Therefore, foreign and Commonwealth personnel in the forces are eligible to naturalise as British citizens after they have served for five years. Alternatively, under
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the immigration rules, they might qualify for settlement—indefinite leave to remain—on discharge, after four years’ service. They cannot obtain settlement in service because someone who holds indefinite leave to remain is subject to immigration control. If the person opts to be discharged and settles in the UK after four years’ service, they can apply to naturalise after they have held ILTR for one year, thus fulfilling the five-year residence requirement and the requirement not to have a time limit attached to their stay.
My hon. Friend the Member for Gainsborough referred to family members. Partners of members of the forces can qualify for naturalisation in their own right or as the spouse of someone naturalised. They have to meet the same requirements of residence and good character, but they are subject to immigration control, so they cannot meet the requirement not to have a time limit to their stay until they have obtained settlement, and it takes the partner of a service person four or five years to obtain settlement.
Sir Edward Leigh: What does “settlement” mean? Say someone is married to a member of the armed forces and has been overseas most of the time. Their partner’s clock is ticking, but what is happening to their clock? Do they have to come back and gain settlement? I am sorry, but I do not quite understand how it works.
Mr Harper: The rules operate differently for the spouse. When serving, the service person is not subject to any immigration restrictions, so they could get naturalisation more quickly. Once they have been naturalised, that opens up some opportunities for their family member.
New section 4C of the 1981 Act, introduced in January 2010, enables a child born to a member of the armed forces serving overseas on an operational posting who would have been born in the UK but for that posting to register as a British citizen on application. Children may also register as British citizens if a parent is naturalised or settles in the UK.
The hon. Member for Kingston upon Hull North referred to a specific case. Obviously, I would not go into a specific case in the House, and I do not have all the details to hand either. As a general rule, there is provision in the immigration system, outside the immigration rules, for people to make an application for leave to remain on compassionate grounds. The Secretary of State and I have the ability to allow that. Clearly, we would not set out the details, but look at the application in the round, but we can grant that if the case is sufficiently compelling.
On the hon. Lady’s general point about testing the Secretary of State’s discretion, all the Secretary of State’s decisions in such matters are of course subject to judicial review. Although we do not use the powers frequently—that would drive a coach and horses through the rules—even during my time as Minister for Immigration we have allowed people to visit the United Kingdom on compassionate grounds when they would not normally have met the rules.
It is helpful to be able to operate with such discretion, which is of course the purpose of the Bill. The requirement for an applicant to have been in the United Kingdom at the start of the five-year period is unwaivable, and the
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Secretary of State cannot waive it however compelling the case. That is the benefit of putting the Bill on the statute book.
It is worth saying that there is already a provision, of which Members may not be aware, to waive that requirement in Crown service cases, but it applies only to those who are still in service and overseas when they apply. The Bill will enable the requirement to be waived for members and former members of the armed forces who have been discharged and have then applied for naturalisation or who have returned to the UK.
Mr Chope: My hon. Friend might be going on to say this, but there is already a provision on the statute book, in section 39 of the Borders, Citizenship and Immigration Act 2009, that is identical to the provisions of the Bill. Why not use the legislation that is already on the statute book, rather than re-legislating?
Mr Harper: My hon. Friend appears to be working seamlessly in tandem with me, because if I turn over the page of my brief, I can see that I was about to refer to the 2009 Act. His general point is good. I am not someone who wants to legislate when provisions already exist in primary legislation. In general, more legislation does not necessarily make the world better. He has a formidable reputation for ensuring that all provisions brought before the House are properly scrutinised and challenged to make sure that they are necessary.
The reason we were not able to make the provision is that there was a provision in the 2009 Act to which my hon. Friend refers. However, it was all bound up with the earned citizenship measures that the previous Government wanted to introduce, and it is not possible, I am advised by lawyers, to implement the armed forces provisions independently of the earned citizenship measures because they contain references to the provisions that are not being implemented. That is why it was necessary to implement the provisions separately.
We announced in July 2010 that we would not be proceeding with the earned citizenship provisions in the Borders, Citizenship and Immigration Act 2009, because we felt that the previous Government’s provisions under those regimes were considerably more complicated and bureaucratic than the current arrangements and would have imposed unwelcome administrative and bureaucratic costs on both central and local government and voluntary sector partners. Both parties represented in the coalition Government voiced concerns about those measures during their parliamentary passage.
So although there are measures on the statute book, they are bound up with measures that we do not wish to commence, and they cannot be commenced separately. I think I can give my hon. Friend the Member for Christchurch the reassurance that he seeks, which is that this provision is necessary. There is not a current provision on the statute book that could be commenced by itself which would enable us to achieve the aim. Although I know that he is normally and rightly sceptical of legislating, I can assure him, given that he and others have welcomed the purpose of the Bill, that it is necessary to do so in the Bill. There is no existing provision on the statute book that we could use. I hope he will find that reassuring.
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My hon. Friend the Member for West Worcestershire referred to the British overseas territories. I will not repeat the list that she read out, but she may be interested in one fact. She mentioned the Cayman Islands. It may interest the House to know that as of 6 September the Cayman Islands has a new governor, Helen Kilpatrick. The only reason why I mention that is that until she was governor of the Cayman Islands, she was the director general of finance and corporate services at the Home Office and is now resplendent, having been appointed by Her Majesty the Queen from 6 September, as governor of the Cayman Islands. It is not relevant to the Bill, but as I am a Minister in the Home Office and worked closely with Helen Kilpatrick, and as my hon. Friend mentioned the Cayman Islands, I thought there was sufficient reason to mention it in the House. But I digress only briefly.
My hon. Friend spoke about the British overseas territories and whether somebody living in an overseas territory could naturalise under the provisions of the Bill. I mentioned in response to the question from my hon. Friend the Member for Gainsborough in my list of conditions that normally the person is supposed to want to settle and live in the United Kingdom, so if someone was settling in an overseas territory, they would not normally be able to naturalise under section 6(1) of the British Nationality Act because they would not meet the requirement of intending to make their principal home in the United Kingdom. They could qualify if they were intending to continue in Crown service. For example, if they still worked for the Crown and were based overseas in an overseas territory, that would apply.
The appropriate route for somebody in that circumstance—a former member of the armed forces settled in an overseas territory—would be for them to apply for British overseas territory citizenship. They would then need to meet the requirements on the knowledge and good character test.
Harriett Baldwin: I thank the Minister for giving way and for beginning to answer some of the questions that I raised about the territorial extent of the Bill. Does he have any plans to amend the territorial extent of the Bill in Committee, in the light of the fact that there seems to be some ambiguity about whether someone may reside in one of those other territories at the point at which they apply for British citizenship?
Mr Harper: The question is not so much where the person physically is when they apply, but what their intentions are. One of the requirements in the Act, as I read out, is that somebody is supposed to intend to continue to live in the United Kingdom. They are supposed to have residence in the United Kingdom or continue in Crown service. If they intend to continue to live in the overseas territory, they ought to apply for British overseas territory citizenship, rather than British citizenship, as in the Bill.
Harriett Baldwin: I know that I am being obtuse, but I do not understand what the purpose is, then, of having all the overseas and dependent territories in the territorial extent of the Bill.
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Mr Harper: I would never accuse my hon. Friend of being obtuse. She and I had a great exchange on her previous private Member’s Bill, as she mentioned, when I occupied a different ministerial role. Of course, it is not just the overseas territories, because the Bill states that the Act will extend to England and Wales, Scotland, Northern Ireland, the Channel Islands, the Isle of Man and the British overseas territories.
On my hon. Friend’s specific question about why it is necessary to refer to the overseas territories, I will reflect on that and, I hope, come back to it at the end of my remarks. Her specific point was about where someone resides. If someone intended to live in an overseas territory, they would be applying for British overseas territory citizenship, rather than what we have been discussing today.
My hon. Friend also mentioned the requirement to have a sufficient level of English and asked whether that requirement can be waived. The Secretary of State can waive the knowledge-of-life and language requirements for citizenship only in very limited circumstances, which are set out. That means someone who is under 18 or over 65 or someone with a specific physical or mental condition that prevents them from being able to fulfil the requirement. My view is that someone who has served for five years in our armed forces will have no problem with being able to speak English. I do not think that it is unreasonable to expect them to do so.
Harriett Baldwin: What I am really trying to clarify is that language acquisition takes place in a specific part of the brain, in the cerebral cortex, that can be damaged later in life, perhaps as the result of a stroke, so someone might have had a good command of English during their period of service but lost that later. Would the Secretary of State have the discretion to waive the requirement in those circumstances?
Mr Harper: The Secretary of State has the ability to waive the requirement if someone’s physical or mental condition is such that they cannot meet it. That would of course mean somebody who has had the particular medical circumstances my hon. Friend raises, and it would of course cover a former member of the armed forces who had suffered an injury in service that had damaged their ability to communicate. The Secretary of State will have the ability to waive that requirement in those circumstances. Assuming that someone does not suffer from that sort of disability, we would expect them to be able to speak English, and I do not think that would be a problem for someone who had served in our armed forces for a period.
My hon. Friends the Members for West Worcestershire and for Gainsborough referred to the extent to which applying for naturalisation was automatic. It is not automatic; it is something that is considered. There are requirements to be met. Some of them are tick-box requirements, such as how long they have resided, but some are more judgment-related, such as those about good character. For those, the Secretary of State has to apply a considerable amount of judgment.
My hon. Friend the Member for West Worcestershire referred to the new citizenship test that we have introduced, which is much more focused on understanding Britain, our history and culture and, in particular, our democratic values and institutions. I will probably make her blush,
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but she mentioned that she scored 100% in the test, and the pass mark is 75%, so she is well up there. She referred to how the statistics might have changed. I do not have the precise figures, but the pass rate under the old test was around 75%. It was getting higher as the tests became older and the question bank became out of date and the number of questions reduced. Now that we have introduced the new test, the pass rate has fallen a little, down to about 60%, so it is still quite a challenge. But citizenship is something that people should have to work for. She brandished a book earlier, and all the information required for the test is available. We do not expect people to know it all without putting some study in, but the information is all available.
Harriett Baldwin: Is the Minister saying that although the pass mark for both tests has remained at 75%, about 75% of people got through on the previous version of the test but the more recent data suggest that the pass rate has dropped to between 60% and 65%?
Mr Harper: My hon. Friend is spot on.
I have now been inspired so let me answer my hon. Friend’s question about the territorial extent of the Bill. Because the Bill amends the British Nationality Act, we were keen to make the territorial extent the same. Because the BNA has provisions dealing with British overseas citizenship, it extends to the British overseas territories. If the extent of the amending Act were different, that could cause confusion and doubt in a case in which the overseas territories were involved. The amending Act therefore needs to have the same territorial extent as the Act that we are amending.
Mr Harper: I had hoped that that was a good explanation.
Harriett Baldwin: I thank the Minister for his excellent explanation. It answers the question I asked my hon. Friend the Member for Gainsborough (Sir Edward Leigh) about the territorial extent of the 1981 Act. However, it remains for me to ask the Minister whether, because this is a separate piece of legislation, it could have a narrower territorial extent in order to address some of the points I raised about the possibility that someone could not even live in the UK and still acquire British citizenship.
Mr Harper: I heard my hon. Friend ask that question of my hon. Friend the Member for Gainsborough and I think that he disabused us of our expectation that he was supposed to have followed all the detail when he reminded us that he was not in the House in 1981 when the Act was passed. Whether the original oversight was, to use his phrase, cock-up or conspiracy, I know not. I was only 11 when the Bill went through the House. I fear that I did not follow parliamentary proceedings very closely when I was 11—perhaps that is a terrible admission—and so I did not follow its passage very closely either. I suspect that he is right and it was more cock-up than conspiracy.
When I was setting out the details on family circumstances, my hon. Friend the Member for Gainsborough asked whether, to use his phrase, the
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clock was ticking. Family members of armed forces personnel are not exempt from immigration control, but, provided they have appropriate leave under the immigration rules, the time they spend with their armed forces sponsor, either in the UK or when they are on accompanied service, is time they can count towards naturalisation. They need to meet the residency requirements, but, as for service personnel, the Secretary of State has the discretion to waive and overlook those requirements if the absence from the UK was as a result of accompanying a person on service overseas. I hope that that is helpful and answers my hon. Friend. He is nodding, which suggests that that is the case.
The hon. Member for Kingston upon Hull North asked about medical discharge. For settlement applications, the requirement for four years’ service can be waived if an illness or injury is attributable to service and is sustained in an operational theatre. If not, a number of factors will be considered, including the severity of the injury, length of service, the prognosis for recovery, and the applicant’s ability to support himself or herself. We may give limited leave where the applicant does not qualify for settlement but needs a period of recovery before they leave the United Kingdom. A member of the armed forces who is granted settlement following medical discharge will be able to apply for citizenship after 12 months. I do not know whether the specific case that the hon. Lady mentioned relates to one of her constituents. If so, and she wants to write to me to raise particular issues, I will obviously be happy to look into them and respond accordingly.
I shall return to the remarks I intended to make—I have not made a great deal of progress because I have dealt with a number of questions. I support what my hon. Friend the Member for Woking said in introducing the Bill. The Government agree that it is wrong that a member of our armed forces should have to wait longer to gain citizenship just because they happened to be posted overseas at the relevant time. The service charities have told us that, and it was recognised as a priority commitment under the armed forces covenant. Once implemented, the Bill will enable us to overlook the requirement to be in the UK on day one of the qualifying period for naturalisation in the same way that we overlook the requirement to have resided in the UK.
My hon. Friend the Member for Gainsborough or my hon. Friend the Member for Christchurch—I forget which, because they were sitting next to each other and both raised a number of points—asked whether the Bill will be retrospective. The Bill will not be retrospective in the sense that it will go back and alter anyone’s existing naturalisation status. However, there is a retrospective element in the sense that the Bill will look back at what happened to applications five years ago and where people were. When the Bill is enacted, not being in the UK at the beginning of the five-year period will cease to be a disadvantage. To that extent, the Bill will be retrospective, but it will not alter the position of someone who has gone through the process of making an application.
When the Bill becomes law—I hope it will—someone who made a failed application or who held off making an application and had to wait for a longer period because they did not meet the requirement will be in a
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position to make an application under the new rules. If the other conditions are met, the Secretary of State will be in a position to overlook the requirement to have been in the UK at the beginning of the process. The Bill will therefore benefit people who are not currently serving but who have served previously, and that will be welcome.
Mr Chope: I raised the issue of retrospection. As a result of the retrospective nature of the Bill, how many people will be eligible who would not otherwise have been eligible?
Mr Harper: It is difficult to be precise, because we do not know how many foreign and Commonwealth members of the armed forces would necessarily want to become British citizens. We estimate—that word has been used previously—that 100 to 200 members of the armed forces each year could benefit from the Bill. That estimate is based on the number of people who seek naturalisation and the number of those who could benefit. That is the order of magnitude. It is not a huge number, but, as my hon. Friend the Member for Woking said, that relatively small number of people have served our country. In the past decade, many of them have probably served our country in an operational theatre on not just one occasion, but on several occasions.
Mr Harper: As it is my hon. Friend’s Bill, I will take his intervention first before listening to the response of my hon. Friend the Member for Christchurch.
Jonathan Lord: Perhaps my intervention will pre-empt a further one. My hon. Friend the Member for Christchurch (Mr Chope) is interested in, and perhaps even concerned about, the retrospective element of the Bill. However, I should point out to him that, by the Bill’s nature, the time elapsed will mean that the people affected— whether they live in the UK, are in the armed services or are in Crown service and wish to naturalise as British citizens and live in the UK—will already have qualified. In that sense, there are no great numbers waiting for any retrospective aspect of the Bill. They will already qualify. I hope that that point is helpful.
Mr Harper: It is helpful. Before I give way to my hon. Friend the Member for Christchurch, it is worth saying that the disadvantage suffered by members of the armed forces under the existing legal position did not mean that they could not seek naturalisation. The disadvantage was that they had to wait longer than someone who was not serving overseas.
To the extent that the disadvantage they suffered was a delay in seeking naturalisation, my hon. Friend is right that the people who suffered from that disadvantage in the past will almost certainly have been in a position to seek naturalisation since.
Mr Chope:
My concern was about eligibility: I did not ask how many people would take advantage of the Bill. I wanted to know how many people would legally be eligible. That brings us back to the big national debate about how many people are eligible to come here
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from Bulgaria and Romania to work, compared with the number of people who will come. How many will be eligible as a result of the retrospection?
Mr Harper: The difficulty with answering that question is that, technically, everyone who is a foreign or Commonwealth member of the armed forces could potentially, depending on their circumstances, be eligible. The problem is that the provision will make a difference only if five years before the point at which someone makes an application for naturalisation they were not in the UK because of their service. It would be impossible to go through everyone’s record of service and do that calculation, because we do not know how many will apply for naturalisation or how many would have been delayed in seeking naturalisation because of where they were five years before making the application.
We think that the number who will not have to suffer a delay is in the order of 100 to 200, and that is based on the fact that most foreign and Commonwealth personnel do not have this problem. Veterans Aid talked of “many cases”, but that is tens and hundreds, rather than thousands. It also said that the Bill would help “quite a few” of their clients, and our estimate of 100 to 200 is based on our knowledge of the process and on talking to those service charities that talk to people who have fallen foul of the existing provision. It is our combined intelligence that enables us to say that it is around 100 or 200. That is the kind of number that we are thinking about. Those who are concerned about the numbers need not worry that the Bill will extend to thousands of people. A relatively small number of people will be affected, but it is important to make the change for the benefit of those people who have served their country. In the last decade, many of those people have served not only in the armed forces generally, but in an active operational theatre, so it is important that the House makes sure that they are not disadvantaged.
My hon. Friend the Member for Christchurch also wanted some clarification of the MOD’s general position on the number of foreign and Commonwealth service personnel. This is largely an issue for the Army, rather than the other two branches. The hon. Member for Kingston upon Hull North also referred to the numbers. In a written statement on 11 July—relatively recently—made by the Minister of State, Ministry of Defence, my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois), the MOD said that it would now be enforcing the five-year UK residence requirement when recruiting Commonwealth personnel. The residency rules already exist for Commonwealth recruits to the regular armed forces, but since 1998 they have been waived. My right hon. Friend informed the House that from 11 July those residency rules will be more strictly enforced, which means that applicants to the armed forces will have to demonstrate that they have lived in the UK for five years lawfully—with leave to remain. That requirement will not affect Gurkhas, because they are recruited only in Nepal under separate arrangements agreed with their Government. If my hon. Friend wants more detail, he can look at the statement made by my right hon. Friend the Minister of State.
Without wishing to be too slopey-shouldered about it, if my hon. Friend the Member for Christchurch has detailed questions about the attitude of the Ministry of Defence and recruitment processes and so on, to which
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I think he alluded, I suggest he speak to my right hon. Friend the Minister for the Armed Forces. I do not think that the Home Office wants to start trespassing on those requirements, although it is worth putting it on the record that as a result of the work we have done on the covenant, officials and Ministers in my Department, the Home Office and the Ministry of Defence have worked very closely to ensure that the system does not disadvantage anyone. I know that that has been welcomed by members of service charities, who have seen an improvement in how we deal with service personnel, their families and former personnel when they go through immigration and naturalisation stages.
This is probably a good time, as I move towards the end of my remarks, to say that the Home Office takes its responsibilities under the armed forces covenant very seriously. In addition to this proposed legislative measure, we have made good progress against a number of our other commitments. We introduced a new process earlier this year, where service leavers could obtain settlement on—
Madam Deputy Speaker (Dawn Primarolo): Order. I would just say to the Minister that of course the covenant provides important context, but only where it is relevant to the Bill. I hope he is not now going to go into a rather lengthy set of comments about other items in the covenant. I hope he will stick to the Bill, because time is ticking on.
Mr Harper: I am conscious of that, Madam Deputy Speaker. I do not have a lengthy list. It is a short list and the reason for raising it is that it is relevant to the Bill. For example, we have made provision whereby service leavers can obtain settlement on the day of discharge. Of course, settlement for some is the precursor to seeking naturalisation. That is important, because there is not then a gap. Several hon. Members referred to making sure that there is no gap, so that personnel have settled status and no problem in seeking support from the Government or elsewhere.
I will not, Madam Deputy Speaker, test your patience by reading out the list, but I would like to draw to the attention of the House the new set of armed forces rules that will come into force in December. You will be pleased to know, Madam Deputy Speaker, that I laid out the details in a written ministerial statement on 4 July, to which I draw the attention of hon. Members on both sides of the House who are interested in the subject. The new rules will address a number of areas that have been problematic in the past, and I hope that that is helpful.
I will not refer to every paper in my sheaf, but I want to refer to a couple of important questions that came up in the debate. We take the criminality or good character provisions seriously, but we have made a change, which was referred to by at least one Member. Any offences that are offences in service law but not in normal criminal law will no longer be treated in a way that is not subject to judgment. There were a number of cases where it was felt that service personnel who had had a conviction under military law that would not have had the same level of seriousness in civilian criminal law had suffered, and that we had had no ability to judge their case in the round, based on their service. We do, of course, expect the highest standards from our armed forces and apply the same standards as those for civilians.
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Non-criminal convictions or disciplinary offences are considered when good character is considered, but there is no automatic factor in ruling out somebody. A number of hon. Members referred to that issue, so I thought it was right to deal with it.
A couple of Members referred to what was encapsulated by the definition of “the armed forces”. The definition is the same as that used in the Armed Forces Act and, for the avoidance of doubt, applies to those who serve in our reserve forces, to which several Members have referred.
My hon. Friend the Member for Stourbridge gave a wide-ranging speech, in which she referred to some of the service charities and the points they have made about the service they received from what was the UK Border Agency. It is worth putting it on the record that the splitting of the UK Border Agency and the creation of UK Visas and Immigration, which is the relevant part of the Home Office that deals with naturalisation applications, means that we are focused on delivering better customer service. Some of the changes we announced in the written statement mean that we will be better able to look at applications from the armed forces, which will be made on a special, separate application form, to ensure that we can deliver a settlement on the day of discharge.
Mr Chope: I think the Minister is nearing the end of his remarks, but before he does, can he address my question about why this issue cannot be dealt with in the forthcoming immigration Bill? Doing so would enable us to consider, for example, the case that I raised of a constituent who has been out in Russia for a long time, because she has been married to a British citizen living out there, looking after their children. She has been unable to apply for naturalisation because she has not been living in the UK.
Mr Harper: Without tempting Madam Deputy Speaker to chastise me, what I would say is that if my hon. Friend writes to me, I will look at the details. At the end of my remarks, I will set out briefly why the immigration Bill would not be the right place to deal with this issue, but I will not do so at any length.
Let me finish what I was saying in response to the point that my hon. Friend the Member for Stourbridge raised. I hope that former members of the armed forces and the service charities they deal with will notice—indeed, I hope they have noticed—an improved level of customer service from UK Visas and Immigration. That is certainly something that the Home Office wants to achieve, and I hope we will be able to deliver that.
Before I close my remarks, let me briefly address the point that my hon. Friend the Member for Christchurch raised earlier—to be fair, I said that I would do so. His question was: why would it not have been appropriate to deal with this issue in the immigration Bill? The short answer is that that Bill addresses three topics: first, access to public services; secondly, putting into primary legislation the rules on article 8 that the House put in the immigration rules last year; and thirdly, dealing with appeals and removals. That Bill does not make changes to the nationality provisions of our legislation,
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because I did not want its scope to be that wide. I wanted to focus on the Government’s priorities for reforming the immigration system; I did not want us to get bogged down in the many nationality questions that I know we might otherwise have considered.
My hon. Friend the Member for Woking has introduced a focused Bill, dealing with a genuine problem. It is not a problem that affects thousands of people; rather, it affects potentially hundreds of people, but they are people who have done great service to our country. The approach he has adopted, in introducing a very focused Bill that has support from both sides of the House—the official Opposition and the Government—is the right way to proceed. I very much hope that the Bill will receive a Second Reading and a fair wind in reaching the statute book.
Madam Deputy Speaker (Dawn Primarolo): Order. I am rather surprised to see the hon. Gentleman standing. He has not been in the Chamber for most of the debate and he did not seek to speak before the Minister gave his response—in detail and at length—to the questions that were raised. As a member of the Panel of Chairs, the hon. Gentleman is fully aware of the courtesies of the House, so I am sure he will agree with me that we should now give the concluding remarks to the Member who moved the Second Reading motion on this private Member’s Bill. I am sure that the hon. Member for Christchurch (Mr Chope) would not want to show any discourtesy to the House, would he?
Mr Chope: If you are inviting me to comment on what you just said—
Madam Deputy Speaker: I am not inviting you, Mr Chope. My question was rhetorical in its nature. I am nudging you gently, as a member of the Panel, to agree with me that the courtesies of the House should stand.
Mr Chope: I did speak to you in your position in the Chair to indicate that I would seek to catch your eye in order to make a short contribution after the Minister had spoken. If you had said to me at that stage that you would not call me at this point, I would have sought to make my contribution earlier. I was here at the very beginning of the debate, and I have made a lot of interventions. I have been here for almost all of the Minister’s response. It is a matter for your discretion whether you call me to make a short contribution, Madam Deputy Speaker, and I shall leave that with you. I put it on record that I would not wish any discourtesy to the House, even if I were not a member of the Panel of Chairs.
Madam Deputy Speaker:
Indeed, and I am sure that you would not wish any discourtesy to me as the occupant of the Chair by assuming that your notification that you intended to follow an unusual procedure would result in my consenting to that, because it does not. We all know the rules, don’t we Mr Chope? This is the last day, however, and if you will make only a very few comments—I shall be timing you, Mr Chope, and
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shall not hesitate to intervene—you may have a few minutes to make your contribution before I call Mr Lord. But this will be the one and only time that you will be able to do this.
1.26 pm
Mr Christopher Chope (Christchurch) (Con): I feel a heavy weight on my shoulders, Madam Deputy Speaker. I am grateful for your indulgence.
I have expressed concern on a number of occasions about the integrity and comprehensibility of our statute book. The Minister said that the reason that we could not use the existing wording in section 39 of the Borders, Citizenship and Immigration Act 2009 was that it was “all bound up with the earned citizenship measures”. The Government have said that they will not proceed with the implementation of the earned citizenship provisions, so they will have to legislate separately. If the Government do not wish to proceed with the earned citizenship provisions in the 2009 Act, surely those provisions should be repealed, rather than left in limbo. If they are left in limbo, it will be open to a subsequent Government to commence them.
I hope that my hon. Friend the Member for Woking (Jonathan Lord) will be able to deal with this matter during the later stages of his Bill. The Bill seems to be amending section 39 of the 2009 Act, rather than repealing it, thereby compounding the felony of making the statute book even more difficult to comprehend. I do not expect my hon. Friend the Minister to respond to this point now, but at some stage during the Bill’s progress, we need to work out why we are keeping on the statute book provisions that the Government say they oppose. Why will the Government not repeal them? Why are they seeking to amend a section of the 2009 Act that they do not wish to implement? Would it not be better to legislate de novo?
Those are the short points that I wanted to make, and I am grateful to you for allowing me to do so, Madam Deputy Speaker.
1.29 pm
Jonathan Lord: I saw the Minister nodding vigorously as my hon. Friend the Member for Christchurch (Mr Chope) was making his points, so it looks as though that matter will be addressed. I agree with the points that my hon. Friend has raised.
I would like to thank all Members who have attended and contributed to today’s debate. I particularly thank the hon. Member for West Aberdeenshire and Kincardine
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(Sir Robert Smith) for waiting so patiently for his Bill to be debated, and I can assure him that I will not prevent that from happening for much longer.
I would like to put on record my thanks to hon. Friends and hon. Members who have spoken in the debate. My hon. Friends the Members for Gainsborough (Sir Edward Leigh), for West Worcestershire (Harriett Baldwin), for Central Devon (Mel Stride), for Stourbridge (Margot James) and for Hexham (Guy Opperman) all made interesting and perceptive points, contributing a great deal to the debate that we have just enjoyed. I particularly thank my hon. Friend the Member for Christchurch (Mr Chope) for his perceptive and inquisitorial interventions and his tidying-up at the end, ensuring that there will be no loose ends on the statute book as a result of this Bill.
I would greatly like to thank Her Majesty’s loyal Opposition for their support and particularly the hon. Member for Kingston upon Hull North (Diana Johnson) for her contribution. Her support and that of all Members is extremely welcome. This should be a cross-party measure, and it looks as though it will be.
I greatly thank, too, the Minister for Immigration, my hon. Friend the Member for Forest of Dean (Mr Harper) for being here throughout the debate, for speaking at some length in support of my Bill and for answering the questions, some of which were above my pay grade and some of which would have baffled even the most legal and scholastic minds. My hon. Friend the Minister knows this stuff backwards and I think he answered everything to every Member’s satisfaction. I look forward to working with him and the Government and with other Members and parties as we take the Bill forward, I hope, into Committee and its further stages.
With the approval of Members, it is my hope that, in building on the armed forces covenant, this Bill will be a further signal sent out both to those servicemen and women who currently hold a UK passport and are British citizens and to those who do not—those who have joined our armed forces for Queen and country and, in a sense, for the common wealth and the common good. The public and their parliamentary representatives are on their side in the difficult jobs they do in this country and around the world. They should be treated with the respect and dignity that their hard work and sacrifice deserve.
In thanking all hon. Members again for their support, I commend the Bill to the House.
Bill accordingly read a Second time, and committed.
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Delivery Surcharges (Transparency for Consumers) Bill
1.33 pm
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): I beg to move, That the Bill be now read a Second time.
I thank the hon. Member for Woking (Jonathan Lord) for his kind words, and I congratulate him on getting his Bill through to the next stage.
There has long been a frustration about additional charges for delivery to certain parts of the United Kingdom. This Bill is designed to shine a spotlight on the issue, highlight it and come up with some remedy to help move us in the direction of a fairer and more sensible system. The Bill requires
“online retailers to declare to consumers at the start of the retail process the existence of surcharges for delivery to certain addresses in the UK; and for connected purposes.”
In respect of this frustration in many parts of the UK, there are three concerns: the excessive charges for delivery to certain parts of the UK; the lack of transparency about those charges; and the often arbitrary nature of how those charges are calculated. There is a long-standing campaign by many in Scotland to try and tackle the issue. I am following in the footsteps of many others who have highlighted it, especially my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) who has a classic example of the arbitrary nature of this problem. Although his constituency is in mainland Scotland, it has the KW postcode—Kirkwall, in Orkney—so most websites classify him as coming from an island, and treat him as such for delivery purposes. Retailers need to look more carefully at how their systems allocate charges and identify areas that will be more expensive to deliver to.
Another issue is the excessiveness and lack of transparency of the charges. Citizens Advice Scotland, in an excellent research paper entitled “The Postcode Penalty”, published in December 2012, made it quite clear that 1 million Scots face surcharges, late delivery or are refused delivery shopping online. The Bill would tackle the issue in relation to online shopping by ensuring that people have a clear and concise idea of what they face before starting the shopping process.
On the website fairerdeliverycharges.net, which is part of the campaign, one person commented:
“About time this discrimination was dealt with as well as over charging by couriers, was once quoted £275.00 to the island but £45.00 to Ullapool. Complained and it was dropped to £75 to island, saying that was what the courier quoted them before they asked for reprice”.
The shopper online is shopping with the retailer, which then negotiates the delivery contracts. We want to encourage the retailer to think more carefully about the needs of the shopper and to make a better attempt at negotiation. As the example shows, the shopper just had to intervene and the charged dropped from £275 to £75, so the initial charge was clearly excessive and not thought out.
On the lack of transparency, I visited a constituent recently who went online to buy radiators for their house. The usual delivery cost was £20, but when they got to the end of the process, the cost increased to
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£60 for delivery to anywhere in the north-east and north of Scotland. The north-east of Scotland is not remote rural. It is the Aberdeen postcode—a major city, the oil and gas capital of Europe, and a major, thriving part of the UK economy.
Mel Stride (Central Devon) (Con): May I clarify that there is nothing interventionist in the Bill that the hon. Gentleman proposes? I presume that there is no attempt to intervene in the amounts that those selling products on the internet are charging to those receiving them, but that the intention is to ensure transparency so that when shoppers go online they are aware up-front of the amount being sought by way of carriage, before they click to complete the purchase.
Sir Robert Smith: The hon. Gentleman has summed up extremely well the nature and purpose of the Bill. It is about transparency, so that shoppers do not have to spend ages shopping online only to discover at the end of the process, having put in all that effort, that they will have to face excessive charges, and then have to shop around elsewhere. The other benefit of early notification will be to encourage retailers to think more carefully about how they calculate those charges and about the nature of those charges.
Mr Mike Weir (Angus) (SNP): In parts of Scotland, postcodes cover a huge area. For example, the DD8 to DD11 postcodes cover my constituency. I live in DD9. Brechin, the town in which I live, is just off the main road between Dundee and Aberdeen, but the postcode covers the whole area of the Glens. That is part of the problem.
Sir Robert Smith: It is indeed. Postcodes exist for Royal Mail’s purposes, to allocate addresses, but many people piggy-back on to them and then do not recognise the need to be more sophisticated and break them down further in order to establish the true nature of deliveries. Citizens Advice Scotland noted that it was possible for a delivery van to travel from a retailer in England to Edinburgh via the borders, passing houses whose occupants would end up paying excessive charges because they were further away from Edinburgh, although the van was passing their front doors and could have dropped the stuff off without having to go to Edinburgh. A resident of Inverness had to pay a £25 delivery charge despite living just two miles from the Inverness postal depot. Another highlands resident was shocked to discover when ordering a gift certificate from an electronics and camera retailer that there was a £15 charge for delivery, although the certificate was simply a postal card for which the normal rate could have been charged. That is another classic example of the failure of retailers to think when shopping around for delivery purposes.
The purpose of the Bill is to introduce more transparency and clarity. It requires the making of regulations, but does not introduce them itself; it allows the Government a year following its enactment in which to negotiate, consult and present the regulations to the House, which would then prescribe an early declaration of the charges for regional delivery so that shoppers could decide immediately whether or not to use a business advertised on a certain website.
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Mel Stride: What penalty does the hon. Gentleman envisage for a business using the internet which failed to comply with the requirements that he is seeking?
Sir Robert Smith: The Bill requires the Government to state in the regulations the penalties that would be applied. They would obviously have to consult on that during the process of drawing up the regulations. One penalty might be a requirement to comply, and to place the details of the charges on the website so that they are established and clear.
Members will be reassured to learn that I have opted for the affirmative process. Any regulations that are produced as a result of the Bill will have to be debated and voted on in the House, so that Members can scrutinise them in detail. We do not want to impose excessive regulation or unnecessary burdens on industry. When the market is failing, giving more information to consumers can help it to become more focused and effective and to deliver a better deal to consumers, while also ensuring that retailers can sell their products in a competitive market.
Mr Christopher Chope (Christchurch) (Con): The Bill is confined to online retailers. What about ordinary retailers? If someone goes into, say, John Lewis and orders some goods, the shop assistant will not say at the outset “Where do you live? If you live in X it will cost you Y.” The transaction will continue, and at the end of it the assistant will ask for the customer’s name and address, and will say “If you live in the highlands and islands, there will be a delivery surcharge.” Why should an online retailer have to say in advance what the costs will be?
Sir Robert Smith: Because it is much easier to ask about delivery in the shop. The nature of the exchange is more fluid. The customer can set the agenda and get the information they want before purchasing, whereas online, the information is not available until the end of the transaction. The online customer will have put in a lot of effort to get to that point of the maze and, having been led all that way, will feel immense frustration and anger at being clobbered at the end of the process. This problem has also been dealt with for airline bookings and credit card charges. They were being whacked on at the very end of the process, but now airlines have to be more upfront and be realistic about the charges.
I want to thank the Members who have supported the Bill: my right hon. Friends the Members for Gordon (Sir Malcolm Bruce) and for Ross, Skye and Lochaber (Mr Kennedy), my hon. Friends the Members for Caithness, Sutherland and Easter Ross and for Argyll and Bute (Mr Reid) and the hon. Members for Aberdeen North (Mr Doran), for Aberdeen South (Dame Anne Begg), for Angus (Mr Weir), for Na h-Eileanan an Iar (Mr MacNeil), for Isle of Wight (Mr Turner) and for Banff and Buchan (Dr Whiteford). This is an extensive problem affecting large parts of the United Kingdom, mainly in the highlands and the north of Scotland but also extending down to the borders and the islands of England—the Isle of Wight, the Channel Islands, the Isles of Scilly.
The Bill must be part of a wider awareness-raising process, because the retailers need to be more focused. They are thinking of the vast majority of their customers
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when they think of a delivery system, and they are not shopping around for one that will deal with those at the margins. Many retailers should consider using Royal Mail’s universal service delivery products for those areas that cannot be served by couriers. Bringing retailers together and shining a spotlight on this issue will help them to understand the frustration that is felt. The Bill would end that frustration and I commend it to the House.
1.47 pm
Ian Murray (Edinburgh South) (Lab): It is a great pleasure again to be in the House with the Minister, and to be going through this important Bill. I pay tribute to the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) for introducing it. I know he has been running this campaign for some time, and it is becoming a major issue that deserves the respect of the House. The Opposition certainly welcome his Bill, which brings attention to an area of consumer policy that has, particularly since the advent of online shopping, brought difficulties for individuals and businesses in most parts of rural UK, but especially the highlands and islands of Scotland, where his constituency is located.
The hon. Gentleman and other Members representing rural constituencies have heard from their constituents about some of the problems that have arisen with the delivery charges of online retailers. The growth in internet sales over recent years has been considerable and a report by IMRG found that the estimated value of UK online shopping in 2012 was £78 billion. There was 300% growth in mobile commerce last year alone. In 2012 the estimated value of global business in customer e-commerce was €825 billion. The annual cost of failed UK online deliveries is about £800 million, which is a considerable sum.
This is a major industry for the UK’s economy. It is not only the economy as a whole that benefits; there are significant savings for consumers in online shopping, and that should be spread around the entire economy regardless of whereabouts in the UK people live. We know confident consumers are key drivers of the economy, creating the demand for goods and services that provides jobs, stimulates innovation, creates wealth and contributes to the Exchequer. In a well-functioning economy, knowledgeable, informed and empowered consumers can drive up standards and drive down prices. We have seen that with online retailing.
However, despite the economic benefits of access to the internet and the potential savings for the consumer, people in rural and remote parts of the UK report that high delivery costs are a strong disincentive to online shopping. We discussed some of those issues just last week in the Backbench Business Committee debate on the impact of postal services in rural areas. Consumer Focus—now the aptly named Consumer Futures—found that consumers are unclear as to how parcel delivery charges are established. The hon. Member for West Aberdeenshire and Kincardine mentioned minor changes to postcodes that allow people just outside Aberdeen to be charged as if they lived on the islands of Scotland. It is reasonable, therefore, that parcel delivery operators should do their utmost to provide a clearer rationale for their pricing structure at the outset. Retailers and parcel delivery operators should ensure that pricing mechanisms do not arbitrarily give customers surcharges because
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they live in a particular area, for example by having one charge for all customers in a large geographical postcode area.
In some cases, consumers find out that an item will not be delivered to them only once they have completed their online purchase, and indeed, sometimes after that. Again, that goes against some customer regulations already in place. We should be clearer about all the regulations in the draft Consumer Rights Bill, which the Minister has introduced as an attempt to deal with this problem. We look forward to working with her on that Bill.
We must also remember that it is the interests of a business to make delivery charges transparent for customers, because people who are treated well when they use online retail and find that the charges are reasonable and transparent will go back to the same business. So this is also incredibly important to businesses, and the Bill will provide help there too.
I am slightly struggling with the next part of my speech because I gave it to my hon. Friend the Member for Caerphilly (Wayne David) when I had to disappear for an urgent meeting at 12 o’clock; he was going to deal with the Bill on my behalf, so I handed him my speech. He has written on it, “This speech is appalling.” I do not know whether he wanted me to add that comment to my speech, but I thank him for the annotation to this particular page.
We have to be clear not only about delivery charges that cause problems, but other particular issues, so let me reflect for a few moments on yesterday’s announcement of the privatisation of Royal Mail and the intended stock exchange flotation. The Bill does not mention this, but I know that the campaign by the hon. Member for West Aberdeenshire and Kincardine for fairer pricing includes a compulsory referral to Royal Mail because it has the one-price-goes-anywhere, six-day service—although it is a five-day service for parcels.
Sir Robert Smith: I think a compulsory approach would fall foul of European regulations; we are encouraging and raising awareness of the products available from Royal Mail under the universal service.
Ian Murray: I agree that my language was probably a bit strong, because the hon. Gentleman’s campaign calls on retailers that charge surcharges to offer delivery by Royal Mail as an alternative. He is right to highlight that point. However, one of the key contradictions is that there are concerns about the universal service obligation being difficult to deliver and maintain in a privatised Royal Mail. If his intention is to offer the Royal Mail as an alternative, that demonstrates the power of the universal service obligation in rural areas. It is important that we highlight those concerns when the flotation of the Royal Mail is undergoing its passage through this House, because it will have a significant impact on his constituents in rural areas if the USO is under threat.
Sir Robert Smith:
The hon. Gentleman has to recognise that the USO is enshrined in law, so the only threat to it is this Parliament deciding that it does not want to protect and keep the service. What is crucial is making
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sure that Parliament honours the legislation. Bringing more investment into Royal Mail should help it to compete more effectively with those whom his Government brought in far too quickly and too deeply to compete against it.
Ian Murray: I do not want to drift into discussing Royal Mail, because you would frown on that, Madam Deputy Speaker, and because we want this Bill to get through—we support it. However, may I just make one comment in response to that intervention? Laws can be changed; that is what this House is for. They can be changed at any point. As the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon) told us yesterday, many of the laws relating to the USO can be altered by statutory instrument in this House, and that can be done fairly quickly. I understand and fully support the fact that the USO is written in law, but the law can be changed at any time.
If this Bill does not get the proper passage that it deserves, will the hon. Member for West Aberdeenshire and Kincardine table amendments when the draft Consumer Rights Bill comes before the House? If this Bill does not get on to the statute book, I am sure that this Minister would certainly welcome such amendments. We would certainly support them in Committee in order to make this slightly more transparent, and I hope that he would be able to table them.
Online retail is a huge industry, and I congratulate the hon. Gentleman on bringing this Bill to us. I know that many colleagues in rural Scotland share the same concerns, and it is not acceptable not to have transparency of charges. All I would do is encourage customers who feel that they are not getting transparent charges to use an alternative, if there is one. The Bill deserves to get its passage through the House.
1.54 pm
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson): I congratulate my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) on introducing the Bill. I very much welcome his work to raise awareness of the issue. He and others from across the House have campaigned hard, because their constituents are particularly affected.
People living in very rural and remote areas may expect or be used to deliveries not being straightforward. If people live on an island, they know from experience that for something to reach the island it has to be flown in or come in on a ferry. That can impact on the costs of all sorts of things. Although we want such consumers to have good information, my hon. Friend rightly outlined that people living in the suburbs of Aberdeen, who are not in a remote area by any definition, might not have the same mindset of expecting suddenly to be hit by massive delivery charges.
I support the principles of clarity, transparency and fairness for consumers that lie behind my hon. Friend’s Bill. Those principles are fully supported by the Government and, as the hon. Member for Edinburgh South (Ian Murray) mentioned, they also underlie the draft Consumer Rights Bill that is being scrutinised by the House.
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It is right that consumers should be clear about delivery information when they shop online or, as my hon. Friend the Member for Christchurch (Mr Chope) said, when they shop anywhere. We certainly aim to provide much greater clarity for consumers. There is no reason why consumers in some parts of the country should experience a postcode lottery on delivery charges or not receive clear and up-front information about any additional delivery restrictions or charges that might apply to their location, particularly if that occurs late in the booking process. My hon. Friend the Member for West Aberdeenshire and Kincardine made it clear that the problem is not that such information is not provided before the purchase of a product. However, a significant investment of time might have gone into browsing and working out the right products to buy, either for oneself or as a gift. When somebody spends significant time doing that and is suddenly hit with an extra delivery charge, it can be very frustrating.
Jonathan Lord (Woking) (Con): There is probably great sympathy in the House for the thrust of what my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) is trying to achieve, but am I right that it could probably be sorted out through guidance, trading standards or regulation, rather than primary legislation?
Jo Swinson: I intend to come on to that point. Legislation already protects consumers in many ways, but there is clearly an issue about how well it is enforced and about what more we can do to ensure that it is enforced. I am certainly committed to working with my hon. Friend the Member for West Aberdeenshire and Kincardine and others to ensure that we deal with the problem through existing channels, as well as to see whether we can do more. We want to make sure that consumers are not disadvantaged by suddenly being notified of delivery charges late in the buying process.
Citizens Advice Scotland reported on the issue last year. It found that consumers encounter a range of problems. One is obviously that of additional delivery charges, but delivery performance can also often be a difficulty: as well as extra charges for the location, there is sometimes an outright refusal to deliver to a particular address or an unfair categorisation of a location as more remote than it actually is. Hon. Members have raised the problem of postcode areas that are quite large and cover places that are remote as well as others that are not.
Delivery charges and arrangements need to be made available early in the ordering process, because they are particularly important for some consumers; if not, that can add to the problems faced by those consumers in researching and investing time in sourcing the products that they want to buy. Underpinning all that is a recognition that the more confident consumers are about what they are buying and about having those products delivered in a reasonable way and at a reasonable price, the more confident they will be to buy, which is helpful for our economy. Creating confident consumers is absolutely what we want.
Let us consider what the law already does in this area. It is clear in requiring traders to provide all consumers, wherever they live, with information on freight, delivery or postal charges when inviting consumers to purchase
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products. That wording is particularly relevant. The invitation to purchase is the key point. There may be a difference in how some people define that point in the process, or some retailers may just be thoughtless, as my hon. Friend outlined. But if some retailers think that invitation to purchase occurs only at the very end of the process when the consumer clicks “Pay”, they might think that that is an acceptable time to give the information about the delivery charges. Clearly, others might interpret invitation to purchase as occurring at a much earlier point, when the consumer is browsing the website or the shopping app and is implicitly invited to purchase.
Specific requirements are set down for contracts concluded via electronic means. The consumer rights directive that the Government intend to implement by next summer will require traders to ensure that their website indicates clearly, at the very latest at the beginning of the ordering process, whether any delivery restrictions apply. I emphasise that that is at the very latest. The best practice would be for that information to be made available much earlier in the process.
Sir Robert Smith: Would it be in scope for my hon. Friend to issue guidance to industry about best practice and about the possibility of implementing it on a voluntary basis?
Jo Swinson: I thank my hon. Friend for that intervention. I would be delighted to do that. With the consumer rights directive and the consumer bill of rights that will come before the House later in the year, we will be publishing not just regulations and legislation, but guidance to go alongside that. It would be an excellent idea to include in that guidance information about how retailers might best serve their consumers and comply with the spirit of the regulations about giving that information and making it clear for consumers.
It is therefore important, as the hon. Member for Edinburgh South said, that businesses are made aware of the extent of customer dissatisfaction with the current situation, and of the potential loss of business arising from delivery policies that may be fit for purpose for some parts of the country but not for others. When businesses are made aware of the situation, there can sometimes be success. Consumer Focus Scotland last year reported a case where a consumer queried the high surcharge for delivery and the retailer happily agreed to use another parcel delivery operator who charged much less to deliver the items.
My hon. Friend mentioned the rather excessive £235 courier charge that one of his constituents encountered, which was dropped to as low as £75 when it was challenged. That is still a significant cost but, as a proportion of the original price charged, it was significantly less. I was rather shocked by my hon. Friend’s example of someone who was charged £15 for the delivery of a simple gift certificate, which does not need to go by courier service. An item of that size could go in the normal post. Such examples need to be highlighted.
It is reasonable for consumers to ask for items to be sent via Royal Mail under the universal service obligation, which may not be as cheap as a courier company can offer for delivery to high population density areas, but in most cases will be substantially cheaper. Businesses should recognise that they can offer that, or alternative courier services or parcel delivery services. The first
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message is that consumers should be aware that it is certainly worth contacting the retailer and challenging a surcharge that they are unhappy about.
Good work has been undertaken by Citizens Advice Scotland, Consumer Futures and others to highlight the issue so that more consumers will feel that they can stand up and challenge a ridiculously high delivery charge. The Citizens Advice research was very specific. It acknowledged that many companies already provide a good service that customers appreciate, but it also identified that some do less well and that their customers feel rather let down. Trading Standards in Scotland has done a huge amount of work, particularly in the highlands, to highlight the issue to businesses and to help them understand and comply with consumer law.
Obviously, consumers with complaints about a retailer’s delivery policy should first ask the retailer for an explanation. If they are dissatisfied with the explanation and think that there is still a problem, I encourage them to contact Citizens Advice, which can then alert the relevant enforcement authority so that there can be an investigation. Encouragement and help to businesses—but ultimately with that enforcement as well—can ensure that consumers feel empowered and confident.
Jonathan Lord: The north-east of Scotland and the highlands and islands have been referred to a lot in this debate. Do we know to what extent there is a problem for residents on the Isle of Wight and in Northern Ireland?
Jo Swinson: I do not think that the problem has necessarily been quantified for all areas, but the hon. Gentleman is quite right. There has been a lot of campaigning on this issue in the north-east of Scotland and the highlands, not least because of work done by my hon. Friend the Member for West Aberdeenshire and Kincardine and others, but I am sure that it is also likely to be an issue for island or rural communities elsewhere in the United Kingdom.
Mr Weir: Citizens Advice also looked at Northern Ireland and found that there was an average mark-up of 216% for packages, so it is not just a problem for the highlands and islands of Scotland.
Jo Swinson:
I thank the hon. Gentleman for that intervention. If I may add an anecdote, I was discussing the issue a few days ago in the Tea Room with my hon. Friend the Member for Argyll and Bute (Mr Reid), whose constituency is rather further south than West Aberdeenshire. He reported the frustration of some of his constituents in Dunoon when they telephone to ask why something could not be delivered or why it was so expensive. Dunoon, of course, is most often reached by ferry, and that information is clearly in a system somewhere, so the customer service assistant would explain to the customers that it was because they live on an island, which of course they do not, even if a ferry is often the most efficient way to reach it. That could create quite a lot of customer dissatisfaction. The important point for businesses to remember is that an unhappy customer is far more likely to tell other people that they are unhappy
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than a happy customer is likely to tell them that they are happy, so it is not necessarily in businesses’ interests for that to happen.
Sir Robert Smith: With regard to the Isle of Wight, it is notable that the hon. Member for Isle of Wight (Mr Turner) is one of the Bill’s supporters.
Jo Swinson: Indeed, and I suspect that is the result of experiences that the hon. Gentleman’s constituents have had.
I share the desire that my hon. Friend the Member for West Aberdeenshire and Kincardine has for the legislation protecting consumers to be clear, simple and transparent. Those are absolutely the qualities that underpin the consumer law reforms that we have set out and that the House is considering in draft. The draft Consumer Rights Bill is a fundamental reform of consumer legislation that will ensure that consumers’ and businesses’ key rights and responsibilities are clear, easily understood and updated to take account of purchases involving digital content. They are modern rights for a digital age. The Bill that we will introduce, once it has been scrutinised, will contain new protections for consumers, alongside measures to lower regulatory burdens for business. The aim is to make markets work better, which is good for consumers, good for business and good for growth.
I will just outline some of the core rights that our reforms will give consumers. I think that it is important that they are straightforward and in plain English. They are the right to clear and honest information before you buy; the right to get what you pay for; the right that goods and digital content are fit for purpose and that services are provided with reasonable care and skill; and the right that any faults in what you buy will be put right free of charge or that a refund or replacement will be provided. The first of those is central to our reforms, as well as to my hon. Friend’s Bill. I absolutely support the aim of transparency of information for consumers. The existing law and the reforms we are taking forward through the consumer bill of rights will continue to make sure that businesses cannot hide the charges they are levying on delivery costs and that they are made clear when the trader invites the consumer to buy. There is already a lot of good work on supporting compliance with existing law. That is positive, but more can be done.
Under our reform of the consumer landscape, more enforcement work is being done by local authority trading standards services, with a great deal being done in the highlands. In Scotland, the Convention of Scottish Local Authorities is responsible for co-ordinating the delivery of significant national and regional cases that cut across local authority boundaries. Of course, this issue does cut across local authority boundaries, and across the entire United Kingdom, as hon. Members have said. It might be worth involving the National Trading Standards Board and the Consumer Protection Partnership, which aims to get together all the enforcement agencies from different parts of the country, to see whether these problems can also be addressed at that level.
The Government significantly fund much of the work on this issue and have allocated more than £1 million to enforcement in Scotland in 2013-14. As I said, trading standards services in the highlands have done significant work, with some success, because some businesses have
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eliminated or reduced surcharges for the highlands as a result. Others have made changes to their websites to ensure that any surcharges that they may have concluded were unavoidable are at least indicated early in the buying process, so that no false claims are made. That was all achieved under the existing legislative framework.
A consumer will need to consider many factors, apart from delivery costs, when making a purchase. As required by the new directive, information will need to be provided to consumers on price, payment arrangements, delivery times, complaint-handling policy, rights to cancel, return costs, after-sales services and assistance, and duration of contract, to name but a few. All those factors, or in some cases only some, might be crucial for a consumer to know, depending on the person and their circumstances.
I support my hon. Friend’s work on promoting clarity and fairness for consumers, but I am not convinced that extra legislation is necessary or the best option for us to pursue. What should we do if this Bill is not the answer? I have been considering what more we can do to help enhance transparency as much as possible, because he has raised genuine concerns highlighting a specific problem that his constituents and others are experiencing. There are limitations on what can be specified in regulations about the timing of information provided to consumers, because some of the legislation derives from EU law and needs to be the same across Europe. However, we can play a part in highlighting good practice and drawing it to the attention of businesses. The work done by Citizens Advice and trading standards services has shown that this can have some success.
I am glad that my hon. Friend suggested publishing guidance alongside the new regulations that will implement the consumer rights directive in the UK towards the end of the year, because that will draw businesses’ attention to how important it is to alert consumers to extra supplementary charges early in the purchasing process. Some are already effective in this regard. In 2012, a study by Citizens Advice found that two thirds of retailers made delivery information very easy to find on their website. We need to use the opportunity provided by the consumer rights directive not only to draw attention to the good practice of those businesses but to draw attention to those that do less well. Two thirds is good, but it also means that a third of businesses are not making the information easy to find.
I would like to give my hon. Friend a couple of examples of where we could take action to help improve the situation for consumers. First, I would like to draw the issue to the attention of the British Retail Consortium, which, as a trade body, has members that include, I am sure, many of the companies that are causing some consternation to my hon. Friend’s constituents. It would be helpful if the BRC considered whether it can encourage its members to consider what hon. Members have said and what it could do to address the problems. I would be happy to bring retailers to a summit to discuss the problem with my hon. Friend. It would be good to have a mix of attendees, including exemplars—businesses that provide information at an early point and that give alternative delivery options to customers. Perhaps we could also invite businesses that were not doing well but that have improved their game and made the situation better for consumers as a result of the work of Citizens Advice and trading standards. We also need to include offenders—those that do not give consumers the right
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information and for which the detriment exists. We could then have a discussion on how businesses can solve the problem and recognise their responsibilities.
Sir Robert Smith: I welcome the idea of the summit. Bringing together best practice and those that need to learn and understand how to proceed will be welcome. My hon. Friend reinforces the point that online retailers need to be more aware of the need to shop around to ensure they get the best deal for their customers.
Madam Deputy Speaker (Dawn Primarolo): Order. Before the Minister carries on, I should tell her that other hon. Members wish to speak in the debate. It is not an Adjournment debate or a discussion between her and Sir Robert Smith. I hope she is watching the clock and leaves enough time for other hon. Members to contribute.
Jo Swinson: Thank you, Madam Deputy Speaker. I will take your guidance seriously.
I welcome my hon. Friend’s contribution. As he outlines, we can have a productive discussion with those businesses. It does not need to be rocket science for them. Some might have the problem in the “too difficult to do” box, and some might be unaware of how much distress the problem causes their customers in different parts of the country. By promoting the dialogue, raising awareness and setting out that the problem is not incredibly difficult to solve, we should be able to make things significantly better for the consumers whom the Bill intends to help. I hope I have set out why the Bill is not necessary to target the problem. The problem is genuine, and the Government are keen to work with my hon. Friend and others to ensure that it is properly addressed. I know that other hon. Members who have experienced the problem in their constituencies are keen to contribute and I look forward to hearing what they have to say.
2.17 pm
Mr Mike Weir (Angus) (SNP): I am pleased to support the Bill promoted by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), my parliamentary neighbour. The problem hits rural areas all over the UK, but particularly the highlands and islands of Scotland. I was somewhat surprised to hear the Minister say that she does not support the Bill—I believe I heard her correctly. That could be met with some consternation in a conference taking place in Glasgow this weekend.
Nevertheless, according to Citizens Advice research, more than 1 million Scots face surcharges, late delivery or refusals to deliver when they try to buy goods online. Consumers in Scotland’s island communities face a postcode penalty of nearly £19 on deliveries, which is a 500% mark-up on the standard delivery price. Of the 534 retailers whose policies were investigated, 63% charged extra for delivery to certain parts of the UK, and 72% of the surcharges apply to consumers in Scotland, which indicates that Scottish consumers are disproportionately affected by the surcharges.
Over the years, there have been attempts to do something about the problem. The Scottish Government held a summit—of the type that has been discussed—with
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retailers, trading standards and council officials to put pressure on retailers. It would be good if that pressure continued, because of the extent of the problem. However, one problem is that there is no consistency in how retailers deal with it—they have different delivery policies. For example, some charge extra for deliveries north of the line that runs approximately from Aberdeen to Fort William. Others do it by postcode, but that has ridiculous consequences. For example, many will not deliver to postcodes DD8 to DD11, which covers my constituency. I live in DD9 in Brechin, which is five minutes off the main A90 dual carriageway from Dundee to Aberdeen. They will not deliver there because of the huge area that some of these postcodes cover.
Mr David Hamilton (Midlothian) (Lab): I agree with the hon. Gentleman, but this is not just a highlands issue. It also happens in the borders. People who live 90 miles south of Edinburgh can face the same problems.
Mr Weir: The hon. Gentleman is right, and to be fair, the hon. Member for West Aberdeenshire and Kincardine made that point.
We talk about consumers, but it cuts both ways; businesses in rural areas are also affected. Whether they are trying to get goods in or out, they cannot get couriers to deliver or pick up, so they are thrown back on the very good service that is currently provided by Royal Mail. It is, to put it mildly, ironic that this debate is taking place the day after it was announced that the Royal Mail is to be privatised, given the serious fears about the continuation of many services in rural areas. Notwithstanding what the hon. Gentleman said about this issue, those services may be under threat after privatisation and with increased competition in urban areas.
One example of the difficulties is given in the Citizens Advice report. One business faced carriage charges of £15 for a £8 plastic valve. That is uneconomic and mad. The company tried to get the supplier to send by Royal Mail, but the staff said that they did not have time to go to the post office, which seems a bit bizarre to me. The company got quotes from carriers ranging from £9.60 to £34. Part of the problem is the lack of clarity.
The report also looked at the main retailers and the views of their customers. The retailer trusted most by consumers was Amazon, because by and large it uses Royal Mail for its deliveries. The hon. Member for Christchurch (Mr Chope) mentioned John Lewis, which came in second, but way behind Amazon. If people order in store in John Lewis, it has displays giving the delivery areas. John Lewis will also deliver in my postcode area because it has a store in Aberdeen. All the major supermarkets will deliver in my area because they have stores nearby. It is about setting up a delivery system that understands the geography of Scotland, but many online retailers do not do that.
When people order goods online, they should know from the outset what delivery charges they will face. Other hon. Members may be more computer literate than I am, but I can spend a long time going through the process only to get to the end and find that I would be charged a ridiculous sum that I am not prepared to pay. I hope that the Minister will allow the Bill to make
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progress. It is not perfect, and it would not reduce the charges, but it would at least let people know what they face in charges. It would be a small step in tackling a difficult problem for many areas in the UK. My main interest is Scotland, but—as I pointed out to the hon. Member for Woking (Jonathan Lord)—there is evidence of a similar problem in Northern Ireland.
The problem is not confined to delivery charges. A constituent who came to see me was trying to get an assessment done under the green deal, but was told by British Gas that it did not send assessors north of Dundee. The issue affects rural areas in many ways, and I hope that the Minister will allow the Bill to make progress.
2.24 pm
Mr Christopher Chope (Christchurch) (Con): This is an example of a private Member’s Bill that is well suited to raising the issue, having a proper discussion and getting a response from a Minister. I note that the Minister offered to have a delivery charges summit under her chairmanship. I hope that the promoter of the Bill thinks that that will be a sufficient reward for having been successful in the private Member’s Bill ballot.
I do not think that introducing new regulations with criminal sanctions against those who break the regulations is the way to improve matters. Of course, by shopping online one probably undermines the viability of many of one’s own local retailers, and if we want to campaign for small shops in rural areas we do not necessarily want to encourage people to engage in online retail. However, I do not think that there is anywhere in the retail world that is more competitive than online. I recently visited a shop in Christchurch that supplements direct retail with online retail. The proprietor told me about a product called “Bananarama”. Unless the shop is the cheapest online retailer of that product, they will not make any sales. The proprietor showed me at least 20 or 30 examples of where the product was available for sale, and the cut-throat way in which it was being sold. That shows the benefits of healthy competition. If an online retailer is alienating his customers by not providing clear information about delivery charges, then he is unlikely to stay in business for very long.
Andrew Selous (South West Bedfordshire) (Con): Will my hon. Friend enlighten the House as to what “Bananarama” is?
Mr Chope: “Bananarama” is a sophisticated form of Scrabble, which comes in a small package. I think the pieces are yellow, but that is enough publicity for that product.
The Bill is an example of where people come forward and say, “There is a problem, therefore we must have more legislation”, but are we really going to start penalising online retailers by saying that if they do not provide all the information upfront as soon as the customer clicks on to their website, they will be subject to a criminal assessment? Apart from anything else, common sense dictates that it is only at the end of a transaction that one knows the bulk and scale of the products ordered. The retailer may offer a range of different products, some of which can be delivered by Royal Mail and some
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that might need to be transported by an elephant. It is only at the end of the transaction that the online retailer will be in a position to say what will be a reasonable charge.
The Bill, therefore, is completely over the top. It states that the Government would have to introduce regulations, thereby transferring responsibility for drafting from my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) to the Government. I just wonder how the Government would ever be able to introduce regulations requiring online retailers to include a clear statement of, for example, “a reasonable indication” of the total cost. What do we mean by “a reasonable indication”? Do we mean an approximate indication or a reasonable guess?
The Bill is riddled with anomalies and problems. I have always been a great believer in putting bad legislation out of its misery at the earliest possible stage, so I have no compunction in saying that I will be doing the House a great service if I ensure that the Bill does not have its Second Reading. It is ill-conceived and the wrong way to address the problem. I do not represent a rural constituency, but there are a lot of online retailers and they do not want to be burdened with the excessive regulations proposed in the Bill. Apart from anything else, and as so often happens with such proposed legislation, it would be counter-productive. Clause 1 requires that the online retailer sets out what the charges will be. An outline retailer would be able to avoid all the burden of this Bill by saying at the beginning that it did not sell goods to islands in Scotland or England, such as the Isles of Scilly or the highlands and islands, or the Isle of Man. That could be counter-productive, because people who live in those more remote areas want to have access to goods, but they recognise that the other side of the coin of living in a remote rural area is that delivery charges are higher. I do not think that anyone has suggested yet in this debate, and perhaps in due course they will, that there should be cross-subsidy of those—
2.30 pm
The debate stood adjourned (Standing Order No. 11(2)).
Ordered, That the debate be resumed on Friday 17 January 2014.
Business without Debate
Prisons (Drug Testing) Bill
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 25 October.
Gender Equality (International Development) Bill
Bill read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).
Education (Information Sharing) Bill
Motion made, That the Bill be now read a Second time.
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Bill to be read a Second time on Friday 18 October.
Sexual Impropriety in Employment Bill
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 18 October.
House of Lords (Maximum Membership) Bill
The Lord Commissioner of Her Majesty's Treasury (Mr Desmond Swayne): I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 18 October.
EU Membership (Audit of Costs and Benefits) Bill
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 18 October.
Diana Johnson (Kingston upon Hull North) (Lab): On a point of order, Madam Deputy Speaker. Very sadly, on Wednesday of this week an 11-year-old girl was knocked down in Bransholme in my constituency by an MOD training vehicle, which are used in large swathes of my constituency to train drivers for the armed forces. My office has attempted to arrange a meeting with the senior officer at the Leconfield base, where the training school is based, and I have been told that we cannot have the name of that senior officer. I do not think that that information is a matter of national security, and I would hope that you agree with me, Madam Deputy Speaker, that giving such information would allow me to perform my duties as a constituency MP.
Madam Deputy Speaker (Dawn Primarolo): May I say to the hon. Lady that I am sure the House would share her concern and anxiety about the accident involving a child in her constituency? We entirely understand that she would be angry at being thwarted in pursuing her responsibilities as a Member of Parliament on behalf of the family, but I have to say to her that it is not a point of order for the Chair. However, those on the Treasury Bench will have heard her point, and I am sure that they will ensure that she is provided with that information in order to pursue her responsibilities as a Member of Parliament.
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G20 Membership Reform
Motion made, and Question proposed, That this House do now adjourn.—(Mr Swayne.)
2.34 pm
Henry Smith (Crawley) (Con): Thank you very much, Madam Deputy Speaker, for this opportunity to debate the reform of the G20 membership. This is the last debate of the week, and the last before the conference recess.
Unlike the G8, which broadly consists of the world’s largest economies, the G20, which was proposed by former Canadian Prime Minister Paul Martin, is a forum for co-operation and consultation on matters of concern to the international financial system. It was formally inaugurated in 1999. It studies, reviews, and promotes high-level discussion of policy issues pertaining to the promotion of international financial stability, and seeks to address issues that go beyond the responsibilities of any one organisation.
In the debate this afternoon I want to focus on questioning Argentina’s status as a G20 member, on the basis that it has failed on all three of the organisation’s primary objectives—namely, restoring global financial growth, strengthening the international financial system, and reforming international financial institutions. With non-members, including countries such as Malaysia, Norway, Singapore and Switzerland, contributing far more to our global economic well-being, one has to question the benefit of Argentina’s presence in the G20.
When Argentina appears in British public discourse, it is normally in relation to one of the two Fs—football or the Falklands. The behaviour of President Cristina Kirchner’s regime towards the islanders is nothing short of disgraceful, and it is extremely encouraging to see the British Government supporting the islanders in the strongest possible terms. The Falklands, for obvious reasons, are top of our agenda when it comes to discussion of Argentina, but that issue should not blind us to other major problems affecting this country as a result of Kirchner’s belligerence.
Kirchner makes no secret of her refusal to play by the same rules as everyone else. Let me start with a few examples. Argentina has expropriated the property of European companies. It provides a safe haven for drug dealers bringing methamphetamine to Europe. It is developing a strategic relationship with Iran. It deliberately falsifies its economic statistics. It refuses to abide by international court judgments. It refuses to pay its debt to other nations and institutions, and even refuses to honour the most basic laws of contracts.
A major and increasing concern is that of drug trafficking. A recent research paper from the International Assessment and Strategy Centre found that Argentina currently imports 30 times more ephedrine than is needed for its legitimate pharmaceutical industry. Ephedrine is a key ingredient in the production of methamphetamine, commonly known as crystal meth, which is a brutal and destructively addictive drug that ruins many lives on the streets of Europe and north America. That is not all. Argentina is now estimated to supply 70 tonnes of cocaine to Europe, which represents a third of the entire usage by volume.
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Equally worrying is Argentina’s growing friendship with Iran, a country that is a major strategic threat to the interests of the UK and of the west more widely. The Argentine Government’s blossoming relationship with Iran has been highlighted in the US Congress, and was evidenced recently when President Kirchner refused to allow a senior Argentine investigator to travel to Washington to testify before Congress on Iran’s role in the 1994 Buenos Aires bombing of the Argentine Israelite Mutual Association, presumably for fear of what the expert might reveal.
Argentina’s refusal to repay its debt obligations, even though it has billions of dollars in reserves, sets a terrible precedent for other nations, such as Greece, which might be tempted to follow that path of irresponsibility. Courts have previously ruled that the Argentine Government needed to pay all its creditors, which is exactly the kind of sound legal principle that we in the developed world should uphold and support, even if the Kirchner Administration have chosen not to do so.
On every conceivable level, Kirchner’s actions are endangering the interests of Great Britain. So what can we do? Following a public campaign, in which I was involved, the Secretary of State for International Development took the important step earlier this year of stating that the UK would vote against future loans to Argentina from international institutions such as the World Bank and the Inter-American Development Bank. President Obama’s Administration is also voting against new loans. No more should Kirchner’s Government be allowed to threaten and denounce the international community on one day, then effectively cash our cheques on the next.
There is more we need to do: other European nations must be encouraged to join the UK and the US. It is simply unacceptable for a country that is a member of the G20—one of the most important and prestigious international bodies—to behave in this manner. I believe that Argentina’s membership of the G20 should be revoked. The country has been named and shamed by Transparency International as one of the worst in Latin America—even outstripping Venezuela—for corruption, while the International Monetary Fund has starkly stated that Argentina’s Government are lying about their economy and cannot be trusted. We cannot, and should not, allow Cristina Kirchner to be rewarded with a welcome at the world’s top table.
Argentina is an international outlier. No other country, including those in Europe, is behaving so irresponsibly in relation to its debts. No other country is in receipt of an IMF censure for falsifying inflation figures. We should stand up for the rule of law, sanctity of contract and respect for international legal and financial obligations. We should not stand with those who refuse to abide by court judgments or who steal private property. We should certainly not stand with those who ally themselves with drug traffickers and Iranian extremist groups.
We stood firm on the Falkland Islands, and we now have a strong stance on international loans. It is time to take a tough position on Argentina’s membership of the G20, too. I believe that this issue is becoming ever more pertinent following the meeting of the group in St Petersburg, Russia just last week.
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2.41 pm
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt): I congratulate my hon. Friend the Member for Crawley (Henry Smith) on securing this valuable and topical debate. I will respond to his points as we go along. I would like to say a little bit about the G20, its purpose and evolution, and our relationship with it. I shall then come on to discuss how we view Argentina’s role.
This is an important debate on an important international grouping. The G20 is the United Kingdom’s premier forum for international economic co-operation. It represents over 85% of global GDP and economies from all regions of the world, and it balances the interests of the advanced with the emerging economies. The G20 also ensures that the views of non-members are represented: the leaders of Spain, Singapore, Brunei, Ethiopia, Senegal and Kazakhstan attended as guests at the most recent summit in St Petersburg, as did leading representatives of the United Nations, the International Monetary Fund, the World Bank, the OECD, the Financial Stability Board and the International Labour Organisation.
Since its creation at Finance Minister level in 1999 and at leader level since 2008, the G20 has provided the space for key global economies to come together on an equal basis to discuss and resolve economic issues openly and by consensus. I believe that it can point to an impressive range of achievements, agreed by all G20 members, including Argentina. For example, in the midst of the financial crisis in 2009, the G20 trebled resources to the IMF to $750 billion, supported $100 billion of additional lending by MDBs—multilateral development banks—and took action to avoid a slide into protectionism. As the immediate crisis passed in 2010, the G20 put in place credible plans for fiscal sustainability, agreed to a moratorium on new protectionist measures and agreed reforms to safeguard the international financial system. Progress has continued in the last two years, too. In 2011-12, we provided much-needed impetus to policy makers solving the eurozone crisis, and boosted the IMF’s emergency funding by $456 billion. Thus the reasons for setting up the G20 include the coming together of nations to combat problems collectively, and its achievements are by no means small.
Most recently, in St Petersburg, where the Prime Minister led the UK delegation, all G20 countries signed up to the St Petersburg action plan for strengthening growth and creating jobs, which contains all the features of the economic plan that we have been following in Britain since the coalition Government came into office. It also took forward the agenda that we and the Prime Minister set at the G8 in Lough Erne—the agenda that we call the three Ts.
On tax, the whole G20, including Argentina, adopted the Lough Erne vision of automatic sharing of tax information, with a single global standard to be finalised by February next year, and with a clear commitment to show how developing countries can participate in sharing tax information and build their capacity to collect taxes in the process.
On transparency—the second T—the whole G20 is now taking forward international standards on company ownership to help to ensure that people cannot avoid taxes by using complicated and fake structures. On trade—
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the third of the three Ts—the G20 extended its commitment to resist protectionist measures until the end of 2016: a hard-fought commitment that will open the way to more British exports and safeguard British jobs. G20 leaders also committed to show the necessary flexibility to secure a deal at the World Trade Organisation ministerial in Bali in December which will reduce red tape at borders, worth £70 billion to the global economy. As the WTO ministerial approaches, the Government will do all that we can to ensure that it is a success.
Importantly, all that has been achieved without a formal legal basis setting out the rights and obligations of member countries, and that is for good reason. As the Prime Minister noted in his report “Governance for growth”, the G20’s informal quality, combined with its flexibility, has been its comparative advantage and its greatest strength. It allows leaders to explore the scope for political agreement outside the constraints of more formal, binding institutions. It allows the G20 to work within the existing international governance system rather than having to rebuild it. Importantly, it provides the space for key global economies—advanced and emerging alike—to come together on an equal basis to discuss and resolve economic issues openly in the spirit of enlightened self-interest, without the historical legacy of north-south divisions. Those features have been the G20’s greatest assets, and accordingly we believe that it should maintain its informal, consensus and leader-driven character for the foreseeable future. That has a bearing on G20 membership.
The G20’s place as a consensus-driven forum where major and diverse economies come together on an equal footing means that there are no formal criteria for membership, nor any means of ejecting a member. Indeed, the membership of the G20 has remained unchanged since its beginnings in 1999, and there are no plans to change it. My hon. Friend makes valuable points, and he is right that we should strive for all G20 members, including Argentina, to be responsible players and to uphold their commitments. We advocate a strengthened accountability process for the G20, which will ensure that G20 members have stronger incentives to live up to their commitments and play by the rules. We also welcome the continued effective participation of non-members, international institutions and others in the G20’s work, while maintaining its efficiency. International organisations make a valuable contribution to the G20, and we believe that the G20 should continue to work with them in a transparent manner, respecting those international organisations’ own governance structures as well as their processes for dealing with members who do not fulfil their commitments.
However, we judge that maintaining the space for leaders from key global economies to come together on an equal and flexible basis is central to the G20’s success. We therefore would not support more formal structures for the G20, or propose a mechanism by which we would eject, or seek to eject, one of its members. We would not of course rule out changing the membership of the G20 in the future, but any proposed change would need to have consensus agreement by all members of the G20, balance the need for representation with the need for effective decision making by leaders and Ministers, and retain the power of informality and political consensus that has been the G20’s greatest strength.
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Having set out the background of the purpose of the G20, the way in which it works, its informality and the lack of formal procedures, let me turn to the points made by my hon. Friend on the specific question of Argentina. I am grateful to him for making the Foreign and Commonwealth Office aware of some of the key points of his speech in advance.
The Government have always been clear that it would like a full bilateral relationship with Argentina. As a country rich in natural resources, Argentina has the potential to be a key trading partner for the UK in the future. The people of the Falklands are British and wish to remain British, as clearly demonstrated by the referendum held in March. We remain disappointed that, more than 30 years after their unjustified and illegal act of aggression against the Falklands, the Government of Argentina continue their policy of hostility towards the Falklands people with attempts to strangle the economic livelihood of the islands, and in their refusal to co-operate with the Falklands on a range of issues that are for the common good of the region. None the less, the United Kingdom continues to enjoy a healthy trade with Argentina, amounting to £1.3 billion according to the last count, and many well-established British companies currently operate there.
My hon. Friend made a series of very important points. Let me make it clear to him and to the House that the UK is well aware of some of the deficiencies to which he drew attention. Argentina has taken a number of trade and investment actions which are damaging to business interests and which, in our view, undermine its economy by reducing its attractiveness to international investors. We are taking action with other partners to encourage it to adopt a different approach. The key point that I should make to my hon. Friend is that, notwithstanding the difficulties that he has raised in relation to Argentina, there are forums other than the G20 in which it would be more suitable to take appropriate action. However, none of the points that he has made are minor. They all need to be addressed.
We have fully supported the EU’s action against Argentine restrictions on imports within the World Trade Organisation. We have also played an active role within the International Monetary Fund, alongside key partners, to ensure that any action against Argentina for its non-compliance with its data obligations under the IMF’s articles of agreement is taken proportionately and appropriately. The world must of course deal with honest and straightforward trade figures and other economic data, and it is the IMF’s responsibility to ensure that that happens.
As my hon. Friend said, in February this year our right hon. Friend the Secretary of State for International
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Development informed Parliament that she had instructed the UK’s representatives at the Inter-American Development Bank and the World Bank to vote against all new proposals for financial support for the Government of the Republic of Argentina presented by those institutions. The same approach has been adopted by the US and other key partners.
We are aware that Argentina ranks 102nd in Transparency International’s corruption perceptions index. We believe that bribery and corruption present one of the most significant barriers to trade and investment. It is estimated to cost the global economy 5% of GDP each year. We continue to push for G20 countries to set high standards in line with international best practice, and we encourage continued implementation of the G20 action plan that we agreed in 2012.
Let me emphasise that the UK Government believe in the importance of a rules-based international system, based on collective decisions made in enlightened self-interest. We firmly believe that the G20, representing large, diverse economies from all the regions of the world, should work across its differences in the interests of securing strong, sustainable and balanced growth. It is for that reason that many of our concerns about the attitude of the current Government of Argentina to the international community should not be addressed within the G20. We believe that it is better to have Argentina in the G20 than outside. We may not always agree with Argentina, but we can use the G20 to sign up collectively to important global rules and standards, and still put pressure on Argentina through the appropriate forums outside the G20.
We therefore do not believe that we should seek reform of the G20’s membership. The nature of the G20 as an informal, flexible group in which economies can come together in the spirit of enlightened self-interest is its key asset, and we should ensure that we retain that. As the recent G20 summit shows, the G20 continues to build consensus, strengthen the global economy, and make progress on our key trade, tax and transparency priorities.
My hon. Friend has raised serious issues in relation to Argentina. He should be in no doubt of the fact that the UK has noted those issues and is addressing them, with partners, in the appropriate places. The G20 performs a different role, and it is through that role that the UK and Argentina will, we believe, develop a full bilateral relationship. That is what we wish for, and we believe that it will be very much in our interests and those of the people of Argentina.
I thank my hon. Friend for raising this issue today.