minutes to focus on action and delivery, because he will be commended for that.

Sajid Javid: The hon. Lady is absolutely right to set that challenge and say that we should focus on action and delivery, and that is what I believe we are doing. I am sure she understands that there is no magic bullet or overnight solution that can be provided by any Government. As we heard today, this is a complex matter. The hon. Member for Nottingham East (Chris Leslie) recognised in his remarks that the banks have legitimate concerns. Other regulatory authorities are involved and hon. Members have mentioned the United States. Whatever the solutions, they may not be perfect and we may not get back to the world as it was before in this space. There will probably be changes to the structure of the industry. I hope she will be reassured, as I make further remarks, that we take the issue seriously.

The hon. Lady mentioned DFID, which I was coming to. I have discussed the recent bank actions with DFID officials and my right hon. Friend the Secretary of State for International Development. Initial indications do not suggest a significant impact on the economies of developing countries or their humanitarian situation. The Government will however assess the impact of market restructuring on developing countries and work with private sector and aid partners to mitigate any negative repercussions. The Secretary of State confirmed that the provision of UK Government aid will not be affected. My hon. Friend the Member for North West Norfolk (Mr Bellingham), who has great experience in development, talked about the work of DFID. It has said that it will commission an independent research report to understand the impacts of the recent bank actions on development outcomes in recipient countries.

Rushanara Ali rose—

Simon Danczuk rose—

Sajid Javid: I shall give way first to the hon. Lady.

Rushanara Ali: I thank the Minister for being generous. Can he explain what evidence DFID used to come to that conclusion? I have not been given any evidence, nor have my hon. Friends or other hon. Members. DFID should be looking at how to improve this important industry, because we want to end aid dependency. It is scandalous that DFID is being so complacent and commissioning a research project, when businesses will go bust in the next month. Will he press DFID to take urgent action with him? I accept that there are no magic wands, but there have been constructive suggestions in the debate, which I ask him to take forward and lead on. He will be commended for coming up with a solution.

Sajid Javid: I assure the hon. Lady that DFID takes the issue as seriously as other parts of Government and Members here today do. DFID, the FCO and the Treasury are working closely on it, because it affects all three Departments.

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Simon Danczuk: If the Minister does not give a clear indication this afternoon that there will be a round-table meeting of which Government are part, everybody will leave with the impression that the Government support big business, but not small businesses.

Sajid Javid: I will come to that point before I finish, but, given the questions asked today, let me say a few words about Barclays.

When I met Antony Jenkins, Barclays chief executive, we discussed its recent decision to end its relationship with a number of money services businesses in the UK and I tried better to understand its perspective. Although we did not discuss decisions taken on individual firms, I was reassured to understand that the recent review of its customers in the sector is being conducted on a case-by-case basis. I was also reassured that it is working with firms to manage the impact of its decision. He confirmed that Barclays will consider on a case-by-case basis extensions to any initial notice period it has given companies, particularly where those companies can show that they are in active discussions with other banks that may take their business.

Barry Gardiner: Will the Minister give way?

Sajid Javid: I do not have much time. A number of questions were raised by hon. Members, but I will give way very briefly.

Barry Gardiner: Without wishing to betray any confidence that Barclays relayed at the meeting with me and my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), it is clear that it has decided not to continue to do business with certain remittance companies, and, despite what the Minister has said about the assurances he received from the chief executive, that was made very clear to us in the meeting. The matter is much more urgent that the Minister is acknowledging.

Sajid Javid: I take those points on board. The hon. Gentleman is right to suggest that Barclays has made

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the decision. It is however showing flexibility over the timing of closing certain accounts, and that flexibility is better than no flexibility.

I shall turn to a few questions raised by hon. Members. The hon. Member for Bethnal Green and Bow asked whether I had received representations from the large money transfer companies. I have not received any representations from such companies. She also suggested—if I understood her correctly—that the banks’ behaviour could be anti-competitive. There is no evidence that banks are acting in concert or are distorting competition. They appear to have acted in accordance with their commercial interests and their desire to minimise risk.

The hon. Member for Rochdale (Simon Danczuk) asked why larger organisations, such as Western Union, are not affected by the decisions of the banks and whether the banks would benefit from the withdrawal of some services. The short answer to why some larger institutions are not affected is that their internal compliance procedures are in many cases similar to what the banks themselves adopt internally; in many cases, they spend more resources on compliance and transparency issues, which they are clearly in a better position to afford than smaller operators; and in many cases they are regulated differently. All companies are supervised by HMRC, but there is a difference between a company registered with the FCA and one fully authorised with it, and banks take that into account.

The hon. Member for Rochdale and others, including the hon. Member for Nottingham East, asked whether we were having discussions with the US. We work closely with the US Treasury and State Department at all times on all regulatory matters, including money transfer. It is important to point out that since many transfers are ultimately in US dollars, there is a US interest. Lastly, I asked the British Bankers Association for a round-table meeting and it has agreed. We will have one, the Government will of course take part and I look forward to it.

Hugh Bayley (in the Chair): I thank all hon. Members for co-operating on the time limit.

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UK Energy Infrastructure (Wales)

4 pm

Geraint Davies (Swansea West) (Lab/Co-op): It is a pleasure to serve under your chairpersonship, Mr Bayley, as I know that you are a green Chair in a green chair. In this debate, I will talk about Wales’s contribution to UK energy, and the development thereof.

Wales currently produces about 22,000 GWh of energy a year and consumes about 18,000 GW. We export approximately 4,000 GWh to England, but that figure is due to grow because of the abundant opportunities provided by the sea and the wind, and by solar energy. Essentially, I want to discuss the need to have the right balance between green energy and green tourism, with future tourism and economic opportunities paying due respect to our seascape and landscape.

The global population is growing, from something like 6 billion to 9 billion, and we are therefore not in control of the environment beyond our immediate physical surroundings. The size of the middle class in China, for instance, has grown from 2% to 20% of the population in the past 10 years, and more people from developing nations are travelling. Opportunities for green tourism in places such as Wales, which has a relatively sparse population, are therefore enormous and need to be borne in mind, as do opportunities in the creative industries. “Da Vinci’s Demons” is filmed at the old Fabian way site in my area. Our landscapes lend themselves to extraordinary Hollywood-type productions. We need a balance.

There are opportunities for nuclear development in Anglesey to produce another 34 GWh, which would be an increase of 150% in Wales’s total energy production and should justify further investment in Wales. We do not get our fair share of investment: some 80% of current infrastructure investment plans and 90% of transport plans are for London and the south-east. I know that hon. Members are interested in freight, for instance, and there is a case for investment in that.

Jessica Morden (Newport East) (Lab): Uskmouth power station in my constituency, which is one of the oldest power stations, is having huge problems getting rail freight capacity—it is difficult for rail freight companies to invest in the future—which is causing problems locally and increasing the costs to the power station’s operators. Does my hon. Friend agree that the Government should consider that further?

Geraint Davies: I completely agree. The big political debate is the balance between growth and cuts to get down the deficit, and we need to focus on growth, which means investment in infrastructure. We need to get the right gauges for freight—from Milford Haven, Swansea, Cardiff or Newport—and we need to move around universal freight modules, which are ship-carried in many instances, and energy from power stations, as my hon. Friend mentioned. There is a case for investment now, given the expected future income from new energy sources in Wales. There has been some discussion of a barrage that might generate up to 16,500 GWh, which would be 5% of UK energy, but the idea has clearly been kicked into touch, partly by the European habitats directive.

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Meanwhile, the Swansea Lagoon is a big issue in the local press. It could generate some 400 GWh, which would be 0.1% of UK consumption and 2% of what the barrage could produce. That is a relatively small level of production, but it is big scheme in that it would take £650 million to build, with its footprint extending from Swansea docks halfway to Mumbles pier. The electricity produced would be enough for about 121,000 households, but it would be for the UK grid and not for Swansea itself, which has about that many households. I am concerned, therefore, that on balance the development is at least neutral in tourism terms. We hope to become the UK city of culture in 2017—we are on the shortlist of four—and next year we celebrate the 100th anniversary of Dylan Thomas’s birth. We have high hopes for prosperity from cultural tourism in the emerging Swansea Bay city region, so preserving our iconic view is enormously important to us locally.

Glyn Davies (Montgomeryshire) (Con): I thank my near namesake for allowing me to intervene. He focuses on tourism, and green tourism is a hugely important part of the economy in my constituency. At the moment, we face six wind farm applications without any knowledge of how the infrastructure will take the power out. If the mad scheme goes ahead, it will be absolutely crucial that the infrastructure is undergrounded, and that will not happen without Government pressure. It is vital that the whole line be undergrounded, because of the damage it would do to the economy.

Geraint Davies: The hon. Gentleman makes the point well that there needs to be a balance between the value of the electricity and the prospective value of the tourism. Aerial views show that England is relatively densely populated and Wales relatively sparsely, and that will be a key asset for our environmental tourism. We want to think strategically, therefore, about where our energy production is. With wind, there needs to be access up the Severn estuary to the grid at Hinkley Point or Port Talbot, but there is less of a case for pylons right into the centre of Wales. I respect the fact that some of these issues are devolved, but we need a balance because we are talking about a once-and-for-all change to our views and to the value of our tourism. Once the infrastructure goes up it will not be pulled down, so we need carefully to consider the pros and the cons.

Nia Griffith (Llanelli) (Lab): My hon. Friend makes the point that Wales is not as densely populated as England, but it has a growing number of energy sources, from the energy island of Anglesey in the north right down to the south. There are large projects and smaller community ones, with a growing number of solar panels. Does my hon. Friend share my concern that the grid infrastructure must be of sufficient capacity to cope with that, and to ensure not only that people can feed in the energy from their solar panels but that the energy, which will be generated in Wales, is fed in properly to the national grid system in the most efficient and cost-effective way?

Geraint Davies: Yes, I certainly agree. My understanding is that Wales produces about 27,300 GWh of energy, but that nets down to about 22,000 GWh because of inefficiencies in transmission. The issue of energy loss is very important. We need to run a sophisticated and

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effective network, which pays due regard to environmental impacts and therefore to the economic impacts on tourism. I am not putting to one side the important subjective impacts on people’s everyday quality of life, but there are also quantifiable economic impacts.

Coming back to the Swansea Lagoon, the Minister might want to comment on whether an evaluation of the impacts on tourism has been done. The construction phase would create discontinuity for retail and tourism. If the sea bed was dug up—which it would be—to provide some of the material for the wall, would that generate a lot of contamination from industrial waste brought up with it? Is the visual impact shown on the promotional literature accurate or slightly misleading?

Is the Minister comfortable with the fact that there is an opportunity now for local investors to put down a £800 stake and get £3,800 back if planning permission is granted? That means that local opinion makers, such as me, are under a lot of pressure from people who have put the £800 down. All the risks are taken by local people. There are fears that when the tide went down there would be an unsightly view which would block the iconic view from the town centre, Town Hill and the Uplands. In addition, given that in future years we want to pursue the idea of a Dylan Thomas festival on a scale more akin to that of Hay, there is a question as to whether the perimeter of the construction—its footprint is nearly as big as Cardiff—would impede future cruise-borne tourism in Swansea bay.

There are therefore several questions—I do not know whether the Minister has any preliminary answers—about the environmental and economic impact, and the trajectory of the short-term problems and of where we will end up if we want a more strategic development of the bay front and then have a lagoon. It may work out well, but those are important questions.

I also want to touch on the Atlantic Array, which, as hon. Members may know, is a bold and imaginative opportunity to have wind turbines offshore. They would be about 12 km offshore, but the National Trust has told me that the Germans normally want them 35 km offshore, so that is an issue. This may sound strange, but, importantly, the biggest harbour porpoise population in Britain is in that vicinity; one of a similar size is in Cardigan bay. Apart from not wanting to disturb that habitat, there is a question mark in relation to future environmental tourism over whether that habitat might be so disturbed by the erection of pylons that those breeding grounds move for ever. I want to make it clear that, in principle, I am in favour of such developments offshore.

Mr Mark Williams (Ceredigion) (LD): I apologise for missing the start of the hon. Gentleman’s speech. What consideration has he given to other marine turbine technologies? I spent a very happy morning with the hon. Member for Llanelli (Nia Griffith) in a boat on the Severn estuary off the north Devon coast, and there is an imaginative scheme for marine turbines in the Severn estuary that would alleviate some—not all—of the concerns that he has voiced, particularly the environmental ones.

Geraint Davies: I am sorry that I could not be in that very boat. We should of course look imaginatively at all opportunities. I think that the hon. Gentleman was talking about underwater marine turbines, which are

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certainly enormously important. In the Severn estuary, which is virtually the biggest of its sort in the world—the bore is enormous—the whole idea of a barrage is predicated on such turbines, rather than on ones driven by the tide coming in and out, which is the case in the lagoon. We should certainly look at that in the future.

Solar energy has been mentioned. If the technology was there, I would like public sector buildings across the country to be tiled with solar panels to provide a solar footprint for the future, although the numbers must add up, because people can get such things wrong. The Chinese invested a lot in solar, but suddenly found that their technology had become obsolete.

There are therefore many opportunities, and I think that it would be best to give the Minister time to respond to some of the ideas and possibly to take some interventions as well.

4.12 pm

The Minister of State, Department of Energy and Climate Change (Michael Fallon): I welcome you to the Chair, Mr Bayley. I congratulate the hon. Member for Swansea West (Geraint Davies) on raising the issues. Balancing the impacts of energy infrastructure against the benefits is a key consideration for the planning system, so I welcome the opportunity to talk about energy infrastructure in Wales.

Wales has an essential role to play in meeting our energy needs. We are committed to putting frameworks in place to ensure that the much-needed investment in infrastructure takes place, which is key to getting our economy moving in the short term. The energy sector has the biggest infrastructure programme in the UK, and many such projects are ready to start. It has been estimated that replacing and upgrading our electricity infrastructure alone will require about £110 billion of capital investment in the decade to 2020, supporting up to 250,000 jobs up and down the supply chain. That is half the total infrastructure investment pipeline in the UK, and nearly double the amount needed for transport.

Wales already plays a significant part in powering the United Kingdom, and is home to a range of vital energy infrastructure across the different energy sectors. It is a net exporter of energy, which helps to meet energy demand across the UK. The most recent figures—for 2011—show that it exported 13% of electricity generation to the rest of Great Britain, and it has been even higher in recent years. Since July 2012, Wales has also been a net exporter of electricity to the Republic of Ireland, via the east-west interconnector.

Wales also plays a central role in ensuring that our gas needs are met. It is home to one of our main liquefied natural gas import facilities in Milford Haven, and LNG is an increasingly important part of our energy mix. The terminal has the capacity to import nearly 29 billion cubic metres of gas a year, which is nearly a quarter of our total gas import infrastructure. The facilities there cost upwards of £1 billion, so major global energy players—such as Qatargas, Exxon Mobil and BG Group—have clearly recognised the great benefits of investing in Wales. That decades-long relationship will continue to benefit Wales and thus the rest of the UK.

Geraint Davies: The Minister is making the case that the net export of energy to the UK from Wales will grow. At a time when austerity measures are hitting

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Wales more than elsewhere, including because it has more public servants and more people on benefits, is there a case for Wales to have, instead of cuts, a greater proportion of investment in infrastructure to build growth to get down the deficit? As we make a growing contribution towards the UK pot, there is a case to be made for more investment, whether in freight railway lines or other infrastructure, to help give people the tools to provide growth and jobs.

Michael Fallon: I was in fact coming to exactly that point. Wales will benefit, and to some extent already benefits, from the steps we are taking to ensure the investment in infrastructure that we need. We are committed to providing the certainty that industry wants and to ensuring that the UK, including Wales, is one of the best places in the world to invest in low-carbon electricity generation. Our electricity market reforms are critical to that. As we know, a large proportion of our existing capacity—the equivalent of about 18 large power stations—has to close by the end of the decade. At the same time, we may need as much as double today’s electricity capacity by 2050 to deal with growing demand from the electrification of transport, heating and industry.

To meet our legally binding carbon targets, significant new electricity generating capacity will be needed by 2030, most of which has to come from low-carbon technologies, such as nuclear, renewables and fossil fuels with carbon capture and storage. By 2050, emissions from the power sector must be close to zero. The reforms that we are delivering through the Energy Bill and electricity market reform will be the biggest change to the market since privatisation and will transform the sector.

I am pleased to say that today, as planned, we have published the draft delivery plan that sets out the detail of how the Government will drive investment in low-carbon technology while securing electricity supplies at lower cost to consumers. Electricity market reform is now at the implementation stage in preparation for its introduction next year.

The challenge now is to unlock the investment, and I believe that Wales is well placed to do so. We have already seen success in Wales. Since 2010, my Department has granted consent to five major energy infrastructure projects there, covering a wide range of types of infrastructure, including onshore wind farms, biomass plants, and tidal and gas generation. In total, the projects already given consent alone can provide a generating capacity of about 1.5 GW, which is enough to power more 1.5 million homes. Many more projects are in the pipeline: developers in Wales have registered an interest with the Planning Inspectorate in relation to bringing forward 17 more major projects that all have the potential to lead to significant jobs and investment there, as well as to increasing our energy security and reducing carbon emissions.

Glyn Davies: The one part of the thinking about which I have not so far heard from the Minister is local opinion. There was a recent statement on the impact of local opinion on the Government’s view about smaller wind farms. In mid-Wales, we face a large number of

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very big wind farms. In general, does the Minister feel that local opinion should have a key place in the consideration of larger wind farms in Wales?

Michael Fallon: My hon. Friend knows that I cannot comment on individual applications or on those in his constituency, but the whole intent of our recent statement was to secure a greater degree of involvement for local communities through their being consulted before the submission of applications and having the ability to take into account wider considerations, such as visibility or the visual impact and the cumulative impact of successive applications in one locality. I hope that that will do something to redress the balance between developers and communities.

Nia Griffith: The Minister mentions the large number of projects in the pipeline. Whenever I have asked whether the Department of Energy and Climate Change has any central records of the number of biomass applications, I am always told that only local authorities know about the applications. It concerns me that we may be reaching a situation in which we are no longer able to supply our biomass plants from local sources, which I find acceptable, and that we end up importing from much less acceptable sources, which may be deforesting the world. Can his Department set up a register so that we have some idea about where we are running to in the future, otherwise we may find that we have biomass plants that can be sourced only from unacceptable sources, which would be a bad place to be?

Michael Fallon: That is an important issue, and one that I have been discussing recently with the domestic wood industry, especially the wood panel industry. I am aware that the Scottish Government require of a biomass plant a plan that shows exactly how sustainable the feedstock is likely to be. If I may, I should like to reply to the hon. Lady in writing, after a little more thought.

As I was saying, Wales is now seeing huge investment in its renewable energy infrastructure. Wales already accounts for around 6% of overall UK renewables. Since 2010, £1.3 billion of investment has been announced in renewable generation in Wales, potentially supporting around 2,000 jobs.

Just last week, the Secretary of State visited the site of the Pen-y-Cymoedd wind farm in south Wales, which is set to be the largest onshore wind farm in Wales and England. The announcement from Vattenfall that construction is to commence on the 76 turbines on the site in 2014, with the first power being generated for the National Grid in late 2016, is welcome news. That project alone represents more than £400 million of investment, creating around 300 jobs, and providing power to 140,000 homes. Furthermore, Vattenfall has confirmed that it will also invest £1.8 million every year in community funds for the 25-year life of the wind farm, ensuring wider benefits for local people.

This is also an exciting time for nuclear new build here in the UK. We were delighted to welcome Hitachi to the new nuclear market in Britain last October, with its purchase of Horizon Nuclear Power. Hitachi brings with it significant experience of building reactors and it holds an excellent track record for building on time and to budget. The first site it is planning to develop in the United Kingdom is Wylfa on Anglesey.

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Hitachi is keen to develop its long-standing programme of industrial development in Wales. Horizon held successful supply chain events in Llandudno in May and in Gloucester, which I attended, which attracted some 400 business representatives. Hitachi’s entry to the new nuclear market shows just what a highly attractive proposition new nuclear is and reflects the strength of the Horizon project. I want to assure hon. Members that the Government are firmly committed to ensuring that new nuclear goes ahead in the UK and that all parts of the UK will benefit from it.

Geraint Davies: Will the Minister comment on shale gas in Wales for the future?

Michael Fallon: Yes, I am happy to do so. We are now accelerating the pace of shale gas exploration by putting in place a robust regulatory framework, and ensuring that where shale is hosted by a local community, that local community benefits, just as it benefits from onshore wind farms and as it will do from nuclear stations. The Chancellor has also announced fiscal measures to incentivise the expensive early years of exploration. My right hon. Friend the Secretary of State for Communities and Local Government will be setting out some amended planning guidance so that both developers and local communities that want to consider their applications will be clearer about how the applications are to be handled. We want to make sure that we do not miss out on the potential of shale gas.

Last month, we published the first authoritative estimate of the amount of shale lying underneath the northern basin—the Bowland-Hodder basin covering the northern counties of Lancashire, Cheshire, Yorkshire and so on. We now have a similar study going on in the south of England. Eventually we need to start mapping the resource right across the United Kingdom.

Finally, I can say that I have authorised a new 14th onshore licensing round, which is in preparation at the moment and will commence next year. Again, that should provide opportunities right across the United Kingdom to check and tap the potential of this resource. It is only potential at the moment; we do not yet know whether shale gas is recoverable as cost-effectively and as easily as it is in the United States. We know that the shale here appears to be thicker, so potentially there is a

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lot of gas that could be extracted and that could make a real difference to our economy. We also know that given the increasing volatility of international oil and gas prices, we have to do more to secure our energy supplies here at home by encouraging a stronger mix of energy from different sources, whether it is wind, other renewables, nuclear, other gas or shale gas.

Jessica Morden: The Minister rightly talks about long-term energy projects. In the short term, we have to maximise the capacity of what we have, particularly when demand is high. Will he look at the issue of lack of rail freight for existing power stations?

Michael Fallon: I am certainly prepared to look at that.

In conclusion, with the framework for investment in place, the energy legislation in front of the House and the details of electricity and market reform being published in greater detail and in draft, we now need to get investment flowing. That is the challenge over the coming years. If we can get investment in a new efficient, low-carbon and diverse energy mix, the jobs and growth that we all want to see will follow. Based on the evidence to date, and the points I have been making, I am confident that Wales is up to the challenge. It is already seeing deployment on the ground, and it is well placed to take advantage of the new investment that we need.

Geraint Davies: Will the Minister say a few words about Swansea Lagoon?

Michael Fallon: In further conclusion, let me just say—I am sorry not to be more helpful—that I am aware of the proposal from Tidal Lagoon Power to develop a bay tidal lagoon in Swansea. My officials have met the developers concerned, but because the project is now at the pre-application stage in the consent process of the Planning Act 2008, I am not able to offer from here any particular comment on the merits or otherwise of the proposal, but I look forward to the outcome of the planning process with interest.

4.28 pm

Sitting suspended.

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Surrey County Council and Adoption

4.30 pm

Sir Paul Beresford (Mole Valley) (Con): I am raising the anonymous case of a small group of parents—potentially—who started an adoption procedure with Surrey county council at the same time. I am not happy with the procedure, and nor are the individual set of parents whom I will talk about. I must say at the beginning that I am very supportive of the Government’s moves to speed up and sort out the adoption procedures. Perhaps they ought to be grabbing Surrey county council by the back of the neck and shaking it.

This case—the one I am choosing to talk about—involves a married couple in my constituency. They are professional people, they own their own home in a small village in the constituency and they are near an excellent primary school, which feeds one of the best secondary schools. The mother has become a full-time mum for the two little sisters they have adopted. Put bluntly, after an appalling start in life things are looking good for those two little girls.

The adoptive parents expressed an interest in adopting to Surrey county council at an adoption meeting in November 2010. They submitted a formal application. A meeting was held with a social worker in January 2011. Prior to approval to progress, the couple attended an initial four-day training course in 2011 with seven other couples. So we are talking about eight couples, potentially—this is not a single-couple case.

On the fourth day of the four-day training course, the couple I am talking about were shown details of some children who were available for adoption. However, it soon became apparent that Surrey county council should not have done that, as its procedures had another eight months to run before approval. My constituents—this couple—looked at the list of children’s details in late March 2011, as produced by Surrey county council, and were attracted towards adopting two young sisters. One was aged five, going on six, and the other was aged two, going on three. At that stage, the two little girls had been in care for two years. On that final day of the training course, all the couples were told that Surrey county council would fast-track an application, as we would wish, if a suitable match was identified during the preparation for adoption. However, in my opinion, or at least in the opinion of the couple, Surrey county council seemed incapable of speeding up any progress at all. In fact, looking at the case in retrospect, the council did the opposite.

At the end of the first stage, the couple were assigned a social worker to take them through the preparation stage; that was in late March 2011. They first met their assigned social worker at the start of May 2011—two months’ delay. By early summer, the couple had started to express serious interest in adopting the two little girls, having seen their child permanence reports and later a short DVD of the children. As a result of that, the social worker agreed to start to run the adoption approval process, so as to approve the couple as adopters. It was agreed that the matching panel process would run in parallel. In October 2011, six months later, the couple met the children’s social worker for the first time, and reconfirmed their wish to proceed to adopt these two little girls, so that the processes could continue in

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parallel. At that stage, there seemed to be mutual agreement that, given the girls’ age and the length of time they had spent in care, the process should be moved quickly.

The adoption panel was set for early November 2011—12 months’ delay. The matching panel was expected to take place in late November 2011, but no date was set. The couple were deeply concerned that, at that time, their social worker had still not interviewed the required three referees from the six who had written reports about them as potential adoptive parents. In October 2011, as the distance between the meetings got longer, the social worker realised that she could not complete the work in the time required and the adoption panel meeting was slid back another 10 days.

After 14 separate daytime meetings, each one lasting between two and three hours, the social worker prepared a report and took the potential parents and the report to the panel in late November 2011. Appallingly, the panel decided that there were some basic deficiencies in the report. For example, the social worker was required to interview three referees but she had only interviewed two and, to make matters worse, still presented the report.

The panel therefore felt that it had to defer the case. To make matters even worse, the panel felt that, among other things, the social worker’s report contained too many references to the specific children—the two girls—instead of fictitious ones, which apparently was the normal procedure. Again, that was a Surrey county council problem.

As a result of that, the panel was apparently not confident that the couple were a suitable match, but that was entirely based on the inadequate report, and so we went backwards. As I am sure the Minister will understand, the adoptive couple were slightly upset—to put it mildly—as the panel was supposed to be judging their suitability as generic adopters, but in fact the couple had been led down the road of considering specific individual girls.

Things got worse. First, the social worker went off sick with stress and disappeared for nine months. A week after the social worker went off sick, the couple met the social worker’s manager, who apologised for the inadequate report. I find that somewhat strange, because the manager is ultimately responsible for the report before it is progressed with. However, the manager did not appear to notice that.

The couple were told to drop the match prospects with the two little girls, which was very upsetting. There were three further meetings with the manager, written submissions from the couple and so on. The matter proceeded on, so that the panel decision was brought forward to late January 2012 and was positive.

I find it extraordinary, but at that stage the couple had difficulty persuading the manager working with them that it was appropriate for them to adopt siblings. The couple were assigned a new social worker and told to look for a new potential match. In March 2012, they discovered from other potential adopters that the two little girls—

4.36 pm

Sitting suspended for a Division in the House.

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4.43 pm

On resuming—

Hugh Bayley (in the Chair): We have been absent for seven minutes, so the sitting will continue until 5.7 pm.

Sir Paul Beresford: I will scurry, Mr Bayley.

In March 2012, the adoptive couple discovered that their potential adoptees—the two little girls—were still on the list for adoption. They had been offered to other potential adopters but not accepted, for some reason. On that understanding, the couple approached the manager. They were told by the manager, once again, to forget the match and move on, even though Surrey county council had no alternative options for the children. Thanks to delays, at this stage the eldest girl was now nearly seven. At no time during the process were my constituents ever informed why they may or may not have been an unsuitable match.

In April 2012, my constituents ran out of patience with Surrey county council. They discovered, through Adoption UK, that there was an adoption exchange day in London, where a large number of adoptive agencies were present with the profiles of children for adoption. They discovered that it would be helpful to bring along a short biography to give out. This they prepared themselves, only to discover on arrival at the event that it should have been prepared with the assistance of Surrey county council. They still attended. Different Surrey county council staff were present, to whom they explained this long difficulty. They were assured that the staff were somewhat appalled.

Fortunately, on a Friday evening in April, the same manager—the one who had been there all along and who originally took them through the adoption panel—rang to say that she had had further discussions with colleagues. She said that Surrey county council now supported placing the two youngsters with them. The next matching panel took place in June 2012, which was a further delay of two months. Introductions were to commence in early July, but there was another two-week delay. To save the Minister the arithmetic, that was some 16 months after the first possible approach, after having first seen the details of the little girls. The two sisters latterly moved in with the adoptive parents, because of success, in August 2012. By this stage, the two girls had been in care for more than three years and had lived with two sets of foster carers.

Bad though that is, there is more. First, there was a shambolic lack of clarity over the contact arrangements with the birth parents. In broad summary, there were two differing opinions from two social workers. One social worker wanted up to six contacts a year for the birth parents with the girls, the other wanted no contact. Decisions were made, undone and remade. Confusion and upset reigned for the wee girls, for the adopting parents and for the birth mother. The final decision was no contact, which was backed by the court but opposed by the birth mother.

Surrey social workers decided at this stage that they needed to support the new combined family once the children had moved in with their adoptive parents-to-be. In September, the two girls were about to start at their new school. The elder of the sisters was going through a difficult settling-in stage. In its wisdom, children’s services

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decided that the mother would need more help, which was accepted. A social worker was allocated to the new family on a weekly basis, after school. She was, I understand, young and clearly inexperienced. Whatever advice was sought, or when changes were suggested in the strategy for caring for the children, she had to rush back to the manager, again, and return with the advice the following week. This support was so pathetic and inadequate that, by mutual consent, these support arrangements were shelved.

In addition to this inadequate support, the adoptive mother received visits every three weeks from the children’s social worker and from the parents’ own social worker—not together, but separately. The two social workers did not agree with each other’s approach. This, of course, made life challenging and every visit from the children’s social worker resulted in a period of unsettled behaviour from the children, who blamed the adoptive mother for the move. Fortunately, Surrey did something right. It bought in SafeBase, an external specialist organisation, which supported and helped the parents.

In January 2013, when the children were quite settled—they had got through their first Christmas with their new parents and the adoption process was about to begin—for some unknown reason, the children’s social worker decided that she needed to start visiting once a week to work on the children’s life story books. Why she needed to do this in conjunction, and in close proximity, with the children, I cannot fathom, and the timing was bad. Of course, predictably, that weekly visit, including pulling information together for the life story, had the immediate effect of unsettling the children yet again, as the social worker raked up their past on a weekly basis. That persisted for more than a month, until the social worker was signed off sick with a broken wrist—so they could not inflict other visits. The frequency of visits reduced and a semblance of normality started to return, and there was progress through to what one would consider proper normality.

To add to the problems, the children’s social worker delayed the commencement of the court process for the adoption by almost four weeks, by failing to provide the parents with the address of the birth parents. This was only resolved by going back to the manager again. To further aggravate the situation, the first court hearing was adjourned because the judge was not satisfied that adequate efforts had been made by Surrey county council to contact the birth parents, and he delayed the adoption by another six weeks.

In the middle of all that, the children were told about the contradiction of the contact with their birth parents. That was done by the children’s social worker in March 2013. I understand that it went through well.

The children are now adopted and in the home. I have met them, although the children do not realise it. It is understandable that Surrey county council children’s services department was concerned about how the parents would cope with the demands, but it seemed to make it worse at every stage. The adoption is now complete, and I should like the procedures that Surrey county council went through to be looked at, preferably independently, by somebody outside, if the Minister—if he acts—can persuade Surrey county council of that.

I have had dealings with Surrey county council’s social services in the past, and it was like banging my head on a brick wall. It shelters behind data protection,

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and progress is zero. A group of potential parents came together in November 2010, and I hope they can have their cases briefly looked at as a paper exercise and that the individual parents can then be interviewed, because if social services continue as they have been in Surrey, we are doomed when it comes to helping those children.

The children are now in what I know is a happy home. I wish them all the very best, but I must warn the parents, as a parent with adult children: just wait till those wee girls are teenagers. Then the fun starts.

4.50 pm

The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson): It is a pleasure to serve under your chairmanship, Mr Bayley. I congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on securing this important debate. I know from his contributions to the Commons stages of the Children and Families Bill that he shares my determination to speed up and improve the adoption system from start to finish.

It is a shame that this debate has come about because of the catalogue of distressing experiences that my hon. Friend’s constituents have had with Surrey’s adoption service. It is pleasing to hear that, despite those problems, his constituents have persevered and are now the proud parents of two little girls who now have the stable, loving family home that they so desperately needed. I am sure that he will understand that I am unable to comment or intervene on an individual case—such cases are always best dealt with locally, where the circumstances are well known. I can assure him, however, that if his constituents want to provide my officials with permission, I am more than happy to write to the chief executive of Surrey county council to inquire about whether the director of children’s services is aware of their concerns and has any plans to consider them formally in the way that he suggests.

I can very much relate to the many challenges and joys of adoption and the care system that my hon. Friend describes. As he knows, I have two adoptive brothers who are among the more than 80 children, many from incredibly difficult backgrounds, that my family have fostered over 30 years. That clearly was not always easy, but I came to treasure seeing how love, stability and routine helped my brothers lay down roots, grow and eventually thrive. I know first hand just how life changing adoption can be.

We know that the permanency of adoption provides vulnerable children with one of the strongest foundations for a brighter future, so it is right that we do all that we can to remove the barriers and blockages that keep children in need and prospective parents apart.

As my hon. Friend’s constituents found, the existing system is clearly far too often failing to deliver for many people. Chronic delays mean that children in care wait on average two years—in the worst cases, three years—to be adopted, and some children are never adopted. Currently, just over 4,500 children are waiting to move in with their new family, and we need around 2,000 more adopters than are currently approved to meet that demand, with an extra 700 adopters needed each year to meet future demand, which is a 25% growth in the system’s capacity.

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We need not only more adopters but more adopters such as his constituents who can welcome older children and pairs or groups of siblings into their family. There is no doubt that we face a significant challenge on adopter recruitment.

The hopes of children waiting for a family are draining away all the time. Evidence shows that a child’s chances of adoption are reduced by almost 20% for every year that they spend in care. I am determined to do whatever it takes to change that situation, which is why we are taking action on a number of fronts to speed up and simplify the adoption system. I assure my hon. Friend that that includes significant measures to drive up performance locally.

We have made £150 million available to councils to boost adoption rates, and through adoption scorecards we have strengthened accountability by publishing information on how long it takes each local authority to place children for adoption. Nationally, some local authorities are doing excellent work on adoption, which we must recognise. That work is reflected in the 12% rise in adoptions last year, compared with the year before. Although that is very welcome, performance across the country is still too patchy, which is why we will continue to monitor closely local authorities, including Surrey, through the adoption scorecard and other available data. Where progress gives cause for concern, we will not hesitate to take the appropriate and necessary action.

As well as getting local authorities to raise their game on adoption, there is also increased support for prospective adopters, backed up by the excellent training available from adoption agencies. When I talk to adopters and prospective adopters, one of the many questions that they have, as well as those on the assessment process, is on what happens next. Where does the support come from? What role will the local authority or voluntary adoption agency play in ensuring that the adoption will be successful? The worst thing that can happen to the child is that the adoption is not successful because the right support was not provided at the right time. We need to ensure that we work closely with local authorities, voluntary adoption agencies and other national adoption organisations, so that we can make really good progress by implementing the adoption action plan, by creating the adoption gateway, by reforming regulations to create more streamlined approval processes and by publishing transparent scorecard data on timeliness, so not only officials and politicians but the public and prospective adopters can see the performance of local authorities and so that others can also have a chance to understand how good or bad the performance of their local authority is.

Sir Paul Beresford: I hear what the Minister is saying, but on paper and from what he is saying, Surrey county council would have appeared to have put in the support and so on. The difficulty is that, looking at it from the outside, it is virtually impossible to tell that that help is a hindrance.

Mr Timpson: My hon. Friend makes a key point about the quality of the support that is available. One of the areas on which we are putting more focus is the quality of social work training, and therefore on the standard and quality of social workers who work with families right from the very start, so that they get a

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better, higher and more consistent level of support, which we know can help to ensure that a placement is successful.

One of the changes that will help push that through is the new inspection regime that Ofsted is introducing, which will bind together both child protection and looked-after children, including adoption, so that there is a much brighter light and a much deeper look at what is happening within children’s services. We owe it to the children whose best future we have decided lies in adoption to provide them with the best opportunity at the earliest opportunity to make those all important attachments with their new family and to ensure that any delay is flushed out of the system wherever possible.

We will continue to develop the adoption scorecards and ensure that they are contextualised in a way that really reflects performance within local authorities. We have also introduced the First4Adoption phone and online service and the adoption passport, so that potential adopters have much better information and support. They do not have to go to the local authority to get that information and support, because it is provided in one place by many people who have personal experience of adoption and who are therefore in a good position to provide a better understanding of what prospective adopters are letting themselves in for and the great benefits that adoption can bring to them and, we hope, their family in the future.

Additionally, we have the new, fast, two-stage adopter approval process that started on 1 July. In most cases, prospective adopters can expect to wait no more than six months to be approved from when they register their interest. I was recently told of a couple who started the process in about October 2012, and twin babies were placed with them on an adoptive placement by February 2013. That is a fantastic example of how we can speed up the process but still ensure that we get a good match and a good-quality placement.

Sir Paul Beresford: Surrey county council seemed to take the right approach to begin with. It was a twin-track approach of sorting out the parents and bringing in the children together. Then, of course, it flew apart. Is that what the Minister means by a twin-track approach?

Mr Timpson: What I am talking about relates to the adopter approval process. The twin-track approach is sometimes called concurrent planning. In the Bill, we are trying to promote fostering for adoption, so that rather than waiting until the final decision is made about whether the birth family is capable of caring for a child in the long term, moves can start to be made to establish the child in the placement most likely to be their permanent one. The aim is to avoid situations in which a child planned for adoption is still within the care system, moving from one foster placement to another.

The beauty of fostering for adoption, which some authorities, such as East Sussex, already carry out, is that the risk falls fairly and squarely on the prospective adopters. There is no risk to the child, who can be placed much earlier with their prospective adopters, so that the family can start to create the bonds that will stabilise their future hugely and avoid unnecessary delay, which we know only causes more problems rather than more solutions.

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The two-stage process involves the initial two-month preparation period, during which the prospective adopters gather the information that they need to understand adoption in greater detail and the relevant checks and references are carried out. Those who successfully complete it then go on to the second stage—a more detailed and more appropriately focused four-month assessment. The beauty, as I said, is that it focuses on the essentials to ensure that prospective adopters can give what is necessary for a child to be placed with them successfully.

It is also worth noting that, since 1 July, a fast-track approval process has been introduced for those who have already adopted and fostered and are looking to adopt again. They do not need to start the whole process again, as they currently do; they can be fast-tracked, which will help reduce delay. The approach will dramatically reduce the amount of time that children must wait before they can move into their permanent home and their number of temporary placements. Stability is a key factor of a successful outcome for a child in care moving on to a permanent placement. The more we can reduce the number of placements, the more likely the child will have a successful childhood.

Adopters will be able to take a much more active role in identifying children through the measures in the Bill to allow approved prospective adopters to access the adoption register directly, which they have not been able to do before now. Again, we expect that that will drive up speed and the number of matches made, as well as increasing the pool of potential matches available directly to prospective adopters. We will pilot the new register in a number of local authorities before deciding whether it should be rolled out nationally, but we believe that that is the right approach, and it is supported by many excellent adoption charities.

We will change contact arrangements through the Bill, so that they are demonstrably more in the best interests of the child than anybody else’s. There have been dramatic reductions in delays since we introduced the new clause on the 26-week time limit for care proceedings. The time has gone from an average of 57 weeks to about 40 weeks, and it is falling fast. That will also help to solve many of the problems identified by my hon. Friend and experienced by his constituents.

As I have outlined, a great deal of work is under way to overhaul the adoption system fundamentally and tackle head-on many of the issues that my hon. Friend rightly raised, but we need to go further and faster, especially with regard to adopter recruitment. The backlog of 4,500 children in care waiting to be adopted needs to fall rapidly, and the system needs to sustain the ability to cope with increased future demand for prospective adopters. We know from the recent research carried out that hundreds of thousands of people out there would love the opportunity to adopt and consider it an aspect of their lives that they would like the opportunity to fulfil.

We need to grab that opportunity and make people feel welcome when they approach a local authority or voluntary adoption agency, so that they feel that the whole system is not set against them but there to support and encourage them and provide them with the advice and guidance that they need to feel equipped and confident when the great day comes and that child or those children end up in the bosom of their family. We will take whatever steps are necessary to ensure that we

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have a system that is deserved by our most vulnerable children, as well as by the thousands of generous, loving people like my hon. Friend’s constituents who have gone to such great lengths to open up their homes and hearts. I join him in wishing his constituents and their two little girls the very best in future.

We must always be alive to the fact that the system that we have created is never perfect, but we do know that for too long the adoption system has failed to deliver for too many children. That is why it remains a high priority not just for me or the Secretary of State, who has his own personal experience of adoption, but

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for the Prime Minister, who from the start of this Government has championed adoption as one of the best ways to give children, some of them with the most difficult start in life, the best possible chance of the brightest future. It is therefore incumbent on us all to ensure that we achieve that, and I believe that the work that we are doing will go a long way to address many of the concerns that my hon. Friend’s constituents have rightly raised and that he raised on their behalf. We will not take our foot off the gas.

5.7 pm

Sitting adjourned without Question put (Standing Order No. 10(13)).