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House of Commons

Wednesday 11 December 2013

The House met at half-past Eleven o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions

Cabinet Office

The Minister for the Cabinet Office was asked—

Civil Service (Union Facility Time)

1. Dr Matthew Offord (Hendon) (Con): What steps he is taking to control the amount of trade union facility time in the civil service. [901548]

4. Karl McCartney (Lincoln) (Con): What steps he is taking to control the amount of trade unions facility time in the civil service. [901551]

10. Alun Cairns (Vale of Glamorgan) (Con): What steps he is taking to control the amount of trade union facility time in the civil service. [901557]

The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude): At the time of the last general election, there was no proper monitoring of trade union facility time in government. That has now changed, and paid time off for any trade union activities and full-time union officials now requires the specific consent of a senior Minister. We expect the cost to the taxpayer for paid time off for trade union duties to fall by 60% from the level we inherited.

Dr Offord: I am very reassured by the Minister’s response, but will he outline to the House how much money has been saved as a result of those reforms?

Mr Maude: So far, by reducing significantly the number of full-time union officials who are paid by the taxpayer as civil servants, we have saved more than £2.3 million just from that element of the reforms. Overall, we are on course to meet our benchmark of spending no more than 0.1% of the civil service pay bill on facility time.

Karl McCartney: Further to the kind answers that my right hon. Friend has given, will he tell the House how many civil servants were given paid time off to attend the Public and Commercial Services Union conference this year and last year?

Mr Maude: In May this year, 651 PCS reps had paid time off to attend the PCS conference—fewer than half the number of the previous year. Next year, paid time

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off to attend the conference will be entirely at the discretion of the Secretary of State or the Minister in charge of that civil servant’s Department.

Alun Cairns: This issue is a significant cost to the public purse. Will the Minister please advise the House how many taxpayer-funded trade union representatives there were in May 2010, and how many there are now?

Mr Maude: It has taken some time to establish the facts about that because there was no proper monitoring. We believe, however, that in May 2010 in the region of 250 civil servants were full-time officers of their trade union and doing no work on behalf of the taxpayer. Several of them had been promoted in post while doing no work as a civil servant—and one of them had been promoted twice, which seems remarkable.

Ian Lavery (Wansbeck) (Lab): It is clear that the Minister has planted these questions in order to union-bash again, which seems to be something he relishes. Is he man enough at this point to say how beneficial trade unions are in the workplace in terms of the economy, the taxpayer and the employer?

Mr Maude: I have always been at pains to say that there is benefit to the employer in having union representatives in the workplace. What is not acceptable, however, is having those representatives uncontrolled, unmonitored and growing like Topsy, to the extent that they were costing the taxpayer £36 million a year at a time of financial stringency caused by the grotesque budget deficit we inherited from the Labour party. That is completely unacceptable.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): The Minister knows that I have a lot of time for him, and I congratulate him on winning a famous design award for his Department recently. However, I am a proud trade unionist and member of Unite, and I am a proud Co-operator. In a democratic society in which unions have an important part to play—as does the co-operative movement—why is there a feeling coming from the Government Benches that they are out to get us?

Mr Maude: I am certainly not out to get the hon. Gentleman, for whom I have—if I may return the compliment—a great deal of respect. I have never said that there is no role for trade unions or for trade union representatives having paid time off in the workplace. I have always stressed that there is value for the employer in the ability to have disputes resolved quickly, effectively and at local level. What was going on in the civil service, however, was way out of line with any other workplace, even in the public sector. The taxpayer is entitled to expect that the Government will grip that issue, which, for the first time, is being done.

Shared Services Programme

2. Sir Alan Beith (Berwick-upon-Tweed) (LD): What assessment he has made of the effect on small towns of outsourcing under the shared services programme. [901549]

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The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude): Our assessment showed that any employment impacts arising from outsourcing are likely to be substantially mitigated through redeployment. I expect that additional new employment opportunities will be generated through what I hope will be a thriving UK-based service provider that will result from the joint venture we have created.

Sir Alan Beith: Does my right hon. Friend recognise that offices in rural locations, such as the Alnwick DEFRA office, can be excellent locations for shared back-office services because they have good staff and low staff turnover? Will he therefore do all he can to encourage the public-private partnership company to make sure that the Alnwick location is used, either for its existing work or for alternative work in the field?

Mr Maude: I absolutely take the point that my right hon. Friend makes. It is very well made. I know that the new joint venture company will look very carefully at all the implications. It will want to be able to do the work effectively and to create a new provider in the marketplace that has the opportunity to create more jobs rather than lose jobs. I know that he will talk to the new company and that it will want to hear his views.

Government ICT Strategy

3. Nick Smith (Blaenau Gwent) (Lab): What recent progress he has made on the Government ICT Strategy. [901550]

The Minister of State, Cabinet Office (Mr Nick Hurd): We have created a world-class Government web presence. We believe that we saved £500 million in 2012-13 through better IT spend controls, and our digital by default strategy is transforming 25 of the most significant Government transactions by making them easier for users and cheaper for taxpayers.

Nick Smith: Meanwhile, in the real world, the new Army recruitment contract with Capita is a shambles. Why did the Government not plan the ICT better so that the new recruitment processes and Ministry of Defence systems worked better?

Mr Hurd: I have to tell the hon. Gentleman that the real world we inherited was an absolute shambles in terms of how Government managed IT transactions. His is the party that gave us tax credits and the NHS IT system. What we have done is to put in proper controls and create the conditions in which smaller and leaner organisations can come in and offer better value.

Mr Bernard Jenkin (Harwich and North Essex) (Con): May I commend my hon. Friend the Minister and the Minister for the Cabinet Office and Paymaster General for the excellent work they have done in ICT? But is it not still ludicrously impossible to get around the silly Treasury rules about recruiting, retaining and rewarding the necessary staff with the necessary expertise to be the single responsible owners with continuous oversight of projects? Does that not show that civil service reform has not gone nearly far enough, and that that justifies a commission on the future of the civil service that only Parliament can provide?

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Mr Hurd: I recognise my hon. Friend’s consistent commitment to the idea of improving the capability of the civil service. However, I do not think I agree with his premise, and I invite him to visit the Government’s digital service because he will see a department that feels unlike any other in Government. It is full of extraordinary talent that has come in to work for Government, often at below market rates, because they want to make that difference.

Chi Onwurah (Newcastle upon Tyne Central) (Lab): The arrogant complacency of the Minister’s answers shows just how out of touch he is. Some 80% of Government interactions take place with the bottom 25% of society, but only 15% of people living in deprived areas use a Government service online. The promised assisted digital provision is still nowhere to be seen, locking our citizens out of his digital democracy. That is why Labour has announced a review of digital government, to make it work for the many, not the few. Is it not time that he did the same?

Mr Hurd: Again, we absolutely will not take any lessons from the Labour party about digital government. We are committed to the idea of transforming the great digital service. The feedback has been tremendous so far, and we have a hard commitment that every transformation will be accompanied by an assisted digital programme.

Mr Philip Hollobone (Kettering) (Con): Kettering borough council, of which I have the privilege of being a member, is having great difficulty in complying with the Cabinet Office protocols on e-mail traffic with local government. May I arrange a meeting with the Minister and a representative from the authority so that we can get this sorted out?

Mr Hurd: I have heard that from other sources, not least in my own local authority, so I am happy to take that matter up with my hon. Friend directly.


5. Mr Jim Cunningham (Coventry South) (Lab): What steps he is taking to increase the number of people involved with charity. [901552]

The Minister of State, Cabinet Office (Mr Nick Hurd): Our recent report encouraging social action set out what we have done to make it easier for people to give time and money, and I hope that the hon. Gentleman will join me in welcoming the news that volunteering has risen sharply since 2012 after years of decline.

Mr Cunningham: I hope the Minister will elaborate further. Only 9% of people are responsible for giving two-thirds of donations to charity. Will he elaborate on his previous answer?

Mr Hurd: The hon. Gentleman makes an important point and he is right to say that we rely on an extremely generous minority who do most of the giving. Britain has risen in the league table and is now the sixth most generous country in the world. Millions of our fellow

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citizens and constituents give time on a regular basis, and volunteering has risen since 2012 after years of decline. We think we have made a contribution to that.

Mr Gary Streeter (South West Devon) (Con): May I add my support for the many people who volunteer to support charities? Does my hon. Friend agree that the investigation by the Public Accounts Committee into the pay of senior executives of charities is a good step in the right direction to ensure that volunteers are following people who are being reasonably paid?

Mr Hurd: I certainly agree that our voluntary sector relies on trust and integrity, and there should be transparency on administration costs and salary expenses. Individual salary pay is not an issue for Government; it is an issue between trustees and donors.

Mr Gregory Campbell (East Londonderry) (DUP): In any discussions the Minister may have with some of the main charities, will he debate with them the need for them to promote their work in a proactive way, while safeguarding against what some regard as assertive and over-aggressive actions by charity collectors who try to obtain direct debits on the street? There is concern about the level of assertiveness on the street.

Mr Hurd: We certainly do have those conversations with the chief executives of some of the largest charities. The activity the hon. Gentleman describes raises at least £100 million a year, so we cannot ignore that. We must, however, ensure that it is regulated effectively so it does not put people off and tarnish the brands of the charities we need to support.

Mary Macleod (Brentford and Isleworth) (Con): Will my hon. Friend join me in thanking the many people in my constituency who work for charities and who volunteer? Will he update the House on what is happening in schools to encourage the next generation of young people to work for charities and volunteer more?

Mr Hurd: My hon. Friend is a great champion of the voluntary sector in her constituency. I am delighted to place on record my appreciation of volunteers across the country. As she points out, it is vital that we inspire the next generation. That is why national programmes, such as the National Citizen Service and the cross-sector and cross-party campaign—Step up to Service—we support to double the number of young people involved in regular volunteering are so important. I hope she welcomes them.

Voluntary Organisations

6. Gavin Shuker (Luton South) (Lab/Co-op): What recent discussions he has had with charities and voluntary organisations on levels of demand for their services. [901553]

9. Andy McDonald (Middlesbrough) (Lab): What recent discussions he has had with charities and voluntary organisations on levels of demand for their services. [901556]

The Minister of State, Cabinet Office (Mr Nick Hurd): I have regular discussions with charities and voluntary organisations. The anecdotal evidence is that many are experiencing higher demand for their services. It is a

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challenging environment and we all know that. However, I am encouraged that charity income appears to be steady, volunteering is up, giving has remained stable and social investment has risen. It is challenging, yes, but there is good news out there.

Gavin Shuker: The Government expect charities and voluntary organisations to step in in many places where the state has pulled out. However, the Minister recently said:

“frankly I don’t think the government does understand civil society.”

Why did he say that?

Mr Hurd: Because for years, not least under 13 years of Labour, government and civil society did not mix or take the time to understand each other. Our commitment to open public service is not about replacing things but trying to create the space for charities and social enterprises to help us deliver better public services. There are different cultures and we have to take the time to understand each other better and make the process work better.

Andy McDonald: A recent survey by The Guardian’s voluntary sector network revealed that 47% of respondents had no confidence in the Government’s approach to the third sector. Rather than just yet another failed relaunch of the big society initiative, would it not be better if Ministers started to actually listen to charities, large and small, to find out what support they need?

Mr Hurd: I have spent a lot of my time listening to charities and voluntary sector organisations over the past five or six years, and I would point out to the hon. Gentleman and the Labour party, which continues to talk down the sector, that the sector’s greatest asset, the British public, continue to support it more and more. Charitable giving has been steady through difficult times and levels of volunteering and social investment have been rising. The Government have done a great deal to make it easier for charities through difficult times.

Robert Halfon (Harlow) (Con): My hon. Friend will be aware that Essex county council is currently consulting on the future of youth services and that some difficult decisions lie ahead. He is meeting the Essex county councillor concerned. Will he give every support possible to youth services in Harlow and do everything he can to support Essex council so that we can protect our youth services?

Mr Hurd: My hon. Friend has written to me about this matter, and I congratulate him on his work. I am committed to meeting the decision makers at Essex county council, as I met with decision makers in Cornwall yesterday. There is a very real issue about the future of youth services and why they have been so easy to cut, and I remain passionately committed to young people having access to high-quality youth work.

Richard Fuller (Bedford) (Con): Church leaders in Bedford have been instrumental in setting up and operating the food bank there. With demand for food bank services increasing across the country, will my hon. Friend join

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me in meeting representatives from local churches in Bedford to understand the complex reasons why demand for food bank services is increasing?

Mr Hurd: I thank my hon. Friend for that question, because the Labour party tries to make far too many political points about food banks. The underlying issues are complex and their number is growing, and the Government are supporting them with investment through our social action fund. Food banks are a magnificent human response to difficult times, and we should place on the record our recognition of the work being done to support them across the country in responding to need.

Government Efficiency

7. Mr David Hanson (Delyn) (Lab): What recent progress his Department has made on improving efficiency across Government. [901554]

The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude): The efficiency and reform group supported Departments across Government to deliver savings of £5.4 billion in the first half of 2013-14, which was an increase of 73% on savings over the same period in the previous year. I am extremely proud of the hard work that civil servants across Whitehall have undertaken to achieve this success for the taxpayer.

Mr Hanson: Will the Minister tell me why the costs of the efficiency and reform group, which now employs 440 members of staff, have ballooned to £60 million? More importantly, will he tell the House today what he would not tell my hon. Friends on the Front Bench—how many people work there now and what is the cost?

Mr Maude: A lot of this work simply was not being done under the previous Government, but the predecessor organisations employed more than twice as many members of staff as the efficiency and reform group now employs, and the simple fact is that in the last financial year it was responsible, with its colleagues across Government, for delivering savings of more than £10 billion by eradicating waste left by the Government of which the right hon. Gentleman was a member.

Jonathan Ashworth (Leicester South) (Lab): We know that universal credit will not be delivered on time, that £40 million has been wasted, that £90 million will be written down and that the IT system Agile was deeply inappropriate. The Opposition have learnt that Agile was used on the insistence of the Cabinet Office, so will the Paymaster General, who boasts of his efficiency drives, give us a full explanation of his Department’s role in this debacle and publish all guidance the Cabinet Office sent to the Department for Work and Pensions?

Mr Maude: Oh dear. Is that the best the hon. Gentleman can do? I suggest he read the report by the Public Accounts Committee on what went wrong with universal credit. The problems only came to the attention of the DWP because of a review commissioned by my right hon. Friend the Secretary of State for Work and Pensions.

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Topical Questions

T1. [901568] Stephen Metcalfe (South Basildon and East Thurrock) (Con): If he will make a statement on his departmental responsibilities.

The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude): My responsibilities are for the public sector efficiency and reform group, civil service issues, industrial relations strategy in the public sector, government transparency, civil society, cyber-security and civil contingencies. In that context, I would like to thank all those in the emergency services who did a brilliant job working to prepare effectively for and respond to the effects of last week and weekend’s storm surge. I am sure the whole House will want to send its best wishes to those adversely affected and our thanks to those who worked massively to prepare for it.

Stephen Metcalfe: May I take this opportunity to congratulate my right hon. Friend on the open government partnership conference held in London last month and ask what plans there are for the open government partnership for the coming year?

Mr Maude: We passed on our chairmanship of the open government partnership at the conference. I thank my hon. Friend for his remarks; it was very successful, with contributors and participants from civil society and from Governments right across the world. It was attended by a number of UK Ministers, including my right hon. Friends the Foreign Secretary and the Prime Minister. We hope that this will develop, with more Governments taking part and with a deepening of the relationship with civil society organisations in some countries where their life is not nearly as protected as the life of civil society organisations here. [Interruption.]

Mr Speaker: Order. The Minister is providing serious answers to serious questions, but I am not sure that he is getting the serious attention that he and I would think those answers warrant. Perhaps we could have a bit of order.

Michael Dugher (Barnsley East) (Lab): It was revealed in a leaked letter yesterday that the Minister for the Cabinet Office tried to use emergency powers to block a freedom of information request for the Government to publish the HS2 project assessment review from 2011, which he did because of “political and presentational difficulties”. Those who support HS2 in principle know that public confidence is vital. Concerns have already been expressed about accelerating costs because of the Government’s failure to get a grip on the project. Questions have been raised by the National Audit Office about the economic benefits. Will the Minister now publish that project assessment review?

Mr Maude: Under the last Government, when the hon. Gentleman resided in Downing street, information about the progress on major projects had to be extracted by force. Earlier this year, we published the ratings for all major projects. We did that voluntarily—the first time it has ever been done—and we will continue to do so. We are now the world’s leading Government on transparency, so lectures from the hon. Gentleman come pretty thin.

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Tim Loughton (East Worthing and Shoreham) (Con): Given the continued funding pressures on youth services, will the Minister update us on how his Department is using the Positive for Youth policy to maximise resources for a better joined-up youth offer between local authorities, voluntary services and businesses to provoke young people’s engagement and a youth voice?

The Minister of State, Cabinet Office (Mr Nick Hurd): First, let me recognise my hon. Friend’s long-standing advocacy for young people and his authorship of the initial Positive for Youth programme. Yes, we are very concerned about cuts to youth services at the local level. The Cabinet Office is mapping exactly what is going on at the moment and stands ready to work with local authorities to help them comply with their statutory duty and work more creatively with other local partners in delivering fantastic opportunities for young people to develop themselves through access to high-quality youth work.

Mr Speaker: It is time for the lion’s roar. I call John Robertson.

T2. [901569] John Robertson (Glasgow North West) (Lab): Thank you, Mr Speaker. Following the question on outsourcing from the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith), we have now passed £100 billion-worth of contracts to large companies that have absolutely no transparency. Is it not time to revisit the Freedom of Information Act 2000 to make sure that these companies do have the necessary transparency and are brought into the scope of the Act?

Mr Maude: The hon. Gentleman will know that my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), who chairs the Justice Committee, presided over an inquiry into the working of the Freedom of Information Act 2000 and did not recommend that any such change should happen. The hon. Gentleman refers to large companies taking part in outsourcing, but one of the things we have done is to reduce the Government’s dependency on large companies by opening up procurement to small and medium-sized enterprises across the country, which was not even measured under his Government. We have made big steps—though not yet enough—to open it up to many smaller UK businesses.

Andrew Percy (Brigg and Goole) (Con): Last week’s tidal surge devastated hundreds of homes in my constituency when our flood defences were breached by the Humber, the Ouse and the Trent. During that emergency, the real heroes in communities such as Burringham and South Ferriby were—apart from the emergency services—our parish councils, which had in place emergency plans that ran 24/7. Will my hon. Friend pay tribute to those parish councillors and urge other such councillors to ensure that they have proper community emergency plans in place?

Mr Maude: My hon. Friend is completely right: there was an amazing community response to the emergency caused by the storm surge. He is quite right that parish councils, particularly in rural areas, play an incredibly

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important role in a completely voluntary way. I would also like to pay tribute to my hon. Friend, who I understand was out there in the small hours of the morning, working alongside his constituents to support them.

T3. [901570] Ms Margaret Ritchie (South Down) (SDLP): Can the Minister tell us what proportion of the files subject to the 30-year rule the Department has released to the National Archives, and how many of them relate to Northern Ireland?

Mr Maude: Not off the top of my head, but I will write to the hon. Lady and let her know.

Iain Stewart (Milton Keynes South) (Con): May I invite my right hon. Friend to visit Matrix SCM at Milton Keynes and see how it is helping local authorities to save an average of 17% on public procurement contracts, increase the number of small and medium-sized enterprises winning those contracts, and speed up the payments process?

Mr Maude: I shall be happy to do that. I know how much support my hon. Friend must have given the company in his constituency. We have opened up procurement, which was being run in a way that, in many cases, froze out SMEs and prevented them from doing work for councils and the Government, but, although we have made some progress, we still have much more to do.

Prime Minister

The Prime Minister was asked—


Q1. [901578] Stella Creasy (Walthamstow) (Lab/Co-op): If he will list his official engagements for Wednesday 11 December.

The Prime Minister (Mr David Cameron): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Stella Creasy: I am sure that the Prime Minister is as concerned as Labour Members are about the 42% increase in long-term unemployment among young women that has taken place on his watch. Will he confirm that the reason he does not support the No More Page 3 campaign is that, like his hon. Friend the Member for South Dorset (Richard Drax), he believes that at least page 3 provides jobs for the girls?

The Prime Minister: We have seen quite a rapid reduction in unemployment over recent months under this Government, and there are a million more people in work than when I became Prime Minister. Of course, there is a lot more to be done to get the long-term unemployed, in particular, back into work, but the Work programme is performing twice as successfully as some of its predecessors. I think that the hon. Lady should get behind such programmes, rather than making points such as the one she has just made.

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Mr David Burrowes (Enfield, Southgate) (Con): Last Tuesday Joshua Folkes, aged 17, died in my constituency following a knife attack. Serious youth violence has fallen by some 19% in Enfield, and the Government have toughened knife laws, but what more can be done to rid the streets of Enfield, and those elsewhere in the country, of the carnage caused by knife attacks?

The Prime Minister: My hon. Friend makes a very good point in speaking on behalf of his constituent. As he has said, we have toughened the law, and I think that that has made a difference, but I think that the most important thing for us to do now is get rid of this dreadful culture of people carrying knives and educate young people about the dangers of carrying them. Those who carry knives often end up being stabbed themselves, and sometimes tragically die. It is to that work that we should now give priority.

Edward Miliband (Doncaster North) (Lab): Does the Prime Minister agree that, given the crisis in living standards that ordinary families are facing, Members of Parliament should not be awarded a pay rise many times above inflation in 2015?

The Prime Minister: I do agree with the right hon. Gentleman about this issue. I think that it would be wrong for MPs to be given a big pay rise at a time of public sector pay restraint. All three party leaders agree on that, and we have all made the point to the Independent Parliamentary Standards Authority. However, we should be clear about the fact that what IPSA has said is not a final recommendation.

Let me briefly make three points. First, I think that the idea of an 11% pay rise in one year at a time of pay restraint is simply unacceptable. Secondly, I think that IPSA needs to think again, and that unless it does so no one will want to rule anything out. No one wants to go back to the system of MPs voting on their own pay, but we must have a process and an outcome that can build public confidence. Thirdly, I think that all this should be accompanied by a cut in the cost of politics.

Edward Miliband: I am glad that the Prime Minister agrees with me about this issue. Does he also agree that we should not let it hang around as an issue until after the general election, and hang over trust in politics? May I urge him to work with me, on a cross-party basis, to find a way of making IPSA think again, and to stop this package happening?

The Prime Minister: My door is always open to the right hon. Gentleman, and I am always happy to discuss this or, indeed, any other issue. Let me stress, however, that what IPSA has said is not a final recommendation. I think that if the three party leaders and others in the House unite in saying that it is not right to award this pay rise, that will be the strongest message we can give.

Edward Miliband: I agree with the Prime Minister, but I hope he agrees with me that waiting and seeing will not work and that we do have to get together to deal with this. The reason this is not the right time for this pay rise is that most people are going through the biggest cost of living crisis in a generation, and I want

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to turn to that cost of living crisis. Last Thursday, the Chancellor claimed living standards were rising. That just is not the case, is it?

The Prime Minister: Let me add one point on the issue of MPs’ pay. This Government have shown respect for the difficulties people face: when we came into office we cut Ministers’ pay by 5% and froze it for the whole of the Parliament. That is not something Labour did.

The right hon. Gentleman wants to get on to the economy and, frankly, after last week’s exchange I cannot wait to get on to the exchange on the economy. We discovered a new duo: red Ed and redder Ed. I am looking forward to discussing these things. I thought the Institute for Fiscal Studies put this very clearly. It said: we have had a great big recession. We have had the biggest recession we have had in 100 years. It would be astonishing if household incomes had not fallen and earnings had not fallen, but the fact is that is the legacy of what Labour left us. The right hon. Gentleman’s entire approach seems to be: “We made the most almighty mess, why are you taking so long to clear it up?” Well, we are clearing it up.

Edward Miliband: In case the right hon. Gentleman has forgotten, he has been the Prime Minister for three and a half years. But I think we are making progress, because last Thursday the Chancellor said that living standards were rising. [Interruption.] His own Office for Budget Responsibility says:

“Almost whichever way you look at it…average earnings, wages and salaries…the levels have been falling”. [Interruption.]

Mr Speaker: Order. Mr Blenkinsop, you are yelling across the Chamber. Be quiet. Calm yourself. Take up yoga.

Edward Miliband: The OBR went on to say that it is “inconceivable” to suggest otherwise, but that is exactly what the Chancellor did last Thursday. Why will the Prime Minister not just come out and admit it: there is a cost of living crisis in this country?

The Prime Minister: Well, it comes to something when the right hon. Gentleman is being heckled from his own side. I do not know how you are going to keep us all in order, Mr Speaker.

I will tell the right hon. Gentleman what has been happening over these three years: we have got the deficit down by a third, we have got 1 million more people in work, we have got 400,000 more businesses operating in Britain, and we have got one of the fastest rates of growth now of any major western economy. But the truth about living standards and the cost of living is this: if we do not have a long-term economic plan to get our economy moving, we do not have a plan to deal with living standards. We have a plan. Our plan is to keep interest rates low, to get the country back to work, to cut people’s taxes, to boost business. Our plan is working. The right hon. Gentleman does not have a plan, as we discovered last week, apart from more borrowing, more spending, more taxes—all the things that got us into the mess in the first place.

Edward Miliband: Utterly complacent and out of touch with the country—that is this Prime Minister absolutely all over. Let us be fair to him: he does understand that some people are really struggling because today we learn of his plan to cut the top rate of tax

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further, from 45p to 40p. Can he explain why he is even contemplating a further tax cut for millionaires, who have received hundreds of thousands of pounds-worth of tax cuts, when ordinary families are so squeezed?

The Prime Minister: The top rate under this Government is higher than at any time when the right hon. Gentleman was in the Cabinet, the Government or was working in the Treasury trying to wreck the economy in the first place. If he wants to talk about the cost of living, let us compare our records. The Labour Government doubled council tax; we have frozen it. They put up petrol tax 12 times; we have frozen it. They put up the basic rate of pension by a measly 75p; we have increased it by £15 a week. I am happy to compare our records any time of day, but the British public know this: if we want to sort out the cost of living, if we want to help families, we need more jobs, we need more growth, we need a long-term economic plan. We have got one; he has not.

Edward Miliband: I will tell the right hon. Gentleman what happened—[Interruption.]

Mr Speaker: Order. Members must calm down. I have said that before, but some people are slow learners. We will go on for as long as it takes. They can shout and scream and bawl in the most juvenile manner, but we will just keep going.

Edward Miliband: I will tell the right hon. Gentleman what happened. Under the last Labour Government, real earnings went up £3,600. Living standards went up: under him, they are down £1,600. Living standards are down under this Government. We have always known how out of touch he is, but he is now taking it to a whole new level. The Government are in denial about the cost of living crisis, and they are not satisfied with one millionaires’ tax cut—they think it is time for another. Once again, the Prime Minister proves that he stands up for the wrong people.

The Prime Minister: Oh, dearie me! At the end of six questions, we are back to denial and the record of the last Labour Government. I know that I have had a long flight, but I could not have written the script better if I had done it myself. The last Labour Government gave us the biggest budget deficit virtually anywhere in the world, and the biggest banking bust anywhere in the world. They created a giant mess that this Government are clearing up. That is the truth. Since the autumn statement, why cannot the right hon. Gentleman mention the fact that business optimism is up, manufacturing is up and the number of job vacancies is up? Pretty soon, we will be able to add two to that list.

Q2. [901579] James Morris (Halesowen and Rowley Regis) (Con): Unemployment in my constituency is 21% lower than it was at the time of the last election. We have had a 90% increase in apprenticeship start-ups, manufacturing output is up and business activity is at a 32-month high in the west midlands. Does the Prime Minister agree that, due to the hard work of my constituents and people across the country, the Government’s long-term economic plan is working and delivering benefits to every region of the United Kingdom?

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The Prime Minister: My hon. Friend is right. During the boom years, the number of people employed in the private sector in the west midlands actually went down, but we are now seeing better news. Employment is up 25,000 since the election, with private sector employment up 14,000 this year. The youth claimant count is falling in the west midlands. I know how much time my hon. Friend puts into things such as the apprenticeship fair that he held earlier this year. This shows that our long-term plan is the right plan, and that it is beginning to work.

Q3. [901580] Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): What does the Prime Minister have to say to women across the country who are working full time and whose disposable incomes have fallen by an average of almost £2,500 since his Government came into office?

The Prime Minister: The first thing to say is that we welcome the fact that there are more women in work than at any time in our history. The second thing to say is that, because we are lifting the first £10,000 that people earn out of income tax, they will be better off by £705 next year. That is progress, but if the hon. Gentleman is asking whether it takes time to recover from the mess left by his party, the answer is yes it does, but we are going to do it.

Paul Burstow (Sutton and Cheam) (LD): Dementia is the disease most feared by the over-50s in this country. The Government are rightly doubling investment in dementia research during this Parliament, and the Prime Minister is hosting the G8 summit on dementia this week. Will he now lift the country’s and the Government’s sights by committing to doubling again this country’s investment in dementia research?

The Prime Minister: I am grateful to my right hon. Friend for that question. He is absolutely right to say that this is a real challenge facing not only this country, where there are 670,000 people suffering from dementia, but the whole world. We are having the G8 conference today in London to share intelligence, expertise and scientific research and learn lessons from each other. And yes, I can confirm that this Government are already planning to double research into dementia up to 2015, and we plan to double it again thereafter.

Q4. [901581] Dan Jarvis (Barnsley Central) (Lab): Given that the implementation of universal credit has become a shambles, how can the public have confidence in those who are responsible for it?

The Prime Minister: I think it is absolutely right that we introduce this benefits system in a very slow and deliberate way. I remember sitting in my surgery as a constituency MP when the tax credit system came in, in one big bang, and having case after case where people’s household finances were completely wrecked by the last Labour Government. I will not let that happen again. As we introduce this vital benefit, let us remember the fact that 480,000 fewer people are on out-of-work benefits and it is this Government who are making work pay.

Stephen Metcalfe (South Basildon and East Thurrock) (Con): Does my right hon. Friend agree that the best way to raise the living standards of my constituents is

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for the Government to stick to their long-term plan to rebuild this economy and not abandon it in favour of more borrowing and more taxes, as proposed by the Labour party?

The Prime Minister: My hon. Friend is entirely right. The biggest hit to living standards would be if we let spending and borrowing get out of control and interest rates went up. That is what we want to avoid, which is why we got the deficit down, and we must continue with our difficult spending decisions. That has enabled us to cut the taxes of people working and living in Basildon. By next year, with the first £10,000 of income coming out of tax, people on the minimum wage who are working a full-time week will see their income tax bill come down by two thirds. That is real action on the side of people who work hard.

Q5. [901582] Mr Michael Meacher (Oldham West and Royton) (Lab): Is the Prime Minister aware that FTSE 100 directors now get £86,000 a week on average, while at the other end of the scale 5 million workers get less than the living wage and three quarters of a million people who cannot get a job and get sanctioned get nothing at all and are left to starve? Is there no end to the brutality and nastiness of Tory Britain?

The Prime Minister: I say to the right hon. Gentleman, who served in Labour Government after Labour Government with a 40p tax rate—it is now 45p—and a bonus bonanza in the City 85 times higher than it is now, that he has a lot of brass neck.

Greg Mulholland (Leeds North West) (LD): New figures show that the second largest pub company in this country, Punch Taverns, overcharged the British consumer in its pubs, on beer alone, by £4.3 billion over 10 years. Clear market manipulation is taking place, so will the Prime Minister commit to deal with this crony capitalism? Will he listen to the Federation of Small Businesses and back the Business, Innovation and Skills Committee’s solution to this problem?

The Prime Minister: I know of my hon. Friend’s long-standing interest in not only beer, but pubs and how pub landlords are treated, particularly by the pub companies. Let me look very carefully at what he said. I am a great believer in a healthy pub industry. Pubs are often the heart of the village and the heart of our communities, and I will look carefully at the beer report that he mentions.

Q6. [901583] Jonathan Edwards (Carmarthen East and Dinefwr) (PC): During his autumn statement, the Chancellor said that

“people should expect to spend…a third of their adult lives in retirement.”—[Official Report, 5 December 2013; Vol. 571, c. 1106.]

Given that life expectancy in some communities in my country is only 75, what does the Prime Minister think would be a fair retirement age in a Welsh context?

The Prime Minister: The point my right hon. Friend the Chancellor was making is that this should be assessed independently but it is right to set a guide—an expectation—rather than just having Ministers announce from time to time what retirement ages should be. If the

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point the hon. Gentleman is making is that we need to tackle health inequalities better in our country and that we need ring-fenced budgets for public health, as this Government have brought in, then I would agree with him.

Q7. [901584] Jackie Doyle-Price (Thurrock) (Con): Bomber Command veteran Stan Franks recently passed away at the age of 88. As a teenager, he flew some 31 missions, a staggering achievement for such a young man. Will my right hon. Friend congratulate the Thurrock RAF Association and the Thurrock Enquirer on their efforts in raising the funds to ensure that his passing is marked appropriately?

The Prime Minister: I would certainly praise all those in Thurrock who have raised money in this way. The story of Stan Franks is a truly remarkable one. He is believed to be the youngest airman to complete more than 30 missions—he did this in 1944-45, before he was 20 years old. It is a real reminder to our generation of just how much previous generations put in to make sure that we could live in freedom. One of the greatest privileges I have had in this job has been welcoming veterans of Bomber Command to No. 10 Downing street and making that announcement about ensuring that they have that clasp on their medal, which I know many value so much. As Winston Churchill rightly said in 1940:

“The fighters are our salvation but the bombers alone provide the means of victory.”

We should never forget those brave crews in Bomber Command. So many now are coming to the end of their lives—so many who did so much for our country.

Mr Speaker: I call Mr Tom Harris.

Hon. Members: Bomber Harris!

Q8. [901585] Mr Tom Harris (Glasgow South) (Lab): A great start. I thank the Prime Minister for saving my marriage. Carolyn was just about to sign the divorce papers when she heard the report that if we stayed together we would be in line for a sweet £150 a year tax break. If, as the Prime Minister says, marriage must be underpinned by the tax system, why is it that, since the married person’s tax allowance was abolished in 2000, the divorce rate has gone down?

The Prime Minister: I am delighted that happiness is maintained in the Harris household. I could put it another way. It was only when I started to talk about the married couple’s allowance that the Leader of the Opposition tied the knot. The tax system moves in mysterious ways.

Mr Peter Lilley (Hitchin and Harpenden) (Con): In the light of the call by the Leader of the Opposition for urgent action in response to the Independent Parliamentary Standards Authority’s proposal for an increase in MPs’ pay, will my right hon. Friend immediately retable the Boundary Commission report, which would simultaneously pay for any increase and increase the workload of MPs? It would surely be hypocritical for the Leader of the Opposition or the leader of the Liberal Democrats to oppose that measure.

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The Prime Minister: My right hon. Friend tempts me. The point I was trying to make is that cutting the cost of politics has a role to play alongside this argument—[Interruption.]

Mr Speaker: Order. Members must not shout at the Prime Minister. It is discourteous to keep gesticulating at the man. Let us hear the Prime Minister.

The Prime Minister: It is no good shouting from the Opposition Benches. Labour Members had the opportunity to reform the Lords, and they were the ones who stopped it.

Q9. [901586] Mark Durkan (Foyle) (SDLP): The Prime Minister says that the G8 and his attendance at the investment conference advertised his commitment to Northern Ireland and its economy. However, his Whitehall is busy removing jobs from Northern Ireland in the Driver and Vehicle Agency and now also in Her Majesty’s Revenue and Customs, with the proposal to close offices in Newry and Enniskillen and halve the office in my constituency of Foyle. How does the removal of jobs by Whitehall contribute to balancing both the economy in Northern Ireland and that region?

The Prime Minister: I understand why the hon. Gentleman makes his point. My hon. Friend the Exchequer Secretary will meet him to talk about the HMRC issues. As for the Driver and Vehicle Licensing Agency, the Department for Transport is still considering the results of its consultation. Let me make this point. Employment in Northern Ireland has risen by 32,000 since the election, and he knows, as I do, that the real long-term answer for the economy in Northern Ireland is a private sector revival. The public sector is very large in Northern Ireland. We need more small and medium-sized enterprises and more investment in Northern Ireland, and we need those jobs to come, which is what the G8 and the investment conference were all about.

Q10. [901587] Jeremy Lefroy (Stafford) (Con): My constituent Jack Scerri, who has recently completed the National Citizen Service programme, visited my surgery on Saturday with Lisa Farrell of Staffordshire NCS to let me know just how much the programme had given him personal confidence and a clear sense of what he wished to do with his future. What plans does my right hon. Friend have for enabling as many young people as possible to take part in that transformative programme that he has championed?

The Prime Minister: I am grateful to my hon. Friend for what he has said. It is a transformative programme. Some 66,000 young people have already been through it since 2010. It now forms part of what Prince Charles wants to see—a decade in which we encourage volunteering and we get 50% of all young people taking part in volunteering. I hope that Members from all parts of the House are having an experience similar to that of my hon. Friend, with people stopping them and talking about the NCS and what it has done for young people and their confidence. It really is a good programme, and I am delighted that it has all-party support.

Fiona O'Donnell (East Lothian) (Lab): As the Prime Minister is trying to come over all family friendly, can he confirm whether maternity and paternity pay will be included in the benefits cap announced in the autumn statement?

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The Prime Minister: As the Chancellor announced at the time, what is out of the benefit cap is the basic state pension. I think that is important. On all other welfare spending, we need to ensure that we are distributing properly the different sorts of welfare.

Q11. [901588] Sir Tony Baldry (Banbury) (Con): Three hundred and thirty new jobs were created in my constituency in the past three months alone and I expect many more to be created over the next few months, particularly as housing and construction projects accelerate. Does my right hon. Friend agree that it is important that young people are not left behind and that abolishing the jobs tax on young people aged under 21 shows that the Government are serious about tackling youth unemployment?

The Prime Minister: I am grateful to my hon. Friend for what he says. As the economy recovers, it is vital that it is a recovery for all—that it is a recovery for north and south, for young and old. There is always a danger in an economy that young people who are not in the work force will be locked out of it, and that is why the change that the Chancellor announced about abolishing the jobs tax on those young people to make it cheaper for employers to take them on can have a real impact on ensuring that young people participate in our growing economy.

Mr Dave Watts (St Helens North) (Lab): Given the fact that the Work and Pensions Secretary was left alone on his Benches when he made his statement on universal credit, does the Prime Minister still have confidence in him and in the universal benefit changes?

The Prime Minister: I think the Work and Pensions Secretary has probably done more than anyone else in British politics to transform the debate about welfare. That is happening because of his dedication to the issue. We see fewer people out of work and the number of workless households at its lowest since records began. He is introducing a system that includes the benefit cap that Labour voted against and the household benefit cap that Labour voted against, and that is making work pay. We should be proud of that work.

Q12. [901589] Mr David Nuttall (Bury North) (Con): Does the Prime Minister agree that in the long term the best plan to improve the living standards of my hard-working constituents in Bury, Ramsbottom and Tottington is to continue to cut their income tax, which can only be achieved by a growing economy and by the Government cutting spending so that our country lives within its means and does not have to borrow every month to pay its bills?

The Prime Minister: My hon. Friend makes a very important point. At the end of the day, you can talk all you like about how you want to help people with their living standards and to keep their tax bills—[Interruption.] Is it not extraordinary? After last week, and all that, the shadow Chancellor is at it again—heckling. We learned something last week: he can dish it out but he can’t take it—[Interruption.]I will tell the House what is going down: his career. That is what is going down. The simple point is that if we want to get people’s taxes down, we have to make difficult decisions about spending. That is what we have done. That is why we can cut taxes, whereas the Opposition would have to put them up.

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Mr Frank Roy (Motherwell and Wishaw) (Lab): In towns across the United Kingdom, there are parents in deep despair because they cannot afford a decent Christmas for their children. Why is that?

The Prime Minister: What is happening in our country is that we are recovering from the longest, deepest and most difficult recession in living memory. It takes time, but what we see is 1 million more people in work—that is a positive development. We see 400,000 more businesses operating in our country—that is a positive development. The growth rate in our country is now the second-highest of any major western economy. The job is not done yet; it is not halfway done yet. That is why we need a long-term economic plan, which is what we are dedicated to delivering. Frankly, we would get nowhere if the first thing we did was to increase spending, increase borrowing and increase taxes—all the things that got this country into the mess in the first place.

Q13. [901590] Mr Nigel Evans (Ribble Valley) (Ind): British Aerospace has 1,000 apprentices at any one time, and 221 in Samlesbury in the Ribble Valley and neighbouring Warton in Lancashire. What can the Prime Minister do to encourage other firms to follow the excellent example of British Aerospace and take on more apprentices, particularly in engineering and science? That would in itself encourage more youngsters to study those subjects in school and university.

The Prime Minister: I have seen with my own eyes what BAE Systems does in respect of apprenticeships, including higher level apprenticeships, and it is extremely impressive. We have to take action at every level. We have to make sure that more young people are studying science and maths subjects, and that is beginning to happen. We have to make sure that setting up apprenticeships is simpler. It must be less expensive. We need a culture where companies really want to get involved in this programme, including small companies, but we also need to attract more investment to our shores. That is why it is particularly good news today that GSK, one of the giants of the pharmaceutical industry, is announcing another £200 million invested into our country, because alongside engineering, life sciences is an area where Britain can win in the global race.

Q14. [901591] Meg Munn (Sheffield, Heeley) (Lab/Co-op): When the House debated Syria in late August, the estimate of dead in the conflict was around 100,000. Just over three months later the estimate is over 120,000. We cannot allow this to become a conflict in a faraway land that we do not know anything about. Is it not time for the Government and, indeed, the whole House to urge greater action by the international community and show that we do care about the suffering of the Syrian people?

The Prime Minister: I absolutely agree with the hon. Lady, who has a long record of speaking out on this issue and believing, as I do, that Britain should be fully engaged in all the work to try to bring those involved in

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this dreadful war to the negotiating table, under the terms of the Geneva II process. At the same time, we must continue with the work that we are doing on humanitarian aid to help those who are suffering because of the conflict, but we should also, in my view and, I suspect, in hers too, continue to work with all those in Syria who want a free, democratic and pluralistic future. We must not allow the argument to develop that the only opposition in Syria is an extremist opposition. That will become the case only if we stop working with those who care about democracy in the future.

James Duddridge (Rochford and Southend East) (Con): In Rochford and Southend, employment is up, the number of apprentices is up and small business numbers are up, largely owing to the impact of the expanding Southend airport. I know the Prime Minister is probably a bit sick of airports, having just come back from one, but would he consider coming to Southend airport in the new year to celebrate its success Essex-style, bringing the family, if he wants? I promise to buy them all a Rossi ice cream on the sea front.

The Prime Minister: Who could resist the idea of an Essex-style celebration in the new year—although I might need to find out a little bit more of what it involves before I fully commit? We should not underestimate the importance of airports in driving regional growth. Clearly, that is the case in parts of Essex.

Q15. [901592] Steve Rotheram (Liverpool, Walton) (Lab): Despite the Government’s savage cuts, next year Liverpool will host the international festival of business. Why will the Prime Minister not commit to attending the event? Will he ensure that the same level of support that Boris would enjoy is afforded to the mayor of Liverpool? Will he tell his green-eyed bête noir that despite a short sleepover in London, the Beatles are and always will be made in Liverpool?

The Prime Minister: Having happily visited the Beatles museum many years ago and enjoyed being there, I can confirm what the hon. Gentleman says. I have never had any problem working with the mayor of Liverpool and enjoyed appearing on a platform with him to advertise the brilliance of that city, and I will continue to co-operate with him in all the work that he is doing to attract investment into the city.

Martin Horwood (Cheltenham) (LD): Abolishing roaming charges is one of the big wins for British consumers that we might get from remaining in the European Union. Has the Prime Minister had the opportunity to discuss international mobile phone usage with any other European Heads of Government in the past day or so?

The Prime Minister: You could say I have, in a roundabout way. It should be remembered that the television cameras are always on, but in my defence I would say that Nelson Mandela played an extraordinary role in his life and in his death in bringing people together, so of course when a member of the Kinnock family asked me for a photograph, I thought it only polite to say yes.

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Points of Order

12.34 pm

Mr David Davis (Haltemprice and Howden) (Con): On a point of order, Mr Speaker. In a named day question on 5 December this year, I asked the Attorney-General how many libel settlements, and of what value, the Crown Prosecution Service had made in each year between 2007 and 2012. I was given the answer that the CPS had made no libel settlements in that period. Unfortunately, in May 2008, in a case adjudicated by Master Eyre between Hardcash Productions and the Director of Public Prosecutions and the chief constable of West Midlands police, there was a settlement of £50,000 between the two defendants. I am certain, because I know him well, that there is nobody less likely to mislead the House than the Attorney-General. Therefore, he must be depending upon information given to him by the Crown Prosecution Service. If this House cannot depend on the organisation that is supposedly committed to promoting justice in this country to give us the truth, the whole truth and nothing but the truth, what can you do to defend us?

Mr Speaker: I am grateful to the right hon. Gentleman for his point of order. In the first instance, I can ask the Attorney-General to respond, and we will see what happens.

The Attorney-General (Mr Dominic Grieve): Further to that point of order, Mr Speaker. I am grateful to my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) for indicating to me a short time ago that he wished to make that important point. At the moment, I am not in a position to answer his question. He is absolutely right that the answer I gave him was based on information provided to me by the Crown Prosecution Service. He has given me some information that gives rise to a question as to whether that is accurate. I take that very seriously and the matter is being looked into urgently. When I have an answer, I will of course ensure that it is not only supplied to him, but made available to the House.

Mr Speaker: I hope that satisfies the right hon. Gentleman for today. I thank him for raising this important matter, which really is a public service. I am sure that clarity will be established, and hopefully very soon.

Sir Gerald Kaufman (Manchester, Gorton) (Lab): On a point of order, Mr Speaker. You will recall that recently I have twice raised the issue of the response, or lack thereof, to my correspondence from the Minister for Immigration. Following the point of order I raised last Monday, on which you ruled, and about which I remind the House, I have continued to receive letters signed not by the Minister for Immigration, but by Lord Taylor of Holbeach, against whom I have no resentment whatsoever. That continued until yesterday, so I asked my secretary to telephone the office of the

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Minister for Immigration to say that if I continued to receive letters that were not signed by him by Friday of this week, I would raise the matter on the Floor of the House. However, when my secretary made that call, the lady who answered said—I quote from my secretary’s note—that

“this was noted but that it would not make any difference and that Lord Taylor will still be replying, as he does to other Members of Parliament.”

I regard that response as a serious discourtesy from a civil servant to a Member of Parliament in any case.

Mr Speaker, when you responded to my point of order last week, you said:

“It should not be a matter of any controversy from now on. I hope that the Home Secretary can pass on the message to the Minister for Immigration and that the Minister for Immigration will behave in a seemly manner both towards the right hon. Gentleman and towards other Members.”—[Official Report, 2 December 2013; Vol. 571, c. 658.]

I should add that two Cabinet Ministers have told me that as a rule they always reply in person to letters from Privy Counsellors. In view of the fact that what you described as a “seemly manner” is not being observed by the Minister for Immigration, I ask you to rule on the matter. Furthermore, with your permission, if I receive any more letters from Lord Taylor, I will send them to you.

Mr Speaker: I wonder whether the Leader of the House wishes to say anything now—or he and I can discuss the matter.

The Leader of the House of Commons (Mr Andrew Lansley) indicated dissent.

Mr Speaker: The right hon. Gentleman is shaking his head. Perhaps we will have a conversation afterwards; I think that that in itself would be perfectly seemly.

May I say for the avoidance of doubt, so that nobody thinks that I am sitting on the fence on this matter, which I most certainly have not done, that I think the concern expressed by the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) is a reasonable one, and reasonable people should respond to it in a reasonable way, which, as far as I am concerned, means that he should get what he has reasonably requested. I am not sure whether something in the system is causing the problem or whether an individual is being obstinate, but it is not necessary. I think that the right hon. Gentleman, who has served in the House without interruption for 43 years and coming up to six months, should be treated with courtesy. He has not been, and I am sorry about that and hope we can put the matter right. I really do not want this matter to have continually to be raised on the Floor of the House. The reputation of the Department is at stake, and the Department must, frankly, raise its game. The Leader of the House and I can talk about it afterwards.

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Surveillance of Telecommunications (Judicial Oversight)

Motion for leave to bring in a Bill (Standing Order No. 23)

12.40 pm

Mr David Heath (Somerton and Frome) (LD): I beg to move,

That leave be given to bring in a Bill to amend the Regulation of Investigative Powers Act 2000 and the Intelligence Services Act 1994 to ensure judicial oversight of the use of material derived from British citizens by means of surveillance of telecommunications; to make provisions concerning the operation of the Investigatory Powers Tribunal; and for connected purposes.

Having unfortunately been on Capitol hill in Washington on 9/11 and in Aldgate on 7/7, I need no lessons on the threat to this country from terrorism and from those who wish to do us harm. I want to start my comments by paying tribute to the security services for all their hard work and the dangers they encounter on our behalf. I would include in that GCHQ, which provides invaluable information, often on the basis of fragmentary evidence, in supporting our safety.

Any surveillance and any clandestine operation in an open, democratic society raises questions that cannot be answered by the agencies themselves or by the Executive but only by the legislature—by this Parliament. They are questions such as these: where are the boundaries between privacy and legitimate information gathering? What controls are in place to prevent either abuse or the suspicion of abuse? What are the limits to what inevitably has to be done in secret? What information is legitimately withheld? How does our legislation and, for that matter, our capability measure up to the ever-changing potential of technology? How effective is our parliamentary scrutiny? How comprehensive is the legal framework within which the security services work?

It is only by asking those questions and, more importantly, coming up with answers that Parliament can ensure not only the safety but the protection of the interests of our citizens. Only by having adequate safeguards in place can we retain people’s confidence that what is being done is being done in an appropriate and proportionate way, and that they can safely use technologies where they believe they have a right to privacy without that privacy being invaded without good cause by the state.

Recent revelations have, at the very least, called into question some of those suppositions, not—I make this clear having received assurances from Ministers—such that the security services are acting outside the law, but that the law is inadequate to meet the present circumstances. That is why my Bill proposes amendments to the legislation passed in 1994 and 2000 to fill in those gaps. Let us remember how far the technology has moved in those intervening years and the extent to which the use of social media, for instance, and various technologies is so very different from the circumstances in which that legislation was framed.

We need to deal with not only the direct interception of communications, but the collection of communication data. Those metadata—the derivative data—that can be analysed are just as important, but I believe that the law is silent on that area. We also need to deal not only with what is collected directly by the United Kingdom

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agencies, but with the actions of overseas allies. We need to ensure that such material is subject to judicial oversight and on the terms of warranted action rather than those of subsequent review, which is a key difference.

The Bill would enable the man or woman on the street to know that their communications were not the subject of inappropriate and disproportionate intrusion. Just as importantly, it would provide the legal framework by which the security agencies would ensure that they would not be subject to legal challenge in their essential work. No such framework exists at present.

That review and updating of legislation is very necessary—those working within the security world agree about that as much as commentators on the outside, including the senior judiciary. If my Bill does not reach the statute book, I hope nevertheless that post-legislative scrutiny of the Regulation of Investigatory Powers Act 2000 will now be undertaken as a matter of urgency, because we need to answer some of these essential questions.

Parliamentary scrutiny is critical. I salute the work done by the Intelligence and Security Committee, particularly the announcement of its forthcoming inquiry into these matters. How much stronger would it be, however, were it to be more properly constituted as a Select Committee chosen by this House and given the resource to do its job properly? That is something I advocated in government and I renew my plea now. I do not believe it is impossible to achieve the security clearances needed to ensure that information is not inappropriately shared while also following the selection procedures of this House. Other legislatures do it. The Americans do it. Why on earth are we incapable of following their example? I see no obvious reason.

Finally, the Investigatory Powers Tribunal should be reformed to make its operation more transparent and the basis for its decisions more open. There are very good reasons—I understand that—for not revealing every detail of a strand of investigation or a technique that is at the disposal of the authorities, but a total lack of transparency and accountability for decision making is not the answer. I believe we can do better.

As I briefly alluded to earlier, other countries are taking these matters very seriously indeed. I am struck by the work being undertaken by the Senate Committee led by Senator Feinstein in the United States. Its legislature is leading a very public debate on where the limits—the boundaries—ought to be set. We are not having that same debate in this country and I think that is because we in Parliament are not taking the lead that we should. I believe that we have a duty to do so.

If we do not do that, I believe we will be failing our citizens and, incidentally, our security services. If we simply close our eyes to what are real issues with difficult answers, we will be letting down not only the public, but the people we ask to do these terribly difficult jobs. They cannot police themselves. They cannot do everything through better training or through being given better information because, at the end of the day, their focus is on doing the best possible job, not on setting the boundaries for their work, which is the proper job of Parliament.

I believe that we owe it to all those with intelligence interests not just to visit, but to revisit the legislative framework regularly, because unless we do so it will

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never keep up to date with technological advances or keep pace with the techniques of those who would wish to harm us, let alone the techniques of those with whom we entrust our security.

The Bill will at least allow us to debate the matter properly. I hope that it will also enable us to amend the law appropriately and to do the job that our electorate expect us to do, which is not just to give the security services the ability to ensure our protection, but to provide people with the security of knowing that there are boundaries provided by a framework of regulation and that those who necessarily work in a clandestine way will keep to those rules because that is the law.

Question put and agreed to.


That Mr David Heath, Mr Dominic Raab, Mr Tom Watson, Dr Julian Huppert, Mr Elfyn Llwyd, Rory Stewart, Simon Hughes, Mr David Winnick and Caroline Lucas present the Bill.

Mr David Heath accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 28 February 2014, and to be printed (Bill 143).

Delegated Legislation

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

Value Added Tax

That the Value Added Tax (Flat-rate Valuation of Supplies of Fuel for Private Use) Order 2013 (S.I., 2013, No. 2911), dated 18 November 2013, a copy of which was laid before this House on 18 November, be approved.—(Anne Milton.)

Question agreed to.

Financial Services (Banking Reform) Bill (Money)

Queen’s recommendation signified.


That, for the purposes of any Act resulting from the Financial Services (Banking Reform) Bill, it is expedient to authorise:

(1) the payment out of money provided by Parliament of:

(a) any expenditure incurred under or by virtue of the Act by a Minister of the Crown or government department;

(b) any increase attributable to the Act in the sums payable under any other Act out of money so provided;

(2) the payment out of the Consolidated Fund of any increase attributable to the Act in the sums which in urgent cases are payable out of that Fund under the Banking Act 2009;

(3) the payment out of the National Loans Fund of any increase attributable to the Act in the sums payable out of that Fund under any other Act.—(Sajid Javid.)

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Financial Services (Banking Reform) Bill (Ways and Means) (No. 2)


That, for the purposes of any Act resulting from the Financial Services (Banking Reform) Bill, it is expedient to authorise:

(1) the charging of fees on persons authorised under Part 2 of the Compensation Act 2006 for the purpose of meeting expenditure of the Office for Legal Complaints; and

(2) the payment of sums into the Consolidated Fund.—(Sajid Javid.)

Financial Services (Banking Reform) Bill (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Financial Services (Banking Reform) Bill for the purpose of supplementing the Order of 11 March 2013 in the last Session of Parliament (Financial Services (Banking Reform) Bill (Programme)) and the Order of 8 July 2013 (Financial Services (Banking Reform) Bill (Programme) (No. 2)):

Consideration of Lords Amendments

(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion six hours after their commencement at today’s sitting.

(2) The proceedings shall be taken in the order shown in the first column of the following Table.

(3) The proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table.


Lords AmendmentsTime for conclusion of proceedings

No. 41

Two hours after the commencement of proceedings on consideration of Lords Amendments

No. 63

Four and a half hours after the commencement of those proceedings

Nos. 1 to 40, 42 to 62 and 64 to 184

Six hours after the commencement of those proceedings

Subsequent stages

(4) Any further Message from the Lords may be considered forthwith without any Question being put.

(5) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Sajid Javid.)

Question agreed to.

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Financial Services (Banking Reform) Bill

Consideration of Lords amendments

Mr Speaker: I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 35, 37, 40, 64, 149, 150, 162, 163, 169, 171, 172, 173 and 175. If the House agrees to any of these amendments, I shall ensure that the appropriate entry is made in the Journal.

After Clause 12

Part 4

12.53 pm

The Financial Secretary to the Treasury (Sajid Javid): I beg to move, That this House disagrees with Lords amendment 41.

Mr Speaker: With this we may take Lords amendments 42 to 62, 160 and 174.

Sajid Javid: It is a pleasure to introduce these amendments. Much work has been undertaken in this House and in the other place since my predecessor closed the Second Reading debate in March. That work has improved the Bill. The Bill has expanded greatly in length and content since it left this House. In large part, the variety of new issues that it covers reflects the Government’s acceptance of the vast majority of the recommendations that were made by the Parliamentary Commission on Banking Standards, which published its final report after the Committee stage in the Commons.

I pay tribute to the members of the PCBS and especially those who sit in this House: my hon. Friend the Member for Chichester (Mr Tyrie), the right hon. Member for Wolverhampton South East (Mr McFadden), the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), the hon. Member for Edmonton (Mr Love) and my hon. Friend the Member for Wyre Forest (Mark Garnier). It was their hard work that led to the reports.

I will speak in support of the amendments that resulted from the work of the parliamentary commission, but ask the House to reject the Opposition amendment that was made in the other place, Lords amendment 41. I will begin by explaining how the former amendments will deliver the goal of improving the standards of conduct in banking.

The Parliamentary Commission on Banking Standards concluded that the current system for approving those who hold senior positions in banks, the approved persons regime, had failed. The commission’s central recommendation was the creation of a senior persons regime that applies to senior bankers. The Government accepted that recommendation. The amendments will deliver on the recommendation by putting in place a senior managers regime with five key features.

First, the regime will reverse the burden of proof so that senior bankers can be held to account for regulatory breaches in their area of responsibility, without the need to prove that they were personally involved in the wrongdoing. Secondly, there will be mandatory statements of responsibility for senior managers. Thirdly, the regulators

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will be able to make conduct rules for senior managers in banks. Fourthly, there will be provision for time-limited and conditional approvals of senior bankers. Fifthly, the financial services register, which is kept by the Financial Conduct Authority, will state who is a senior manager in a bank and give details of the regulatory action that has been taken against them. The amendments will provide a clear and effective system for raising standards and increasing accountability among the country’s senior bankers.

Lords amendment 53 introduces a certification regime for bank staff. That will apply to all staff below senior management level who have roles in which they could seriously harm the firm or its customers. The Prudential Regulation Authority and the FCA will therefore be given a far-reaching new power to make enforceable rules of conduct for all employees in a bank. Banks will have to verify that employees who have roles in which they could do significant harm to a bank or its customers are fit and proper for those roles. Banks will have to do that on appointment and annually thereafter. They will have to issue certificates, which may be electronic, to those employees, confirming that they are fit and proper for their role.

The Government have always supported the spirit and substance of the commission’s licensing regime recommendations. However, we do not consider it appropriate to call it a licensing regime. That would imply that the individuals concerned had been given licences by a regulator. That is precisely the opposite of what the commission recommended. We therefore cannot use the words “licence” or “licensing”. It is in order to refer to “certificates” and “certification” because certificates will be issued by the banks. Banks will also have to notify employees of the banking standards rules that apply to them and take steps to ensure that they understand them.

I would like to say something about the firms that are covered by the senior managers regime and the new obligations under the certified persons regime. The parliamentary commission naturally focused on banks. However, the definition was extended to include systemically important investment firms that do not take deposits, but that are regulated by the PRA. We have also included a power to extend the senior managers and certified persons regimes to cover UK branches of foreign banks and investment firms if it is considered appropriate to do so. Some large branches of foreign banks and investment firms operate from London, so it is prudent to equip ourselves to bring them into the new regime.

Neil Parish (Tiverton and Honiton) (Con): Does the Minister agree that it is essential that companies can trust their banks in order that they can do business? We must get the legislation right so that companies can again trust their banks. Companies must feel able to give banks confidential information in the expectation that it will remain confidential. Companies need to be able to access finance to compete in business and create employment. The banks are holding back our businesses.

Sajid Javid: I agree wholeheartedly with my hon. Friend, and I hope that he agrees that all the effort that has gone into setting up this new regime—in particular the senior managers regime and the certification regime—is a huge step forward in achieving that aim.

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1 pm

The Government are committed to bringing branches of foreign banks and investment firms that operate in London into the regime. At the same time, such a shift may be disproportionate for some small branches with few real decision makers, and the Government will consider the case for not extending the regime to such branches in due course.

I do not accept Lords amendment 41 because it would do nothing other than rename the existing approved persons regime as a licensed persons regime—that is about all it does. It would not deal with problems with the existing regime identified by the Parliamentary Commission on Banking Standards, or deliver the improvements recommended by that commission. I assure the House that, under the Government’s approach, which is based on the commission’s recommendations, firms will have to certify that people who perform roles through which they could do significant harm to the firm or its customers are fit and proper to perform those functions. That will include ensuring that they have received suitable training and have any relevant qualifications required by the regulator. That will not be a one-off check; it will be done annually.

The Opposition amendment would place all the burden of raising banking standards on the regulator. The PCBS concluded:

“Banks should not be able to offload their duties and responsibilities for monitoring and enforcing individual behaviour on to the regulator or on to professional bodies. The tools at their disposal have the potential to be much more usable, effective and proportionate for the majority of cases than external enforcement,”.

That is the approach the Government have adopted in their amendments. They place clear responsibility on the banks to ensure that anyone who is appointed to a post where they might cause significant harm to the bank or its customers, is fit and proper and able to perform their role. That will require consideration of the person’s qualifications, characteristics, experience and training, and the banks will have to consider each year whether that person is still fit and proper to continue in that job.

The regulator will specify those functions that may cause significant harm to a bank or its customers in rules, and can specify what qualifications must be held by anyone appointed to that role. The bank’s implementation of that regime will be subject to monitoring by the regulators, who will be able to take enforcement action against any bank that does not meet requirements laid down by the regulators.

The Government have worked tirelessly to replace the failed system of financial regulation we inherited from the previous Government. We supported the PCBS in its work and are implementing its recommendations. It seems that all the Labour party can offer at this point is a change of name. I therefore ask the House to reject Lords amendment 41.

Another key recommendation of the PCBS is the introduction of a new criminal offence of reckless misconduct in the management of a bank. The introduction of such an offence means that, in future, those who bring down their bank by making thoroughly unreasonable decisions can be held accountable for their actions, which, as we have seen, can lead to severe economic disruption and considerable losses for taxpayers.

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Emily Thornberry (Islington South and Finsbury) (Lab): With hindsight, will the hon. Gentleman help the House and say whether Fred Goodwin would have been prosecuted under that provision?

Sajid Javid: It is possible, although it is difficult to answer that question specifically as it would depend on the legal process, as anticipated in the Bill. As I progress with my remarks, the hon. Lady will see the kind of actions that can lead to prosecution.

Mark Garnier (Wyre Forest) (Con): Does the Minister agree that a lot of the changes that are coming through as a result of PCBS recommendations should in some respects be treated rather like the nuclear deterrent? It is not necessarily about trying to punish people; it is about trying to drive behaviour that avoids a crisis in the first place. Had these rules been around at the time, it is far more likely that Fred Goodwin would not have led his bank over the cliff, that we would not have had the financial crisis, and that we would have a more stable banking system as a result. That is the intention behind the proposed law.

Sajid Javid: My hon. Friend has explained well the reasoning behind the recommendation from the PCBS—which, of course, he was part of—and the deterrent effect this change could have should not be underestimated.

Emily Thornberry: I thank the Minister for giving way again; he is helpful in giving me the time because I am genuinely confused about this. If the proposed legislation is to have a deterrent effect and deter the sort of behaviour that was seen before the banking crash, had it been in place at the time, presumably people would have been prosecuted. All I want to know is: which people, and can the Minister give the House some examples?

Sajid Javid: As I discuss the issue I will provide more information on how the measure could work, and perhaps the hon. Lady will judge for herself, given the situation she has in mind, whether the measure would have acted as a deterrent, and whether a prosecution could have taken place.

Mr Andrew Tyrie (Chichester) (Con): First, I think it would be inappropriate to try to assess the impact of the proposed legislation on any specific case that has passed, and secondly, we are trying to devise legislation that will work for the future. I completely endorse what my hon. Friend the Member for Wyre Forest (Mark Garnier) has just said. We must emphasise that we expect a change and improvement in behaviour as a consequence of much more considerable risks and responsibilities being placed on those individuals than currently pertain with the approved persons regime and system of regulation.

Sajid Javid: I thank my hon. Friend for his comments. As Chair of the Parliamentary Commission on Banking Standards, he helps to explain the commission’s reasoning, which the Government share.

The introduction of this offence means that, as we have heard, in future those who bring down their bank by making thoroughly unreasonable decisions can be held accountable for their actions, which, as we saw in

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the recent financial crisis, can lead to severe economic disruption and considerable loss for taxpayers. In line with the commission’s recommendations, the new offence will be applicable only to individuals who are covered by the senior managers regime I mentioned earlier. Senior managers could be liable if they take a decision that leads to the failure of the bank, or if they fail to take steps available to them to prevent such a decision from being taken.

The offence will apply to behaviour that falls far below the standard that could reasonably be expected of a person in their position—that is similar, for example, to the test applied in corporate manslaughter. Importantly, the offence will apply to senior managers in banks, building societies and investment firms, and be subject to PRA supervision. That reflects concerns expressed by their lordships that the failure of systemic investment firms could lead to similar adverse consequences for financial stability, and that the taxpayer may have to bail out a collapsed retail bank. The maximum sentence for the new offence will be seven years in prison, and/or an unlimited fine. That reflects the seriousness that the Government, and society more broadly, place on ensuring that our financial institutions are managed in a way that does not recklessly endanger the economy or the public purse.

Mr Andrew Love (Edmonton) (Lab/Co-op): The Minister struck the correct note when he mentioned the seriousness of such situations. Much concern has been expressed that this provision applies only to financial institutions, but the conditions that would have to apply for it to be used—in other words, a serious threat to the systemic nature of our financial system—are such that it is likely the measure will not be used often.

Sajid Javid: I completely agree with the hon. Gentleman and I think we all hope that the new criminal sanction will not actually have to be used because the offence will act as a genuine deterrent against such recklessness.

Emily Thornberry: If I were a senior banker to whom this law applied, what would affect my decision on whether to behave recklessly? Would it be the thought, “If I do this, there’s a risk my bank and the whole financial system will crash around my ears and I will be seen as personally responsible”, or would it be the possibility of being prosecuted under this new legislation?

Sajid Javid: Both cases would be a deterrent. A key point of the change to criminal sanctions is that they would apply if a senior manager took part in any reckless action—there is a very strong test, as we have just heard—that led to the failure of a bank. It would not be appropriate to perform a legal analysis of what has happened in the past because we do not have the full facts before us, but if a board full of senior managers makes a decision on, let us say, a potential acquisition and they fail to carry out proper due diligence or they deliberately ignore certain risk factors, and that eventually leads to a failure and collapse of that bank, that will be an example of the situation that the new offence tries to capture. It is reasonable to say that, as those senior managers will be aware of the new criminal sanction, which did not exist before, it will bear on their minds

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when they make those important decisions. The Government amendments in this group will improve standards and the culture in banking.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I have listened with interest to the Minister. May I first add my thanks to all the members of the Parliamentary Commission on Banking Standards, who have done us a great service in examining the issues in great detail? They include not only Members of this House but Members of the other place—the Archbishop of Canterbury, my noble Friend Lord McFall, Lord Turnbull and Lord Lawson. Other Members in the other place, including my noble Friends Lord Eatwell, Lord Mitchell and Baroness Hayter, have ensured that particular issues have been put on the agenda.

It would be remiss of me not to say a few words about how we have arrived where we are today—considering a vast number of Lords amendments at this stage. The concerns about that have been well rehearsed during discussion of the Bill and how it has been brought forward and considered. The Government commissioned the Parliamentary Commission on Banking Standards to ensure that recommendations could be added to the Bill, but we had a very thin Bill for Second Reading and in Committee. The commission recommended a three-month gap between the publication of the Bill and the commencement of the Committee stage, but the Government rejected that idea. Instead, this House had to consider the partial Bill before the final report on standards and culture had been published. It is pertinent to reflect on that, given some of the comments made by the Minister. Many of the issues that will be taken forward when the legislation is enacted will still depend on judgments being made and on getting the message across that the culture of banking, at whatever level, has to change. That would have been helped by further scrutiny at various points.

We must also remember that the Government’s response to the commission’s report was published only three or four hours before we started considering the Bill on Report. We had 183 amendments tabled during the next stage of the Bill, and I wish to put on record our concerns about that method of legislation. The Bill is now three times bigger than the one that was originally introduced, and consideration of Lords amendments took place only a couple of days after Third Reading—again, without much opportunity to consider matters in detail.

Mr Gordon Marsden (Blackpool South) (Lab): My hon. Friend is detailing, forensically and importantly, the logjam that this process has produced. Does she agree that if we had had longer, organisations and groups outside the House, which feel very strongly on these issues, would have had more opportunity to make representations? The Government’s failure to allow that, by tabling these amendments as they have done, has circumscribed the public process.

1.15 pm

Cathy Jamieson: My hon. Friend makes an important point. It is vital that the public has confidence in the process. The public need to know that the culture of banking will change; that we have given the Bill thorough scrutiny; and that we have considered and put in place

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every possible method to limit bad judgments and errors in the future. In the end, however, it will be down to individuals, and from my experience of various pieces of legislation I would always guard against the notion that any individual piece of legislation will guarantee that nothing will go wrong in the future. That always depends on individuals making judgments. It is important that we get the culture right so that individuals within it make judgments not just because they fear that they will be prosecuted and go to jail, but because they believe they are doing the right thing by their customers and by the wider economy.

Mr Love: Before my hon. Friend moves on, does she agree that while we should congratulate Members in the other place on the role that they played in amending the Bill, it would have been correct to delay the Bill so that the House of Commons had proper time to scrutinise the changes recommended by the commission, rather than leaving that to the other place?

Cathy Jamieson: My hon. Friend makes a valuable point. It would have stood us in good stead had we had such an opportunity. I have only been a Member of Parliament for a relatively short time, and others will have much more experience, but it seems to me unusual to have so many amendments at this stage of a Bill. External bodies have made significant representations at this stage, which is also unusual and shows the strength of feeling about the issue of banking and its culture. It also shows that people have been thinking about how to future-proof the Bill, not simply to repair damage done in the past, but to ensure that we do all we can for the future. Some people may feel that this has been a tick-box exercise and a part of the process that does not matter as much, and it is rather sad if that has been the case.

We know that we have a huge amount more to do. Only today we have seen the latest news about Lloyds bank being fined again. It is also fair to say that as the weeks and months have unfolded during the Bill’s passage, we have seen various situations emerge. I have written to the Minister on the recent issues on forex, and we have also had the sad events at the Co-operative bank and the outcome of investigations into the LIBOR rigging. Those all show that more issues may arise that will have to be dealt with properly, and we want to ensure that the legislation we put in place is able to do that.

Emily Thornberry: Is my hon. Friend satisfied with the definition of senior bankers as those who would be liable to be prosecuted? Is it sufficiently clear and is it felt that it covers those people who really would be directing proceedings?

Cathy Jamieson: My hon. Friend makes another interesting point. She has already raised the likelihood of criminal proceedings, and in that context the Minister made comparisons with other legislation. I was concerned about the comparison with legislation on corporate manslaughter, which my hon. Friend obviously knows a considerable amount about. We have to ensure that definitions are as tight as possible, so that things do not slip through the net at a later stage. I hope the Minister will be able to provide clarity on those concerns.

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We wish to ensure that Lords amendment 41, on professional standards, stays in the Bill. Earlier this year, the Government committed to implementing the main recommendations of the Parliamentary Commission on Banking Standards. Those recommendations included the creation of the new criminal offence of reckless misconduct by senior bankers. We want to ensure that that is as tight as possible. As the Minister outlined, the Government also agreed to introduce a new two-tier authorisation process for bank staff.

Our concern is that the Government have consistently failed to go far enough on the professional standards required of bankers. When the Bill was first introduced, Ministers resisted, on three separate occasions, Opposition attempts to put tougher professional standards in the Bill. Introducing the proposal at an early stage would have allowed us the opportunity to debate and finesse it, if required. At that stage, we included proposals for an annual health check on senior bankers. Indeed, Labour first pushed for a licensing regime with an annual validation of competence during the Committee stage of the Financial Services Bill in March 2012, so we have been pressing this case for a lengthy period of time.

Lords amendment 41 states that there needs to be

“minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct.”

The recognised code of conduct is important. The then Minister, the hon. Member for Fareham (Mr Hoban), opposed the amendment, saying:

“I…argue very strongly that the amendment is not necessary. In fact, it could have unintended consequences.”––[Official Report, Financial Services Public Bill Committee, 1 March 2012; c. 235.]

I cannot recall what those unintended consequences he feared were. Given that the Government have now seen fit to change their view, I am sure they no longer have those concerns.

A similar amendment was tabled again in April 2013 to this Bill and once again it was voted down by the Government. We on this side of the House never give up: if we think something is the right thing to do, we will come back and come back again. We tabled the same amendment again in July 2013, and again the Government failed to support it. We tabled the amendments because we believe that the persons we are talking about must have adequate standards of competence and integrity. The debate on managing the process and legislating for it may seem technical, but it is important for people in the real world to know that we are trying to introduce reforms. There has been a degree of discussion across the House, and I accept that, but people need to know that we are trying to introduce reforms that complement the attempts to change the culture of the banking sector.

Mr Marsden: I am listening carefully to my hon. Friend as she lists the specific attempts that we on this side of the House have made to bring this into clear sight for the Government. Is it not worrying that the Government seem to have reacted as though we need do something only when the deathwatch beetle in these financial institutions has done its work and we need only press on the institution for it to collapse into powder? Unless we press the Government, there will be no mechanism to examine the process.

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Cathy Jamieson: We pressed for an earlier introduction of the measure so that we could debate and finesse it if necessary. However, the Government were prepared to move only at the last minute, through a successful amendment in the other place, and it is disappointing that they now want to strike it down.

Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): My hon. Friend is making a strong case. I, too, served on the Committee and witnessed our efforts on this matter. Why have the Government been on the back foot throughout the process? We are talking about the culture of banking, but I wonder whether there is an issue with a Government culture of continual caution, rather than the challenge that ought to be presented to some of those interests in society that have failed our country.

Cathy Jamieson: I thank my hon. Friend for his comments. I do not know what was in the Government’s mind, but in Committee the Bill was very thin. We raised the matter on a number of occasions, but the Government resisted every attempt to amend the Bill in Committee, apart from on one minor detail. In retrospect, that is not the way to produce the best possible legislation. The Bill will undoubtedly have been improved by the end of the process—I do not detract from the work that has been done—but it would have sent a stronger message to the general public and the financial services industry that this place took the matter seriously if the Government had accepted amendments at an early stage.

Ian Swales (Redcar) (LD): As a member of an accountancy body that deals with police professional standards and continuing professional development, I understand this issue. I also understand that the financial services industry is diverse, with many different roles. Has the hon. Lady tried to list all those roles and thought about what professional qualifications and standards are appropriate to each and every one?

Cathy Jamieson: I understand the hon. Gentleman’s point. Our approach has been to suggest that that responsibility lies, rightly, with the Financial Conduct Authority. It would not be for me, as a shadow Minister, to list those roles. In relation to the definition of a professional, it is important for people to have professional development, with qualifications, on a continuous basis. One fundamental issue for professions is an adherence to a code of conduct. We tabled amendments on that consistently because we believe strongly that that is important. The wider world wants to know that the banking industry culture has changed and that malpractice, which unfortunately is still coming to light, is being dealt with.

Mr Love: As a member of the parliamentary commission, I note that despite our many recommendations, which my hon. Friend has illustrated, six years on from the credit crunch there are continuing difficulties with the culture of the banking system. Is it not the case that we need to do more to change that culture, and that we need to do it now?

Cathy Jamieson: My hon. Friend is absolutely right. If we believe the Bill to be the end of the story, we will do a disservice not only to the hard work done already,

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but to the industry and to the wider public. I hope the Minister and the Government will take that on board. We must always be vigilant and look to the future.

1.30 pm

The commission was unable to consider several areas, which no doubt will come before us in the future, concerning the culture of banking—not just in retail banking, but in investment banking and on the trading floors—and other areas on which I am sure there will be more to do. Millions of consumers have fallen victim to the mis-selling of products in the past 15 years, but although many have successfully claimed money back, the general public see only that those who sanctioned the products and oversaw their mis-selling have not necessarily been held to account. That will remain a concern. Despite the huge economic and social importance of the banking industry, there are still no uniform professional standards for bankers. As I pointed out earlier, those with responsibilities in other professions—teachers, lawyers, medical health professionals—must comply with certain professional standards and codes of conduct, which is important.

There is concern that standards have not improved enough in the years since the initial banking crisis—as I said, we still hear of ongoing malpractice in the industry. Recent research from Which? has found that 65% of bank staff with a sales role say there is now more pressure than ever to meet sales targets and that almost half know of colleagues who have mis-sold products in order to meet their targets. It was reported today, in the context of the latest fine on Lloyds, that one bank employee sold products to his family and others in order to meet the incentives and not be demoted. If that is the case, it is exactly the kind of thing that the general public are concerned about.

One in four of those surveyed said that targets drove employees to sell inappropriately. Surely there can be nothing more inappropriate than people feeling under that kind of pressure. The report also found that two thirds of people thought that bankers were unlikely to lose their job if they lied or cheated. Despite the tougher regime and legislation we are putting in place, the general public are not convinced. A similar proportion think that bankers are unlikely to lose their job if they fail to comply with industry codes of conduct and even if they deliver consistently poor service or receive a lot of customer complaints.

Interestingly, given that we tried at various stages to introduce the concept of a fiduciary duty to look after customers, only 6% of people thought that bankers acted in the best interests of consumers. Only one in four felt that bankers were properly trained or qualified. Clearly, then, the industry has a long way to go to regain the public’s confidence. In discussing these issues, however, we need to think about those in the banking industry who are not making the big decisions at the top but are doing the front-facing work with customers. We must protect them and ensure that they are not put under pressure to sell or provide products incorrectly. On a wider issue, of course, we also need to protect the taxpayer from ever again having to bail out the banks.

The Opposition are not alone in thinking that. Sir David Walker, the chairman of Barclays, said on 5 February 2013 in his appearance before the commission:

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“My view is that the best thing that could happen is for the Commission to say that it thinks that something like a banking standards board, designed to professionalise banking…be put in place and commend that as an initiative to be undertaken with urgency”.

The chief executive of the Chartered Banker Institute told the commission on 14 January:

“My predecessors tried to encourage banks and bankers to support professional qualifications and membership of professional bodies… I have tried in the past five years to say, ‘Look, in order to rebuild the banking industry, it’s fine to look at rebuilding regulatory structures and the structure of the industry, but the whole issue of culture and standards is one that is equally important.’”

He said he had been trying to bring attention to that for the past five years and arguing for a re-professionalisation of banking.

If the Minister does not wish to listen to us or those individuals, I should quote the Chancellor, who himself told the commission in February that we should develop the

“kind of professional standards...that you see in the medical profession or the legal profession”.

Mark Garnier: Is the shadow Minister aware that the banks have already initiated the creation of a professional banking standards body?

Cathy Jamieson: I thank the hon. Gentleman for that comment. I know that he has done considerable work in his role on the commission, but it is important that these issues be put on the record. It would have been useful to consider them in Committee, and I mention them now to show that significant pressure has been applied to move things forward and bring about change. The Government appeared to resist that and some of the commission’s recommendations until, of course, their recent change of heart following their defeat in the other place on the amendment for the licensing regime. At that point, they felt they had to bring forward their own plans.

The Opposition might have expected the Government to be reasonably gracious and accept the decision of the other place, but today they have tabled an amendment to disagree with and remove Lords amendment 41 from the Bill. To be fair, what they have tabled, under pressure to replace that amendment, is better than nothing, but it does not go anywhere near as far as the amendment they wish to strike out. The main difference essentially concerns the code of conduct. Lords amendment 41 states specifically that the

“licensing regime must…apply to all approved persons exercising controlled functions, regardless of financial sector;…specify minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct and revised Banking Standards Rules”.

That is important, given that the Government’s position does not call specifically for a code of conduct. In some ways, their regime legislates for the commission’s recommendations, but by failing specifically to legislate for an open and transparent code of conduct, they risk failing to address some of the ethical issues surrounding so-called casino banking. Their more permissive amendment does not focus specifically on a code of conduct.

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Several other hon. Members wish to speak, so I shall conclude with some brief comments about remuneration. As hon. Members might be aware, the Opposition have given considerable thought to the regulation of bankers’ remuneration, and there remain certain issues that the Government must consider before the general public can have confidence in the industry. The public find it difficult to understand, and have concerns about, the culture of high risk, high reward that was evident in the previous system and which contributed to the crisis.

Mr Love: Does the banking industry not make it more difficult for the public to understand, given that, even in these difficult times, it has gone back to the massive bonus culture we have all been complaining about?

Cathy Jamieson: Once again, my hon. Friend is absolutely correct. The general public expected the industry to show some humility and make every effort not only to repay the taxpayer, where appropriate, but to reflect on its actions, perhaps take the view that this culture was now outdated and move on and operate differently.

The general public’s concern will not be alleviated by the latest list of scandals. We have had LIBOR, EURIBOR, PPI—payment protection insurance—forex, yen LIBOR—the list seems to go on and on. Almost every day, every week, every month, something else is being put into the public domain. We have recently heard concerns about lending from RBS, with businesses having gone into administration. It is right and proper, of course, that these issues are investigated. We continue to talk about these issues, but however much we will things to change, people are concerned that if the bankers do not accept that their culture has to change, we will just continue to talk and put legislation in place, but without the messages having got through. I believe that the general public are particularly concerned about that.

As I said, we believe that the amendment unsuccessfully launched in the other place should remain in the Bill. I am disappointed that the Government have chosen to disagree with it and want to strike it out. I do not expect the Minister to change his view at this stage. I am sure he will revert to the position held in Committee, which was to disagree with us on this matter.

Mr Tyrie: Before addressing the amendments in the group, I would like to say a few words—this is the only and last opportunity to do so—about the work of the Parliamentary Commission on Banking Standards. The task that Parliament set it was

“to consider and report on: professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting process”

and on

“lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for Government policy…and to make recommendations for legislative and other actions.”

That was a very large canvas. The backdrop was a profound collapse of trust in parts of the banking sector—triggered by, among other things, deep lapses in banking standards.

We should bear it in mind, however, that the banks were only partly responsible for all these problems, and that the commission’s proposals represent only part of

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the solution. On the first point, responsibility for the problem also lies with regulators, central banks, Governments, auditors, risk-rating agencies and consumers, both retail and wholesale, who over-borrowed. They all need to take their share of the responsibility.

On the second point—finding the solutions—the Banking Commission’s proposals need to be set alongside both reforms to the regulatory structure, such as the creation of the Prudential Regulatory Authority and the Financial Conduct Authority after the abolition of the Financial Services Authority, and the structural reform of the banks, as proposed by Sir John Vickers.

I doubt whether the Government or the man who led the regulatory changes, Sir John Vickers—or indeed any member of the Banking Commission—thinks that, even taking together all the proposals we have put forward, we can solve everything. In any case, many on the commission were sceptical about the extent to which culture can be changed by legislation—a point made from the Front Bench earlier this afternoon. Legislation can, however, play an important role by incentivising good behaviour and penalising bad. Nevertheless, we concluded that, if fully implemented, our proposals should put us in a better place to protect taxpayers and the country from systemic risk and to protect consumers from lapses in standards.

As the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) said a few moments ago, there will continue to be regulatory failures, so only with the exercise of judgment and a good deal of vigilance are even these proposals likely to make a big difference in the long run. Our job today is narrower—to complete the task of making sure that those responsible for exercising that vigilance have the statutory tools to do the job.

1.45 pm

The Banking Commission made a number of far-reaching proposals. It has been a massive collaborative effort for and by Parliament and parliamentarians. I would particularly like to thank all the commissioners for their hard work, determination and ideas, without which virtually nothing could have been achieved. I see that two of the five Commons commissioners are in their places with us this afternoon. I would like to thank, too, the staff: the Clerks, those seconded from other work and the specialist advisers, all of whom worked long hours to deliver five reports in under a year. With respect to this specific legislation, I would like to thank our legal team—both former parliamentary counsel—for their professional help over the past few weeks.

A measure of the scale of what we are trying to scrutinise this afternoon is the fact that the Bill went to the House of Lords 35 pages long but has come back to us with an extra 170 pages. I do not think that does much for parliamentary scrutiny of legislation—however important, necessary and urgent it might be. Is it so urgent that we could not have found more time for it?

It was clear on Report that the Government’s commitment to implement our proposals was, frankly, somewhat lukewarm. Our first report was cherry-picked, and of the two other reports that had made recommendations, one, on proprietary trading, was ignored,

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and the other, the final report, received only a partial commitment for implementation. So I am delighted to report that there has recently been a dramatic change of heart from the Government. Over the past few weeks, this Bill has been transformed.

Cathy Jamieson: The hon. Gentleman mentioned proprietary trading. Is he now satisfied that the Government’s recent actions take account of all the commission’s recommendations?

Mr Tyrie: Broadly, yes. Given that I am already stretching things a little in my opening remarks, I will try to deal with prop trading at the most appropriate parts of my speech—but the short answer is, as I say, broadly yes.

The commissioners met yesterday to discuss progress. We believe that the Government have converted the lion’s share of the Banking Commission’s recommendations into statutory action, where required. It is worth listing what has changed. The following amendments have been made to the Bill in order to implement our recommendations: electrification of the ring fence has been considerably improved since Commons Report stage; an independent review of the ring fence, which can consider the full separation of the banking industry, has been introduced; the Banking Commission’s recommendations on prop trading, which we just discussed, have, for the most part, been implemented; the proposals for the senior managers regime have been improved; a certification or licensing regime has been added to the Bill; a proper definition of a bank—the Bill’s definition was defective when it left this place, and it was a major lacuna—has been added to the Bill; the PRA has acquired a competition objective to complement that of the FCA; and audit requirements have been tightened for systemically important firms.

Furthermore, a good number of undertakings and assurances have been given in response to specific recommendations. Most importantly perhaps, the bank will almost certainly be given the Financial Policy Committee responsibility for the leverage ratio, and the Government have said that they will legislate to that effect after a review. We would otherwise have had to wait until 2017-18 to have that considered.

Mr Love: Will the hon. Gentleman give way?

Mr Tyrie: I give way to my fellow commissioner.

Mr Love: How long does the hon. Gentleman think the handing of control over the leverage ratio to the Bank of England will take? Time is moving on, and we need to get there sooner rather than later.

Mr Tyrie: I have pressed the Bank of England on that issue with my Treasury Select Committee hat on. A subsequent exchange of letters between the Governor and the Chancellor makes it pretty clear that by the end of next year the issue will be resolved and responsibility will lie with the Bank. Indeed, I think that for anything else to happen, given that exchange of letters, would be considered extraordinary, unless the review came up with some major obstacle that no one had previously spotted.