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House of Commons

Wednesday 7 May 2014

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Scotland

The Secretary of State was asked—

Scottish Independence (Border Constituencies)

1. Rory Stewart (Penrith and The Border) (Con): What assessment he has made of the potential effects of Scottish independence on border parliamentary constituencies. [903823]

The Secretary of State for Scotland (Mr Alistair Carmichael): As a United Kingdom, we all have better job opportunities, employment and mobility. Every day, 30,000 people travel between Scotland and England for work. If Scotland were to leave the United Kingdom, our border constituencies would be the first to feel the effects of the creation of an international border.

Rory Stewart: Does the Secretary of State agree that one of the challenges of separation would be that our focus would be lost and our energy dissipated by looking at the details of administration and borders, rather than all the opportunities in the world, from Brazil to Indonesia?

Mr Carmichael: That is one of the many downsides a vote for independence would bring. It would be an unnecessary distraction that would indeed remove our focus from the opportunities that being part of the United Kingdom give us to develop Scottish business by looking overseas.

Mr Brian H. Donohoe (Central Ayrshire) (Lab): On the question of separation, surely it is understood that divorce can be messy and that in this case it certainly would be messy? What I have been told by businessmen in my area is that they will move out of Scotland if separation takes place.

Mr Carmichael: I think we all know that what matters to business is the bottom line: the profit and loss account and the balance sheet. If businesses felt that independence was going to be good for them, they would be lining up to support it. Since the turn of the new year, we have heard a steady chorus from the business community, who have all been coming out to underline the risks and uncertainty that would come from independence. [Interruption.] These are voices

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that the hon. Members on the nationalist Benches may wish to drown out with their incessant chatter, but they will not do it.

Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD): Anybody who pauses at the top of the hill on the Carter Bar on the A68 is able to reflect on one of the most beautiful views of Scotland and on one of the most beautiful views of England, and reflect on the fact that these two countries have so much in common and so much shared family experience. Does my right hon. Friend share my hope that that will always be the case, rather than it marking the border point between two separate states?

Mr Carmichael: I very much agree with my right hon. Friend. I always think of the United Kingdom as being a family of nations. Of course, like all families, we do have those moments where we have disagreements, and we do occasionally want to do things in a slightly different way, but as a family the ties that bind us are so much greater than the differences that divide us. That is why I believe that Scotland, come 18 September, will choose to remain part of that family of UK nations.

Angus Robertson (Moray) (SNP): But the people of the borders and the rest of Scotland are being subjected to the self-styled “project fear” campaign, which its own supporters describe as negative, nasty, and threatening, and who also say that the Prime Minister is toxic in Scotland. Why are even the Secretary of State’s own colleagues saying this?

Mr Carmichael: I have to say that it is a bit rich to hear the right hon. Gentleman talking about “project fear” when the First Minister went to Carlisle on St George’s day to deliver a lecture that I can only describe as project ridiculous. The fact of the matter—there is no escaping this for the nationalists—is that for people living in the constituencies on either side of the border, there are real benefits to being part of the United Kingdom. The nationalists want us to walk away from those benefits.

Angus Robertson: Leading members of the right hon. Gentleman’s own campaign have told people in the borders and the rest of Scotland that they will have to show a passport at the border; drive on the right-hand side of the road; worry about their pensions, when in this place people are being told that they are safe; and that they will not be able to use their own currency, when the media in London are being briefed that that will be safe. Why do his colleagues think that the people of the borders and the rest of Scotland will fall for this demeaning, insulting nonsense?

Mr Carmichael: The question of the borders highlights perfectly how the Scottish nationalists want to have their cake and eat it. On the one hand, they tell us that we could have a common travel area, which works very well with the Republic of Ireland at present. At the same time, they tell us that we will have a widely divergent immigration policy, which the Republic of Ireland does not have. They can have one thing or the other: they cannot have both. That is why their prospectus is flawed.

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John Stevenson (Carlisle) (Con): In places such as Carlisle, many businesses have branches and offices on both sides of the border. Does the Secretary of State agree that if Scotland votes yes there is a real danger that there will be such an additional burden on those businesses that it will have an effect on jobs and economic prosperity on both sides of the border?

Mr Carmichael: Inevitably, an independent Scotland would have a different taxation system, different national insurance provisions and different economic regulations, and that would impose an extra cost on business. The financial services sector, which supports 200,000 jobs in Scotland, has already issued serious warnings about what would happen to its business and how it would organise itself if Scotland became independent.

Housing Benefit

2. Katy Clark (North Ayrshire and Arran) (Lab): What discussions he has had with his ministerial colleagues on the effects of housing benefit changes in Scotland. [903824]

9. Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): What discussions he has had with his ministerial colleagues on the effects of housing benefit changes in Scotland. [903831]

The Parliamentary Under-Secretary of State for Scotland (David Mundell): I have had regular discussions with ministerial colleagues about the effect of housing benefit changes in Scotland, and in particular about the application of discretionary housing payments to those affected by the removal of the spare-room subsidy. Those discussions led to the announcement on Friday 2 May that the setting of the limit for such payments could become the responsibility of the Scottish Government.

Katy Clark: In February the Scottish Parliament voted in favour of full mitigation of the bedroom tax, but much of that money has not yet reached tenants. Given that there has been a discussion about the discretionary cap, does the Minister agree that the Scottish Government could have acted earlier, and, given that an announcement has now been made, will he do everything in his power to ensure that there is co-operation between Westminster and the Scottish Government so that the money reaches the people who need it?

David Mundell: I entirely agree with the hon. Lady. The Scottish Government already had powers that they could have used to take other steps for the purpose of the mitigation that they said was necessary, but they chose not to do so. The Scottish Parliament forced additional funds to be provided, and we will not stand in the way of the spending of those funds. I shall be meeting the Deputy First Minister of Scotland tomorrow morning, and I shall convey the hon. Lady’s comments to her.

Sandra Osborne: Does the Minister agree with the far-reaching proposals of Scottish Labour’s devolution commission, including the proposal for the devolution of housing benefit? Does he agree that that would be a

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progressive, logical and practical step that would enhance devolution and the ability to meet Scottish housing needs?

David Mundell: I think that the proposal to devolve the setting of the cap for discretionary housing payments is a positive step, and I welcome the fact that the Labour party has presented proposals. At the end of May, the Scottish Conservative party will present its proposals following the outcome of the work of our own devolution commission.

Mary Macleod (Brentford and Isleworth) (Con): An important part of dealing with housing benefit is ensuring that there is enough affordable housing. Does my right hon. Friend agree that the lack of suitable affordable housing in Scotland is the result and the responsibility of successive Scottish Governments?

David Mundell: I do agree with my hon. Friend. She will be aware that since 2010 the Scottish Government have had an additional £1.3 billion in funding that they could have used to provide affordable housing in Scotland. We used to hear constantly in the Chamber about the number of shovel-ready projects in Scotland, but we have not seen much shovelling.

Dr Eilidh Whiteford (Banff and Buchan) (SNP): The bedroom tax has been a costly fiasco in Scotland. It should never have happened, but I am glad that the Government have at long last agreed to allow the Scottish Government to mitigate its worst impacts. However, the Secretary of State recently boasted that we have a “fantastic” benefits system. Does the Minister think that he was talking about the bedroom tax, or is he also living in a parallel universe?

David Mundell: I certainly do not live in the universe that the SNP inhabits. It has not given us a single detail of how a welfare system would operate in Scotland. Indeed, in the 670 pages of the Scottish Government’s White Paper, there is just one reference to the establishment of such a system. The SNP set up a commission, but we have heard nothing from it, so I am afraid that I shall take no lessons from the hon. Lady.

Mr Ian Davidson (Glasgow South West) (Lab/Co-op): Does the Minister accept that, now that the Scottish Government have been given the powers for which they asked in relation to discretionary housing payments, there is no reason why they should not first cancel all the bedroom tax for this year, and then write off all the debts that were incurred last year? In order to ensure that no moral hazard is involved, should they not do as the Scottish Affairs Committee has asked, and refund the money that Scottish people paid last year in bedroom tax?

David Mundell: I understand that a statement is to be made about the matter in the Scottish Parliament today, and I am sure that the hon. Gentleman’s colleagues will raise those very points with the Scottish Government.

Energy Bills

3. John Robertson (Glasgow North West) (Lab): What assessment he has made of the effects of recent trends in household energy bills on standards of living in Scotland; and if he will make a statement. [903825]

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The Parliamentary Under-Secretary of State for Scotland (David Mundell): Rising energy bills are a serious concern for consumers in Scotland and across the rest of the UK. We are increasing competition, sustaining vital financial support for vulnerable consumers, and working to ensure suppliers put customers on the cheapest tariff.

John Robertson: I thank the Minister for his answer. Does he agree that with the closing of coal-fired power stations and a doctrine of anti-nuclear power stations north of the border, under independence, with the reliance on renewables, energy costs must increase?

David Mundell: I certainly agree with the hon. Gentleman about the serious loss to the Scottish economy of closing the door on the nuclear industry, which has brought so much benefit to Scotland, and I pay tribute to him for being such a champion of that cause. He is right that energy costs will go up in an independent Scotland, as set out in the Government’s analysis on energy.

Guy Opperman (Hexham) (Con): Both in Northumberland and in Scotland people are setting up oil-buying clubs to deal with the problem of off-grid energy. Does the Minister agree that the best way to combat energy problems and price rises in off-grid circumstances is to copy this good measure and spread it out across the country?

David Mundell: I absolutely agree with my hon. Friend. Oil clubs are developing in Scotland and the Government are keen to promote and support them. I commend him for highlighting this issue.

11. [903833] Mr Mike Weir (Angus) (SNP): If the Minister is genuinely concerned about rising costs of energy in Scotland, why is it that Ofgem has yet again delayed the implementation of Project TransmiT, which would finally begin to tackle the discriminatory and expensive transmission charges? Will he press his colleagues to implement it immediately?

David Mundell: Project TransmiT is one matter on which I am probably in agreement with the hon. Gentleman. The important thing for Scotland is to get the right answer. Yes, it is disappointing that it has taken some time, but the Scotland Office is determined to work towards getting the right answer, and I urge him and his colleagues to continue to press Ofgem on this as well.

Margaret Curran (Glasgow East) (Lab): Will the Secretary of State explain why, when the Prime Minister said that consumers in Scotland would be £50 better off after cuts to the green levies, hundreds of thousands of Scottish consumers have seen their bills decrease by only £12?

David Mundell: There is no reason why consumers in Scotland should not be seeing this £50 benefit, and the Government will continue to do all we can to make sure that they do.

Margaret Curran: That is the definition of an inadequate answer, and perhaps goes some way towards explaining why Labour’s policy has gained widespread support across Scotland. In opposing Labour’s energy freeze, the Tory-led Government have had the full support of a

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surprise friend in the form of the Scottish National party, and it does not stop there: standing up for energy companies, failing to take action on the living wage, proposing tax cuts for those at the top. Does the Minister not agree that Scotland deserves better than this?

David Mundell: What I believe is that we do not take any lectures from Labour on energy issues. Gas bills more than doubled under Labour, electricity bills went up by 50%, the leader of the Labour party was responsible for £179 of additional levies on gas bills and fuel duty went up 12 times. I am proud of this Government’s record on energy and Scotland is doing well under it.

Bank of England

4. David Mowat (Warrington South) (Con): What discussions he has had with Ministers in the Scottish Government on the potential role of the Bank of England in the event of Scotland becoming an independent country. [903826]

The Secretary of State for Scotland (Mr Alistair Carmichael): I have not had any discussions with Ministers in the Scottish Government on the potential role of the Bank of England. If people in Scotland vote to leave the UK, they are voting to leave the UK institutions that support it, such as the Bank of England, which will continue to operate on behalf of the continuing UK.

David Mowat: I thank the Secretary of State for that answer. The majority of my constituents hope very much that Scotland will stay in the Union, but for the avoidance of doubt, will he confirm that in the event of a yes vote, there are no circumstances under which my constituents will underwrite the borrowing and spending plans of an independent Scotland, whichever currency it uses?

Mr Carmichael: I thank my hon. Friend for his support for the continuation of Scotland within the United Kingdom. The position on any currency union or central banking arrangements if Scotland were to vote for independence has been made very clear recently by the Chancellor and the Chief Secretary and also by the shadow Chancellor: there will be no such arrangements.

Ian Murray (Edinburgh South) (Lab): In the event of an independent Scotland, will the Bank of England’s Monetary Policy Committee take its instructions from the UK Treasury or the Scottish Government?

Mr Carmichael: The Bank of England will continue to take its instructions from the UK Treasury. It is a UK institution and that would not change.

Mr Philip Hollobone (Kettering) (Con): If Scotland separated from the United Kingdom, how would the UK’s foreign exchange reserves be reallocated?

Mr Carmichael: That would be a matter to be determined in the event of Scotland voting to leave the United Kingdom. I very much hope that will not come to pass.

Stewart Hosie (Dundee East) (SNP): The Bank of England has already sensibly engaged in technical discussions with the Scottish Government. As each day

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passes and a yes vote on independence becomes more likely, is it not about time this Government abandoned their bellicose scaremongering and also engaged in sensible discussions with the Scottish Government on how these institutions can continue to work, in the best interests of both countries?

Mr Carmichael: Both Governments agreed in the Edinburgh agreement that there would be no question of pre-negotiation. That was a sensible situation and I am astonished that the hon. Gentleman now seeks to walk away from it.

Sir Malcolm Bruce (Gordon) (LD): Does the Secretary of State agree that the Bank of England is not an asset to be shared but an institution that belongs to the United Kingdom which Scotland chooses to leave? Does he also agree that it is an extraordinary kind of independence where one wants to hand over control of one’s fiscal and monetary policy to a foreign bank?

Mr Carmichael: My right hon. Friend puts it perfectly. The difference between an asset and an institution is not a difficult one to understand, but the Scottish nationalists do seem to struggle with it.

Currency Union

5. Michael Connarty (Linlithgow and East Falkirk) (Lab): What discussions he has had with Ministers in the Scottish Government on a potential currency union with an independent Scotland. [903827]

The Secretary of State for Scotland (Mr Alistair Carmichael): I have not had any discussions with the Scottish Government about the prospect of a currency union. The Chancellor, Chief Secretary and shadow Chancellor have all said there will not be a currency union. The only way to keep the UK pound is to stay in the UK.

Michael Connarty: I thank the Secretary of State for that reply. Having read the fiscal commission’s report, it is clear that it took the advice that I have been giving Scottish National party colleagues here that they would be destroyed if they went into the eurozone, where the stability and growth pact would destroy their economy. If they have no currency union with the UK, exactly what prospects are there for the 8% deficit that Scotland is running at the moment?

Mr Carmichael: The position is very clearly laid out: the difficulties that would be created by the currency union would be difficulties for the whole of the United Kingdom, but particularly for the people of Scotland. If we are to be independent, we need to be independent with all that that means. It is not possible to be half independent.

Michael Fabricant (Lichfield) (Con): Is my right hon. Friend aware that Moody’s has stated that if Scotland were to gain its independence it would downgrade Scotland’s credit rating to B? What effect would that have on Scotland’s interest rates?

Mr Carmichael: The comments and report by Moody’s last week have to be taken very seriously and read with some care. Moody’s makes it clear that on its estimation an independent Scotland would be rated two levels below the rating the UK currently enjoys. For the

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people of Scotland that would mean more expensive store cards, more expensive overdrafts and more expensive mortgages. We are cheaper as part of the United Kingdom.

12. [903834] Gemma Doyle (West Dunbartonshire) (Lab/Co-op): Does the Secretary of State agree that all the currency options that have been put forward for an independent Scotland by the nationalists would actually involve constraints on decision making on fiscal policy?

Mr Carmichael: Every option that is put forward by the Scottish nationalists is inferior to what we currently have as part of the United Kingdom. That is the unpalatable truth that they do not want to hear, but from which there is no escaping. The people of Scotland know that truth.

Mr Alan Reid (Argyll and Bute) (LD): The success of the Government’s economic policy is proven by the fact that the number of people claiming unemployment benefit in my constituency reduced by 419 in the past year. Does my right hon. Friend agree that the best way to keep this sustained economic growth is to stay within the UK and with the common currency that we have at the moment?

Mr Carmichael: Indeed. My hon. Friend gives me an opportunity to remind the House that the United Kingdom has the fastest growing economy in the G7, and that Scotland is the second wealthiest part of that economy.

10. [903832] Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab): The people of Scotland want facts, so will the Secretary of State tell us on what date, if Scotland chooses to separate, will it either have to begin printing its own money or, failing that, start using the pound as a foreign currency?

Mr Carmichael: The hon. Gentleman invites me to look into the future and make a prediction, which is never an easy prospect—it is an unwise prospect for anyone in politics. The truth of the matter is that all these things are uncertain, and they bring enormous risks in areas where we do very well as a result of being part of the United Kingdom.

Sir Menzies Campbell (North East Fife) (LD): To echo the hon. Member for Moray (Angus Robertson), what could be more demeaning and insulting than to lead the Scottish people to believe that there are no risks in independence, and that a currency union is a foregone conclusion?

Mr Carmichael: The only foregone conclusion about a currency union is that it will not happen. It will not happen because that is the advice that has been given by the permanent secretary to the Chancellor of the Exchequer. That advice is not going to change, and the outcome of that advice is not going to change.

Pete Wishart (Perth and North Perthshire) (SNP): The Chancellor’s sermon on the pound was supposed to bring the Scottish people back into fearful line, but as the opinion polls have shown, the Scottish people will not be discouraged by this; instead, they are emboldened and angered. The Scottish people will no longer be told

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by Westminster. Will the Secretary of State tell us what has happened to the search for the Minister who told the truth? Have they made any progress, or do they perhaps need our help?

Mr Carmichael: Mr Speaker, I am delighted that you were able to fit the hon. Gentleman in; otherwise, we would all have missed his monthly comedy turn. It is quite remarkable that he chooses to ignore the advice given by the permanent secretary to the Chancellor of the Exchequer, setting out why a currency union would be bad for the rest of the United Kingdom and bad for an independent Scotland. Why does the hon. Gentleman want something that would be bad for Scotland?

Gordon Banks (Ochil and South Perthshire) (Lab): Last week, 18% of members of Scottish Chambers of Commerce confirmed that they are making plans to move out of Scotland in the event of a yes vote, and 63% believe that an independent currency or the euro would be bad for business. Today we have heard from the British Chambers of Commerce that 85% of their businesses are against independence, and nearly half identified currency concerns as the most important issue for them. What reassurances can the Secretary of State give the House about currency for businesses on both sides of the border?

Mr Carmichael: The only reassurance I can give is that if people in Scotland vote no, they will continue to enjoy the use of the pound and they will continue to have the Bank of England as a lender of last resort. Beyond that, everything is uncertain.

Cross-border Trade and Employment

6. Iain Stewart (Milton Keynes South) (Con): What assessment he has made of the potential effects of Scottish independence on cross-border trade and employment. [903828]

The Secretary of State for Scotland (Mr Alistair Carmichael): Scotland’s place in the United Kingdom means we have a truly single domestic market, with no barriers to trade and employment across the United Kingdom. Independence would fundamentally change that. The resulting “border effect” would disrupt trade and free movement of workers, reducing real incomes by, it is estimated, around £2,000 per Scottish household per year.

Iain Stewart: My constituency is home to a large number of national logistics and distribution companies. Is my right hon. Friend aware of the growing concern in that sector that separation could make some cross-border routes less attractive, as they would become international rather than domestic ones?

Mr Carmichael: Indeed, and I hear the same message from a range of business interests. The financial services industry, for example, says that independence would bring extra costs with different taxation and different regulation. The supermarkets have made it very clear that extra costs would fall to Scottish consumers if Scotland were independent.

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Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): According to the House of Commons Library, 200,000 UK jobs depend on trade with the Republic of Ireland—double that of Canada and Norway. Ireland used to be part of the UK, but trade between the two has never been higher. The UK is Ireland’s No. 1 trading partner, and among the recently independent nations of the European Union, foreign direct investment rose by 215% in the first four years of independence. For those realities, what scare stories will the Secretary of State use?

Mr Carmichael: It is not a scare story to point out that the White Paper presents a prospectus and a future where there would be barriers and where the mere existence of a border would be an extra cost. If the hon. Gentleman wants to know the truth of the matter, he need look no further than at the situation that exists between Canada and the United States. The hon. Gentleman might not like it, but that is the truth.

Graeme Morrice (Livingston) (Lab): What discussions has the Secretary of State had with the Scottish Government regarding the possibility of border controls between an independent Scotland and the rest of the UK, if an independent Scotland had a separate immigration policy?

Mr Carmichael: It is an inescapable fact that if, as the nationalists tell us in the White Paper, Scotland were to have a widely divergent immigration policy, which would be necessary for such of their economic plans as they have been prepared to tell us about, the operation of a common travel area of the sort that currently works well with the Republic of Ireland simply would not operate. You cannot have your cake and eat it on this occasion.

Mr Speaker: Last but not least, Mrs Anne McGuire.

Mrs Anne McGuire (Stirling) (Lab): Given the First Minister’s threat to blockade Scottish fishing grounds if he does not get his own way on EU membership and given that licences are held across the United Kingdom, what analysis has the Secretary of State done on the impact on employment in the Scottish fishing industry?

Mr Carmichael: The impact on employment would be serious in some of the most economically fragile communities in Scotland in our coastal and island communities. I have to say that the First Minister’s comment about blockading Scottish waters went beyond the ridiculous, but it makes me wonder whether that is why he seems so desperate to cosy up to Vladimir Putin.

Prime Minister

The Prime Minister was asked—

Engagements

Q1. [903873] Mel Stride (Central Devon) (Con): If he will list his official engagements for Wednesday 7 May.

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

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Mel Stride: As the proud father of three daughters, I am sure that the entire House will share my deep concern for the more than 270 Nigerian schoolgirls held captive in that country. Their only so-called crime is that they aspired to receive an education. Will my right hon. Friend set out for the House the steps that the Government are taking to ensure that we help to secure their release as soon as possible?

The Prime Minister: I know that my hon. Friend speaks for the whole House—and, indeed, the whole country. I am the father of two young daughters, and my reaction is exactly the same as my hon. Friend’s and of every father and mother in this land and in the world: this is an act of pure evil, which has united people across the planet to stand with Nigeria to help find these children and return them to their parents.

The Foreign Secretary and the British Government have made repeated offers of help to the Nigerian Government since the girls were seized. I shall be speaking to the Nigerian President this afternoon and will say again that Britain stands ready to provide any assistance, working closely with the US, as immediately as we can. We already have a British military training team in Nigeria, and the Foreign Office has counter-terrorism experts. We should be proud of the role we play in that country where British aid helps to educate 800,000 Nigerian children, including 600,000 girls. We should be clear that this is not just a Nigerian issue: it is a global issue. There are extreme Islamists around the world who are against education, against progress and against equality—and we must fight them and take them on wherever they are.

Edward Miliband (Doncaster North) (Lab): Let me begin by fully associating myself and the Opposition with the Prime Minister’s remarks on the terrible situation in Nigeria.

On our proposal for three-year tenancies in the private sector, will the Prime Minister tell us when he expects to make the inevitable journey from saying that they represent dangerous Venezuelan-style thinking to saying that they are actually quite a good idea?

The Prime Minister: I have not had the time to study the rent control proposals, but I am sure the right hon. Gentleman will be able to lay them out for the House. Let me be clear about my view. If there is an opportunity to find longer-term tenancy agreements to give greater stability—a proposal made at last year’s Conservative conference—I am sure we can work together. If, however, the proposal is for rent controls that have been tried all over the world, including in Britain, and have been shown to fail, I think it would be a very bad idea.

Edward Miliband: Even by the right hon. Gentleman’s standards, this is a pretty quick U-turn. Last week, the chairman of the Conservative party—I know the right hon. Gentleman does not have a briefing on this, but perhaps he can listen to the question—was saying this was all back to Venezuela and that it is completely wrong, but the Community Secretary has supported these proposals. The question is how are we going to make it happen?

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The Prime Minister: Actually, I have got some very good briefing on these proposals—from Labour MPs. Here they are. Let us start with Labour’s Housing Minister. You would think she would support Labour’s policy. She says:

“I do not think it will work in practice”.

The shadow Secretary of State for Communities and Local Government says this:

“We don’t want to return to rent controls because the rental sector is meeting a demand for housing.”

There we are—the authentic voice of Bennism.

Then we come to the Chairman of the Communities and Local Government Committee, a Labour MP, the hon. Member for Sheffield South East (Mr Betts). He said this:

“We concluded that rent control was not feasible.”

So there we have a Labour policy, completely unclear about what it is; but the one thing that is clear is that Labour MPs do not back it.

Edward Miliband: All the right hon. Gentleman shows is that he has nothing—[Interruption.]

Mr Speaker: Order. I know it has to be said every week, but I will very happily say it again. However long it takes—a very simple exercise in democracy; the lesson should be learned—the question will be heard and the answer will be heard. It is incredibly simple.

Edward Miliband: All the right hon. Gentleman shows is that he has no idea about this incredibly important issue facing our country. Let me explain it to him. There are 9 million people renting in this country. Our proposal is that there should be fixed three-year tenancies as the norm for those people with predictable rent changes. Right? That is the proposal. Many people across this country think that for the first time this is a party addressing the issue they face, so will he explain what is wrong with going from one-year tenancies with unpredictable rent rises to three-year tenancies with predictable rents? Why has the Conservative party given up on millions of people who are Generation Rent.

The Prime Minister: We want to build more houses so we have a better rental sector with more affordable rents. But as I said in my very first answer, if this is about finding new tenancies that give long-term security on a voluntary basis, yes. If it is about mandating rent controls from the centre and destroying the housing market, no. The problem I have with so many of the right hon. Gentleman’s policies is that they all come from the same place—

Steve Brine (Winchester) (Con): Len.

The Prime Minister: Thank you very much. Len—they come from the Unite union. Unite said, “Renationalise the railways.” The right hon. Gentleman wants to renationalise the railways. Unite says, “Let’s have old-style rent controls.” He wants old-style rent controls. The problem with rent controls is their policies are for rent, their candidates are for rent and their leader is for rent. That is the problem.

Nigel Adams (Selby and Ainsty) (Con): The Prime Minister will be as encouraged as I am that unemployment in my constituency is down by almost a third since the last election. However, the future for almost 1,000 workers

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related to Eggborough power station in my constituency is less certain. Will he meet me to ensure that we have a future for this very important asset in my constituency?

The Prime Minister: I am very happy to meet my hon. Friend to discuss this. What he says about the fall in unemployment, which we are now seeing right across our country, is welcome. In fact, employment is growing fastest not in the south-east but in Wales, which shows that the recovery is increasingly more broadly based. I know about the problems at Eggborough power station, and the demand there for further action, as has been agreed at Drax. I am very happy to discuss that with him and see what can be done.

Q2. [903874] Mr Andy Slaughter (Hammersmith) (Lab): I have two world-class hospitals in my constituency. The Secretary of State for Health has decided that Hammersmith will lose its A and E this year and Charing Cross will be demolished, losing all consultant emergency services, including A and E, and the country’s best stroke unit. Will the Prime Minister stop his Health Secretary putting my constituents’ lives at risk?

The Prime Minister: What we are doing in north-west London is ensuring that the NHS gets more money. It will be getting £2.4 billion this year—£74 million more than the year before. Let us remember that his own party’s policy was to cut the NHS, as is happening now in Wales. The changes that are being made in north-west London are backed by clinicians and local people. We want to see our NHS improve, as it is under this Government.

Sir Tony Baldry (Banbury) (Con): Does my right hon. Friend agree that the policies of the UK Independence party are based on fear—fear of the world and fear of foreigners? As a great trading nation, we should embrace the world. If anyone comes to my constituency and goes to the hospital, the nursing homes, the farms or the building sites, they will see the great contribution that is being made to our communities and to the growth of our economy by fellow EU citizens.

The Prime Minister: My right hon. Friend is absolutely right that Britain has benefited from being an economy that is open to investment and open to people coming who want to contribute and work hard here. I agree with what he says about UKIP: so much of its view seems to be that we do not have a bright future in this country. I absolutely believe that we do. If we get our deficit down and our economy growing and we invest in apprenticeships, we will show that we can be one of the success stories of the 21st century. We are making progress and that is the way to challenge its world view.

Edward Miliband: There is deep concern in the British business and scientific communities about the proposed takeover of AstraZeneca by Pfizer. The deal would have an impact for decades to come on British jobs, British investment, British exports and British science. The Business Secretary said yesterday that he is “not ruling out intervention”. What type of intervention is under consideration by Government?

The Prime Minister: I absolutely agree with what the Business Secretary said yesterday, but let me be clear that the most important intervention we can make is to back British jobs, British science, British research and

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development, British medicines and British technology. That is why I asked the Cabinet Secretary and my Ministers to engage with both companies right from the start of this process, and I make no apology for that, because we know what happens when you do not engage. If you stand back and just say you are opposed to everything, you get abject surrender and no guarantees for Britain. We are fighting for British science, and it is a pity that the right hon. Gentleman is trying to play politics rather than backing the national interest.

Edward Miliband: It is good to hear that the right hon. Gentleman agrees with the Business Secretary. The Business Secretary said this:

“One of the Government’s options would be to consider using our public interest test powers.”—[Official Report, 6 May 2014; Vol. 580, c. 23.]

There needs to be a proper assessment of this bid, and yesterday the Business Secretary said that he was open to doing that. It could be done straight away, through this House, and we on the Labour Benches would support making that happen. Will the Prime Minister agree to do it?

The Prime Minister: The assessment that I want is from the Business Department on this deal or indeed, because there is not now an actual offer on the table, any subsequent offer. I will judge all these things on whether they expand British jobs, British investment and British science. Let me just make this point, because I worry that it may be lost in this debate. We all know that the right hon. Gentleman thinks he is extremely clever—we all know that—but he may have missed this point. Britain benefits massively from being open to investment. Nissan is now producing more cars than the whole of Italy. Jaguar Land Rover, under Indian ownership, has created 9,000 jobs in the west midlands since I became Prime Minister. Vodafone and indeed AstraZeneca have benefited from that backing of an open country to go out and build and buy businesses around the world. There is more inward investment in Britain today than the rest of the EU combined. Let us not put that at risk.

Edward Miliband: The right hon. Gentleman does not understand. This is simply about something very straightforward—having an independent assessment of this bid and whether it is in the national interest. I will ask him the question again as it matters to people right across this country. Is he ruling out, or ruling in, using the public interest test on this takeover? We could make it happen. His Business Secretary could make it happen, and we would support it. If he does not take action now, and the bid goes through without a proper assessment, everyone will know that he was cheerleading for this bid, not championing British science and British industry.

The Prime Minister: I think it is deeply sad that the Leader of the Opposition makes accusations about cheerleading when the Government were getting stuck in to help British science, British investment and British jobs. Does it not tell us everything that, given the choice of doing the right thing for the national interest and working with the Government or making short-term political points, that is what he chooses to do? We might ask why the public interest test was changed in the first place. It happened when they were sitting in the Treasury. Yes, they wrote the rules, they sold the gold and they

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saw manufacturing in our country decline by one half. We will never take lectures from the people who wrecked our economy.

Dr Julian Lewis (New Forest East) (Con): Will the Prime Minister confirm that under his leadership this country will never spend less than the NATO recommended minimum of 2% of GDP on defence?

The Prime Minister: We are spending in excess of 2% and we are one of the only countries in Europe to do that. The Greeks, I believe, are spending more than 2% but, if I can put it this way, not all on things that are useful for all of NATO. We should continue to make sure we fulfil all our commitments on defence spending.

Q3. [903875] Joan Walley (Stoke-on-Trent North) (Lab): Will the Prime Minister urgently meet again with me and fellow MPs to find a way forward on consultant-led maternity services to be run by the university hospital in Stoke-on-Trent?

The Prime Minister: The hon. Lady has asked me this question in the past. I was keen to ensure that despite all the difficulties at the Mid-Staffordshire hospital there was an opportunity to see whether it might be possible for the long term to have consultant-led maternity services. People who live in our major towns, such as Stafford, want to be able to have their babies locally. It is vital that we do that and I am regularly updated by my hon. Friend the Member for Stafford (Jeremy Lefroy). I would be happy to meet him and a delegation of Staffordshire MPs if it is necessary to talk further about this point.

Q4. [903876] Margot James (Stourbridge) (Con): Last week, Boston Consulting Group published research that found that Britain is the No. 1 competitive manufacturing country in the whole of western Europe and number four globally behind China, the United States and South Korea. Does my right hon. Friend agree that that is just the sort of company we should be keeping and further evidence that our strategy to rebalance the UK economy towards manufacturing and the west midlands and other regions is working?

The Prime Minister: I am grateful to my hon. Friend for what she says, because for the first time in almost a decade all three main sectors of the economy—manufacturing, services and construction—have grown by at least 3% over the past year. That is further evidence that the economic plan is working. Manufacturing is important in itself and it is also important because so much of it is tradeable. We want to see Britain export more, make more and invest more. The moves made by my right hon. Friend the Chancellor in the Budget in terms of investment allowances and backing UK Trade & Investment are dedicated to that angle. As I said earlier, we must also remain an open economy, which will encourage people to invest in our manufacturing base.

Mr Nigel Dodds (Belfast North) (DUP): Later this week, the opening stages of the Giro d’Italia will take place in Northern Ireland. The Tour de France is also coming to Yorkshire. Such world-class sporting events allow us to showcase our region, boost tourism and

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grow the local economy. Does the Prime Minister agree that as we seek to build a more prosperous and better future for all our people in Northern Ireland it is vital that the suffering and hurt of the victims is never forgotten and that whether it happened one year ago, 10 years ago or 42 years ago, justice must be pursued and the police must be allowed to follow the evidence wherever it may lead?

The Prime Minister: First, I agree with the right hon. Gentleman about the importance of these great sporting events—both the one he mentioned in Northern Ireland and, of course, the Tour de France, which will be starting in Leeds. That will be a great moment for Yorkshire and for the whole United Kingdom. We should do all we can to promote these events, although we should perhaps draw the line at appearing in lycra at either of them.

The right hon. Gentleman raises a very important issue about terrorist victims. We discussed recently the important issue of trying to ensure greater assistance from Libya over Semtex that is still being found in Northern Ireland as we speak today. As for his other remarks, we should be proud of the fact that a free country has an independent judiciary, an independent legal system and an independent police service and that they decide who to arrest, who to question and who to charge. That is how it must remain.

Q5. [903877] Paul Burstow (Sutton and Cheam) (LD): Dementia is one of the biggest challenges facing our country. Will the Prime Minister join me in congratulating the Alzheimer’s Society and Public Health England on launching a major new campaign through Dementia Friends to raise awareness and to challenge stigma? Given that 50,000 people quit their jobs to care for people with dementia, will he ensure that there is a new dementia strategy at the end of this year—the current one ends this year—so that we can ensure that people with dementia receive the support they need?

The Prime Minister: I pay tribute to my right hon. Friend for raising this issue. We have turned the zero on No. 10 into the dementia flower today to help to boost the importance of raising awareness of this issue and of encouraging more people to train as Dementia Friends. I will look at what he says about the strategy. As he knows, it is about investing in research and science, where we have doubled the budget for dementia. It is about dementia-friendly communities and also making sure that our hospitals and care homes treat people with dementia better. We will carry forward all those, and I will perhaps write to him about the update to the strategy.

Ann Clwyd (Cynon Valley) (Lab): Some 100,000 people are already dead in Syria and others are dying while we are here today. They need help desperately. We have talked about humanitarian help, but we have not crossed borders. What on earth are we doing about it?

The Prime Minister: The right hon. Lady is right to raise this. The answer to what are we doing about it is that Britain is the second largest bilateral aid donor in terms of humanitarian aid going into Syria, so we are helping to feed, clothe and house people in Turkey, in

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Lebanon, in Jordan and elsewhere. She raises the important point about getting aid into Syria. More is being done on that, but it is extremely difficult because of the security situation. We will continue to do what we can.

Q6. [903878] Andrew Griffiths (Burton) (Con): As we mark the centenary of the first world war, it is a national disgrace that the graves of Victoria Cross winners lie crumbling and derelict. As a patron of the Victoria Cross Trust, may I congratulate the Prime Minister and the Secretary of State for Communities and Local Government on pledging £100,000 to help to restore some of those graves, and The Sun on highlighting this campaign? As the Government have pledged to match-fund every penny raised by the Victoria Cross Trust, will the Prime Minister join me in urging people to go online, to donate and to ensure that we have fitting memorials for the bravest of the brave.

The Prime Minister: I certainly join my hon. Friend, who is a patron of the Victoria Cross Trust, for the hard work that is being done. The Sun did a good job in highlighting the importance of this issue. As my hon. Friend mentioned, my right hon. Friend the Secretary of State for Communities and Local Government has announced £100,000 of funding for the Victoria Cross Trust. This should go to restoring the graves of Victoria Cross recipients.

We also have a programme for letting local authorities put down paving stones for people who won Victoria Crosses in their area, and we are looking at many other ways to commemorate this absolutely vital anniversary. The most important thing we are doing is the huge multimillion pound investment going to the Imperial War museum, which is opening this summer and to which I take my children. It brings the first world war to life in an extraordinary way, and that is at the heart of our important commemorations.

Q15. [903887] Mrs Emma Lewell-Buck (South Shields) (Lab): My constituent Darren Lugg’s disability means that he needs a specially adapted bed. He therefore cannot share a room with his wife, but still they are hit by the bedroom tax. Can the Prime Minister explain why this Government are punishing him for his disability?

The Prime Minister: As the hon. Lady knows, we have discretionary housing payments for exactly this sort of case, and the money has been topped up, so there is no reason for people to be disadvantaged in the way she suggests.

Q7. [903879] David Rutley (Macclesfield) (Con): AstraZeneca is Macclesfield’s largest employer with 2,000 employees, so I share constituents’ concerns about Pfizer’s proposed bid. I welcome the steps taken by the Government to secure initial commitments from the company if it succeeds. Can the Prime Minister tell the House what further steps are being taken to strengthen those commitments and to safeguard highly skilled manufacturing jobs in Macclesfield?

The Prime Minister: I am grateful for my hon. Friend’s remarks. There are 2,000 people employed by AstraZeneca in his constituency, and he is quite right to speak up for them. Our entire approach is based on trying to secure the best possible deal in terms of jobs, investment and science, and that is why I believe it was absolutely right

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to ask the Cabinet Secretary to engage with Pfizer, just as we are engaging with AstraZeneca. I find it extraordinary that we have been criticised for this. Of course, there is no offer on the table, but the commitments that have been made so far are encouraging in terms of completing the Cambridge campus and making sure that 20% of the combined companies’ total research and development work force is in the UK going forward—and they specifically mention substantial commercial manufacturing facilities in Macclesfield. The company also goes on to say that because of the patent box that we have introduced, it would look at manufacturing more in the UK. But let me absolutely clear: I am not satisfied; I want more, but the way to get more is to engage, not to stand up and play party politics.

Mr Kevan Jones (North Durham) (Lab): On a number of occasions the Prime Minister has raised the important issue of awareness of mental health, and I thank him for that, but can he explain why, since 2011, there has been a 30% drop in the number of mental health beds in the NHS, and is it really right that mental health patients are having to travel up to 200 miles to access a bed?

The Prime Minister: What matters in our NHS is the quality of provision and parity of esteem between physical health and mental health. This Government have not solved every problem, but we have put proper parity of esteem into the NHS constitution and the NHS mandate. We have also put in proper targets for some of the talking therapies that are absolutely vital in mental health. Measuring the output of our NHS purely by the number of beds is not a sensible approach.

Q8. [903880] Iain Stewart (Milton Keynes South) (Con): The Government are making a substantial investment in renewing and expanding the nation’s infrastructure. There is, however, a real need to get more young people into engineering so that we will have the long-term skills base for these projects. Will my right hon. Friend assure me that this Government will do all they can to inspire the next generation of engineers?

The Prime Minister: I absolutely back what my hon. Friend says. I know he has been campaigning very hard to get the HS2 academy to go to Milton Keynes, because there is a vital bit of skills work that needs to be done. [Interruption.] I am sure there will be a lot of competition. The key thing about these investments, whether it is Crossrail, the Olympics or HS2, is to plan in advance for the skills that we are going to need so that we can fill the jobs with British people leaving school and college wanting to take on those skills. Today the Chancellor and the Minister for Schools have launched the “Your Life, Your Choice” campaign, which is all about encouraging young people to get into STEM subjects—science, technology, engineering and maths—and to stay in STEM subjects, because there is a massive fall-off from GCSE to A-level, particularly in physics among young women, and we need to encourage them to go on studying.

Hazel Blears (Salford and Eccles) (Lab): I am delighted to see that the Prime Minister is wearing his Dementia Friends badge today. He will congratulate the Alzheimer’s Society on its commitment to get 1 million dementia

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friends over the next year, but will he also today commit personally to putting an end to the scandal of 15-minute visits, low wages and zero-hours contracts for the dedicated home carers who look after people with dementia in our country?

The Prime Minister: First, let me praise the right hon. Lady for her work on dementia and the amount of work she has done to spread awareness about this. The 15-minute working times is an issue for local councils. My local council has just decided to stop these 15-minute visits because it does not believe people can really get any meaningful work done, but this is a matter for councils. We are the first Government to have a proper review on zero-hours contracts. We are very unhappy about those with exclusivity clauses that do not allow people to work elsewhere. As important as those things are, it is as important to make sure that our care system has got people inside it who are really caring and understanding about the problems of dementia. The right hon. Lady and I have both been through the very short Dementia Friends training course, and I do not know about her, but I think I am ready for a refresher.

Q9. [903881] Neil Carmichael (Stroud) (Con): With 1.3% growth in manufacturing in the last quarter and some strong performances from my local firms such as Renishaw, Dairy Crest, Lister Communications, Lister Shearing and others, largely through innovation, does the Prime Minister agree that one key element of the long-term economic plan is the need further to strengthen our skills base so that those firms can continue to grow, work hard for Britain, and generate exports?

The Prime Minister: My hon. Friend is absolutely right. A key part of the long-term plan is to rebalance our economy away from purely the south-east and also towards manufacturing exports and investment. I know that he has been playing his part by running a festival for manufacturing and engineering in Stroud. This is really important, because one of the things we have to do is inspire a new generation to think of these careers and think of the subjects they should be studying in school and at university to open up these careers for them.

Keith Vaz (Leicester East) (Lab): Last Thursday, the European Union ban on the import of Indian mangos took effect. As a result, hundreds of businesses in Leicester and throughout the UK will suffer millions of pounds of losses. There was no consultation with this House and no vote by British Ministers. Next week, the Prime Minister will have his first conversation with the new Indian Prime Minister. Will he do his best to reverse this ban so that we can keep our special relationship with India, which his predecessors and he have worked so hard to maintain, and have our delicious mangos once again?

The Prime Minister: I know how much the right hon. Gentleman cares about this issue, so much so that he delivered a tray of mangos to No. 10 Downing street—missing the deadline, I might add, so that they could safely be consumed by the people inside. I am very grateful for that.

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This is a very serious issue. The European Commission has to consider it on the basis of the science and the evidence. There are concerns about cross-contamination of British crops and interests, so we have to make sure that that is got right. I understand how strongly the right hon. Gentleman and the Indian community in this country feel. Indeed, I look forward to discussing the issue with the new Indian Prime Minister.

Q10. [903882] Chris White (Warwick and Leamington) (Con): Will the Prime Minister join me in congratulating Vitsoe, the world-class furniture manufacturer, on its decision to locate its manufacturing facility in Leamington and on the jobs that will create? I am proud the decision was based in part on our community’s rich industrial heritage. Will the Prime Minister also pay tribute to local businesses that have created jobs and reduced the number of jobseeker’s allowance claimants in Warwick and Leamington by a remarkable 54% since May 2010?

The Prime Minister: I congratulate my hon. Friend on the decline in unemployment in his constituency, which is incredibly marked at 54%. I note what he says about furniture factories, because those are the sorts of businesses that were going offshore. What we are seeing in our country is a slow trend—but I want to encourage it—of reshoring and getting businesses to come back to, and invest and expand in, Britain. We must do everything we can to encourage that by keeping their taxes down, keeping national insurance down, cutting national insurance for young people, training more apprentices and investing in infrastructure. That is what we will do so that there are many more success stories like that mentioned by my hon. Friend.

Q12. [903884] Nic Dakin (Scunthorpe) (Lab): My constituent Lorraine Seath’s son has recently returned from serving our country in Afghanistan. Does the Prime Minister think it is right that she has to pay the bedroom tax to keep a room available for her son to stay in when he is at home?

The Prime Minister: Let me look at this individual case, because we made a specific exemption from the spare room subsidy for people who were serving overseas. If the spare room subsidy exemption does not apply in this case, there is of course the provision of the discretionary housing payment, which is another way of dealing with this, and I would hope that Scunthorpe borough council would take up that offer.

Mr Speaker: I call Mr Simon Burns. [Hon. Members: “More!”] There will indeed be more, which is why we must hear the right hon. Gentleman and then, at my request, others. We are concerned also, I am sure, about others.

Q11. [903883] Mr Simon Burns (Chelmsford) (Con): The Prime Minister will be aware that last week the service sector grew at its fastest level this year, with the ensuing creation of jobs. Does he agree that that demonstrates that we must stick with the long-term economic plan, because it is working? I trust my right hon. Friend has enough time to answer the question in full.

The Prime Minister: My right hon. Friend is absolutely right: we have to stick to the long-term economic plan and deliver it. For my right hon. Friend to be called at 12.33 pm on a Wednesday shows that if you stick at anything, you can win.

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Mr Speaker: I have always practised that philosophy myself: however long it takes, we are going to get through them.

Kate Hoey (Vauxhall) (Lab): The Prime Minister will know that recently it has gone into the public domain that more than 365 people in Northern Ireland were given the royal prerogative of mercy, despite 10 years of files being lost. Will he give a commitment that those names will be made public? After all, if the Queen takes the time to sign 365 names, surely the public and particularly the victims have the right to know.

The Prime Minister: I would say to the hon. Lady, who I know takes a very close interest in these issues in Northern Ireland, that difficult decisions were taken, principally by the previous Government at the time of the various agreements, which involved very difficult choices—hard choices—that had to be made in order to try to build the platform for peace and reconciliation. I am very happy to look at her specific point and see whether there is anything I can do to reassure her in a letter, but I do not want to unpick decisions taken at a difficult time to try to give us the peace that we enjoy today.

Q13. [903885] Zac Goldsmith (Richmond Park) (Con): The chief medical officer warned last month that we are misusing antibiotics to such an extent that we risk returning, in just a matter of years, to a 19th-century environment where routine operations carry a grave risk of death. A couple of days ago, the World Health Organisation issued a similar warning, saying that we are hurtling towards the post-antibiotic age. On that basis, it is surely madness to continue to allow so many antibiotics to be used on our factory farms—about half the total use in this country—when we know that that contributes to resistance.

The Prime Minister: My hon. Friend raises an extremely serious problem, which is global in its nature and could have unbelievably bad consequences in terms of anti-microbial resistance leading to quite minor ailments not being properly treatable. One of the problems is that the way research is done currently by pharmaceutical companies

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is not necessarily bringing forward new antibiotics in the way that we need or solving this problem. I have met the chief medical officer to discuss this. There are a number of steps that we can take here in the UK and working with other countries, and I hope to say something about it soon.

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): Yesterday, the Secretary of State for Business, Innovation and Skills said that he was working with civil servants to ensure that any assurances given by Pfizer during the proposed takeover of AstraZeneca could be made legally binding. Does the Prime Minister back that?

The Prime Minister: As I said, the more we can do to strengthen the assurances we are given, the better. But the only way to get assurances is by engaging and getting stuck in with those companies, which is what we have been doing, and I find it extraordinary that the Labour party chooses to criticise us for that.

Mr Speaker: Last but not least, I call Dr Julian Huppert.

Q14. [903886] Dr Julian Huppert (Cambridge) (LD): The Pfizer bid for AstraZeneca is driven by tax advantages. Has the Prime Minister spoken to the US Government about whether they propose any changes to their tax law, and has Pfizer asked for any changes to our tax system, particularly to the patent box?

The Prime Minister: In its letter to me, Pfizer mentions the patent box as a positive reason for wanting to invest in Britain and for examining whether it could increase manufacturing in Britain. Of course, because of the way the patent box works, you only get the low-tax benefit if you make your investments and do research in the UK, and then exploit that research by manufacturing in the UK. I agree with the hon. Gentleman that we should be incredibly hard-headed about this. It is an advantage that Britain is a low-tax country. We used to stand in this House of Commons and bemoan the fact that companies were leaving because of our high taxes. They now want to come here because of our tax system. I agree with the Business Secretary that that is not enough; we want the investment, the jobs and the research that comes with that competitive tax system.

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Smoke Alarms (Private Rented Sector)

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

12.38 pm

Mr Nick Raynsford (Greenwich and Woolwich) (Lab): I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to make provision for the mandatory installation of smoke alarms in privately rented accommodation; and for connected purposes.

At the outset, I draw attention to my interests as declared in the Register of Members’ Financial Interests, including my role as a non-executive director of the Fire Protection Association—a not-for-profit organisation that works to improve fire safety.

Smoke alarms save lives. The latest Government statement on the subject, issued by the Department for Communities and Local Government in February, states that

“analysis suggests a person is…4 times more likely to die in a fire in the home if they do not have a working smoke alarm”.

In recent years, as our fire and rescue services have focused increasingly on fire prevention, we have seen a substantial increase in the number of homes that are protected by smoke alarms. Building regulations require smoke alarms to be installed in all new dwellings. The impact of that regulatory requirement, together with national and local promotional campaigns to get alarms fitted in existing properties, has been to ensure that almost nine out of 10 homes across the country are equipped with at least one working smoke alarm.

That still leaves about 2.5 million homes unprotected. By a margin, the largest proportion of unprotected homes are privately rented. The latest available data from the English housing survey suggest that only 82% of privately rented homes were equipped with a working smoke alarm in 2011. The purpose of the Bill is to remedy that by making the installation of a working smoke alarm mandatory in all privately rented housing. I would have no objection to extending the provision to all rented homes, including those rented from councils and housing associations. However, as those sectors have already gone significantly further, with 89% of council properties and 93% of housing association homes having working smoke alarms, it seems sensible to start with the sector where the need is greatest.

Very few people appear to disagree with the proposal. The National Landlords Association says:

“we already advise that it is best practice to install smoke alarms and carbon monoxide detectors in rental properties and are comfortable with this being made a regulatory requirement”.

The British Property Federation says that it

“supports the compulsory roll-out of smoke alarms and CO alarms across the rented sector”.

The Chief Fire Officers Association, which has provided me with very helpful information and guidance in preparing the Bill, is adamant that this proposal is one of the simplest and most effective ways to save lives.

The Government appear to agree. Section 150 of the Energy Act 2013 empowers the Secretary of State to make provision, by statutory instrument, to require residential landlords to ensure that tenanted properties are

“equipped with a required alarm”.

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A required alarm is defined as covering smoke alarms and carbon monoxide alarms.

The public appear to support the proposal overwhelmingly. Research by YouGov, which was commissioned by Cheshire fire and rescue service but conducted nationwide, found that 93% of the more than 2,000 respondents agreed with the statement:

“Private landlords should be required by law to ensure that working smoke alarms are fitted in rented residential properties.”

A parallel YouGov survey of businesses found a very similar level of support, with 91% of the 690 respondents agreeing with the statement. Interestingly, when that was broken down by category of business, YouGov found 100% support among real estate respondents. That does not imply that there is opposition to the principle of regulation in the industry.

What can possibly be the objection to taking action? Why has the necessary statutory instrument not been introduced? The clue to answering that question appears in the DCLG consultation paper that was issued in February, to which I have referred. The paper, which is entitled “Review of Property Conditions in the Private Rented Sector”, sets out clearly the forceful arguments in favour of the mandatory installation of smoke alarms and carbon monoxide alarms as a lifesaver. However, the paper continues:

“requiring the installation of smoke alarms in all privately rented homes would impose additional costs on landlords.”

It concludes:

“Regulation is always a last resort and, as part of the review, we will also explore the scope for non-regulatory alternatives to promote further take-up.”

I find that regulatory burden argument wholly unconvincing. As I have pointed out, the National Landlords Association and the British Property Federation are in favour of the proposal. When the representative bodies for the businesses concerned are not complaining about the regulatory burden, why on earth do the Government see a problem?

The Government are sceptical about regulation, but that scepticism does not prevent them from imposing new regulatory burdens on landlords when they want to. For example, the Immigration Bill, which the House will debate this afternoon, will impose penalties of up to £3,000 on landlords who let premises to people who do not have leave to remain in the UK, even if they were unaware of their tenant’s immigration status. Landlord representatives have made it clear that they oppose that new regulatory burden, but the Government have insisted on keeping the provision in the Bill.

However, when landlord representatives are not opposed to a new regulation that would save lives, the Government appear less committed. That is, frankly, perverse. The cost would be tiny both in absolute terms and as a proportion of landlords’ income. A sealed smoke detector with a 10-year battery costs about £15, which is only £1.50 a year spread over the life of the battery. Even if three or four alarms needed to be installed, it would still be no more than £6 a year, compared with an average rental income from a private letting of more than £10,000 a year. The regulatory burden argument is wholly unpersuasive, and we simply cannot allow such a flimsy pretext to delay any further the necessary action to save lives.

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Nor is it the case that, as the DCLG consultation paper implies, voluntary arrangements without a regulatory obligation will be an adequate alternative. We have certainly seen real progress in voluntary arrangements to date, with the number of existing homes protected by smoke alarms increasing dramatically over the past decades. However, a law of diminishing returns is at work. Landlords keen to do the right thing will almost all have installed alarms by now. Those who are negligent or indifferent to tenant safety may well not have done so. Without a legal obligation, it is unlikely that they will respond positively to further encouragement. That is one reason why landlord representatives are not opposed to making the installation of smoke alarms a regulatory obligation. It would ensure that there was a level playing field and help raise safety standards across the whole sector.

The failure of irresponsible or negligent landlords should no longer be allowed to damage the reputation of the whole private rented sector. The case for the mandatory installation of smoke alarms in all privately rented housing is overwhelmingly strong, which is why I am presenting the Bill as a call to action. I am delighted that it is supported by Members from throughout the House, and I am grateful to all right hon. and hon. Members who have agreed to add their names as sponsors. It is a simple, common-sense measure that would save lives, and I commend it to the House.

12.47 pm

Philip Davies (Shipley) (Con): I rise to oppose the Bill. First, like the right hon. Member for Greenwich and Woolwich (Mr Raynsford), I should draw the House’s attention to an interest declared in the Register of Members’ Financial Interests. As I have made clear before, I am a landlord, although an accidental one, and a tenant as well, so perhaps I am in an unusual position in being able to see both sides of the argument from personal experience. I want to place on record my thanks to the Residential Landlords Association for its help on the issue. Although it does not oppose the right hon. Gentleman’s proposal outright, as I do, it has highlighted to me a number of potential problems with it.

Perhaps I should start with something that the right hon. Gentleman failed to mention: his former ministerial role. He was the Minister in charge of this area of policy, and he had the opportunity to introduce the law that he suggests, but he did absolutely nothing about it. We should start compiling a list of things that Opposition Members ask for that they failed to do in their 13 years in office. The right hon. Gentleman has gone one step further, because he was the Minister responsible and did absolutely nothing. In fact, when he was questioned about what measures he would take to require more smoke alarms in properties, he used to give answers that mentioned everything apart from a mandatory requirement for private landlords to install them. He asks how on earth anyone could oppose the Bill, but the question for him should be why on earth he did not introduce it when he was the Minister responsible if it is such a fantastic idea. I might add that at the time he failed to introduce it, there were far fewer private landlords with smoke alarms and far more fires. If there was ever a time to do it, it would have been when he was a Minister, rather than now.

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There is no doubt that the desire exists to reduce and eliminate the number of incidents and fatalities that horrifically result from fire accidents, but I wish to record my concerns about the Bill because I do not believe that it provides the necessary solution. Surely, it is obviously in everyone’s interests to have a fire prevention device installed in their property. In a rented property, the tenant would want one to protect themselves and their family, and the landlord would be keen to protect their property from any chance of fire damage—the figures bear that out.

In answer to a parliamentary question on 27 March, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins), stated that 82% of privately rented properties already have a smoke alarm. As I find myself saying all the time, some people want to regulate everything in the name of a worthy cause. However, potentially criminalising law-abiding, decent landlords—the vast majority of whom, by anyone’s standards, have properties with smoke alarms already fitted—and adding to the burdens that could put them off renting their properties will have undoubted unintended consequences on the market and the very people this proposal seeks to protect.

The right hon. Gentleman spoke about the cost of this measure as though that were the only factor, but it is not. The risk of prosecution is a factor for landlords when making these decisions. The practicalities of implementing and enforcing a mandatory programme to install smoke alarms in private rented accommodation could make it incredibly inefficient and almost impossible to police. Although landlords would be legally obliged to install such devices in their properties, they would not be able to check the status of the alarm regularly. Shifting that responsibility to the landlord, who has irregular and unguaranteed access to the property, might result in testing becoming a less regular affair than would otherwise be the case.

We should also consider tenant responsibility. Given that time and again it appears that tenants interfere with fire protection devices in their property, how can the landlord be held responsible if those sensitive alarms are disconnected or tampered with? You do not have to take my word for it, Mr Speaker, because when the right hon. Gentleman was a Minister, he stated in a parliamentary answer that

“in approximately 9 per cent. of households containing fitted smoke alarms at least one alarm has either been disconnected or has had the battery removed.”—[Official Report, 13 January 2003; Vol. 397, c. 392W.]

How can a landlord be held responsible for that?

If a tenant were to remove the batteries, cover the sensor or disconnect the device completely without notifying the landlord, would it still be the landlord’s responsibility to ensure that those protection devices were engaged, and if so, how? [Interruption.] Opposition Members are chuntering, but they just like having noble ideas. They have absolutely no idea about the practicalities because they never think anything through. It is totally impractical, impossible and unrealistic to expect a landlord to check on the status of all smoke alarms in his or her properties on a daily basis to ensure that all devices are connected and operational. How on earth are they expected to do that? If smoke alarms are not working, they are pointless.

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How many smoke alarms would be satisfactory? Guidelines seem to suggest that an alarm should be present on every floor of a property, but given the nature of private letting, where rooms are often let on an individual basis, will the landlord need to provide a separate alarm in all rooms of the property? Would one alarm in an eight-bedroom property be sufficient? Not only would excessive alarm installation amount to an increased financial burden on the landlord, but it would no doubt have a knock-on effect on tenants, who will pay extra to rent those properties.

A mandatory smoke alarm policy could reduce the use or consideration of alternative safety alarms and measures. I believe that heat alarms have been acknowledged as a suitable and in some cases more appropriate alternative to smoke alarms. They reduce the risk of accidentally triggering an alarm, which in turn lessens the chances of tenants actively disengaging them. The Residential Landlords Association recently pointed out that it is clear from relevant British standards and Local Authorities Co-ordinators of Regulatory Services guidance, that in certain situations the fitting of a heat alarm is more appropriate. Smoke detectors are not appropriate in kitchens because of the higher risk of accidentally setting off the alarm. [Interruption.] Labour Members do not like listening to this because they have not thought it through. Any mandatory policy on smoke alarms could create a climate where landlords might remove a more effective heat alarm system and replace it with a less effective smoke alarm system that would be less suitable for the type of property and tenant, just because of the right hon. Gentleman’s diktat.

I understand that private rented accommodation is already covered by an extensive amount of safety regulations, including on fire safety, which makes this proposed extra burden seem completely unnecessary. Local authorities already have powers to require the provision of smoke alarms where necessary through the housing, health and safety rating system. A British standard underpins various provisions for the installation of fire detection, along with LACORS guidance, as agreed by the Department for Communities and Local Government and the Chief Fire Officers Association, and that is the basis for fire protection in existing dwellings. A clear downward trend in fire deaths and injuries has been evident for many years in fire statistics. Although those statistics are encouraging, they bring into question the need to adopt compulsion for fitting smoke alarms when steps are already being taken in the right direction and with excellent results.

Finally, I have great concerns about discriminatory treatment in relation to private landlords. If the intention is to promote fire safety, surely the right hon. Gentleman’s motion should apply to the mandatory installation of smoke alarms in all types of accommodation and not single out private landlords. Given everything that I have said, I do not believe there should be any move towards the mandatory provision of smoke alarms in private rented accommodation. As mentioned, the Bill applies only to private landlords, not to social housing or owner-occupied homes, despite the threat of fire not respecting such boundaries.

The Labour party thinks that, whatever something is, it must be regulated, that there must be a law for it and that we must have more burdens and unnecessary regulations, but I think that this provision is completely

7 May 2014 : Column 160

unnecessary. The right hon. Gentleman needs to explain why he did absolutely nothing to introduce this measure when he was a Minister and in a position to do so. I oppose this Bill. I will allow the right hon. Gentleman his moment in the sunlight and his moment of glory, and I will not seek to divide the House. However, I hope that the Minister will register my points and not introduce this ridiculously unnecessary nanny-state proposal.

Question put (Standing Order No. 23).

The House divided:

Ayes 245, Noes 8.

Division No. 265]

[

12.57 pm

AYES

Abbott, Ms Diane

Abrahams, Debbie

Aldous, Peter

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Amess, Mr David

Ashworth, Jonathan

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Balls, rh Ed

Banks, Gordon

Barron, rh Kevin

Bayley, Hugh

Beckett, rh Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman, Bob

Blackman-Woods, Roberta

Blomfield, Paul

Blunkett, rh Mr David

Bone, Mr Peter

Bradshaw, rh Mr Ben

Brennan, Kevin

Brooke, Annette

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Buck, Ms Karen

Burden, Richard

Burnham, rh Andy

Burstow, rh Paul

Burt, rh Alistair

Campbell, rh Mr Alan

Campbell, Mr Gregory

Carmichael, Neil

Caton, Martin

Champion, Sarah

Chapman, Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Colvile, Oliver

Connarty, Michael

Cooper, Rosie

Cooper, rh Yvette

Corbyn, Jeremy

Creagh, Mary

Creasy, Stella

Crockart, Mike

Crouch, Tracey

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Sir Tony

Dakin, Nic

Danczuk, Simon

David, Wayne

Davidson, Mr Ian

Davies, Geraint

Denham, rh Mr John

Dobbin, Jim

Docherty, Thomas

Dodds, rh Mr Nigel

Donohoe, Mr Brian H.

Doughty, Stephen

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Ellman, Mrs Louise

Esterson, Bill

Evans, Chris

Evans, Jonathan

Farrelly, Paul

Field, rh Mr Frank

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Fovargue, Yvonne

Francis, Dr Hywel

Gapes, Mike

Gardiner, Barry

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Goldsmith, Zac

Goodman, Helen

Greatrex, Tom

Green, Kate

Greenwood, Lilian

Griffith, Nia

Hain, rh Mr Peter

Hamilton, Fabian

Hanson, rh Mr David

Harris, Mr Tom

Havard, Mr Dai

Hemming, John

Hepburn, Mr Stephen

Hermon, Lady

Heyes, David

Hilling, Julie

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hollobone, Mr Philip

Hopkins, Kelvin

Howarth, rh Mr George

Huppert, Dr Julian

Irranca-Davies, Huw

Jackson, Glenda

Jamieson, Cathy

Jarvis, Dan

Jenkin, Mr Bernard

Johnson, Diana

Jones, Graham

Jones, Mr Kevan

Kane, Mike

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Kennedy, rh Mr Charles

Lavery, Ian

Leslie, Charlotte

Leslie, Chris

Lewell-Buck, Mrs Emma

Lewis, Dr Julian

Love, Mr Andrew

Lucas, Caroline

Mactaggart, Fiona

Mahmood, Mr Khalid

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCann, Mr Michael

McCarthy, Kerry

McCartney, Jason

McCrea, Dr William

McDonagh, Siobhain

McDonald, Andy

McDonnell, Dr Alasdair

McDonnell, John

McFadden, rh Mr Pat

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Meale, Sir Alan

Mearns, Ian

Miller, Andrew

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme

(Livingston)

Morris, Grahame M.

(Easington)

Mosley, Stephen

Mulholland, Greg

Murphy, rh Mr Jim

Murphy, rh Paul

Murray, Ian

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Offord, Dr Matthew

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Paisley, Ian

Pearce, Teresa

Percy, Andrew

Perkins, Toby

Phillips, Stephen

Phillipson, Bridget

Pound, Stephen

Powell, Lucy

Pugh, John

Qureshi, Yasmin

Raynsford, rh Mr Nick

Reed, Mr Jamie

Reed, Mr Steve

Reid, Mr Alan

Reynolds, Emma

Reynolds, Jonathan

Robertson, John

Robinson, Mr Geoffrey

Rosindell, Andrew

Rotheram, Steve

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Russell, Sir Bob

Sanders, Mr Adrian

Sawford, Andy

Seabeck, Alison

Shannon, Jim

Sharma, Mr Virendra

Sheerman, Mr Barry

Shuker, Gavin

Simpson, David

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, Angela

Smith, Henry

Smith, Nick

Smith, Owen

Smith, Sir Robert

Spellar, rh Mr John

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Syms, Mr Robert

Tami, Mark

Thomas, Mr Gareth

Timms, rh Stephen

Tomlinson, Justin

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, Valerie

Vickers, Martin

Ward, Mr David

Watts, Mr Dave

Whitehead, Dr Alan

Williams, Hywel

Williams, Roger

Williamson, Chris

Wilson, Phil

Winnick, Mr David

Winterton, rh Ms Rosie

Woodcock, John

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Jim Fitzpatrick

and

John Healey

NOES

Bingham, Andrew

Davies, Philip

de Bois, Nick

Lilley, rh Mr Peter

Mills, Nigel

Nuttall, Mr David

Rees-Mogg, Jacob

Whittingdale, Mr John

Tellers for the Noes:

Susan Elan Jones

and

Mr David Hamilton

Question accordingly agreed to.

7 May 2014 : Column 161

7 May 2014 : Column 162

Ordered,

That Mr Nick Raynsford, Jim Fitzpatrick, Alistair Burt, Mr Andrew Love, Mr Adrian Sanders, Mrs Mary Glindon, Peter Aldous, Mr Barry Sheerman, Mr David Amess, John Healey and Bob Blackman present the Bill.

Mr Nick Raynsford accordingly presented the Bill.

Bill read the First time; to be read a Second time on Thursday 15 May, and to be printed (Bill 207).

Water Bill (Programme) (No. 2)

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

That the following provisions shall apply to the Water Bill for the purpose of supplementing the Order of 25 November 2013 (Water Bill (Programme)):

Consideration of Lords Amendments

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

(2) The proceedings shall be taken in the following order: Lords Amendments Nos. 15 to 30, 32, 33, 43 to 64, 101 to 103, 107 to 147, 1 to 14, 31, 34 to 42, 65, 66, 104, 67 to 100, 105, 106.

Subsequent stages

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

(4) 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.—[Harriett Baldwin.]

Question agreed to.

7 May 2014 : Column 163

Water Bill

Consideration of Lords amendments

Mr Speaker: I must draw the attention of the House to the fact that financial privilege is involved in Lords amendment 142. If the House agrees to it, I will cause an appropriate entry to be made in the Journal.

Clause 10

Agreements by water undertakers to adopt infrastructure

1.11 pm

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson): I beg to move, That this House agrees with Lords amendment 15.

Mr Speaker: With this it will be convenient to discuss Lords amendments 16 to 30, 32, 33, 43 to 64, 101 to 103, and 107 to 147.

Dan Rogerson: The Lords amendments relate to the subject of market reform, and in particular to retail exits. By that I mean allowing an incumbent water company to exit from the market for retail services to non-household customers.

Lords amendments 15 to 30, 43 to 48, 101 to 103 and 107 to 147 are minor technical or consequential amendments to the market reform provisions in the Bill—for example, changing wording from “a code” to “the code”. Some are minor and technical amendments relating to cross-border pipes. Lords amendments 32 and 33 ensure that the Consumer Council for Water is consulted on water company charges schemes. The Government are keen to ensure that customers are protected, and are grateful to Opposition Members for highlighting the important work done by the council on behalf of customers. We expect it to contribute to all discussions about the future of the industry, and we are pleased to have been able to enhance that in the Bill.

Lords amendments 49 to 52 would implement recommendations made by the Delegated Powers and Regulatory Reform Committee in another place. We are very grateful for the Committee’s scrutiny of the Bill. I do not propose to refer to the amendments in detail, but I shall be happy to respond to any specific queries.

Lords amendments 53 to 64 deal with the issue of retail exits, which we have discussed previously in the House. The Bill seeks to introduce a range of reforms that will enhance and extend competition in the water sector. The Government believe that the development of competition in the sector will bring real benefits to customers. They listened to, and acted on, well-argued contributions to the debate on market reform, especially the calls for incumbent water companies to be able to choose to exit from the non-household retail market.

I think it would be appropriate for me to expand on the retail exit amendments, as the House is not familiar with the clauses involved. The amendments differ in some crucial ways from amendments on the subject that Members have seen before. When drafting the amendments, we were particularly careful to ensure that customers were protected, both the non-household customers who will be transferred to a different retailer and the household customers who will remain with the incumbent. Non-Government amendments tabled by Members here and in another place have not reflected those safeguards fully.

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The Lords amendments relating to retail exits contain three core principles. Exits must involve non-household customers only, they must be undertaken voluntarily, and they must ensure the ongoing protection of customers. Any exit will be possible only with the consent of the Secretary of State. Other amendments that the House has considered did not grapple with those key issues. These amendments create broad, permissive powers in what will be a very complex area. Further work will be required to consider the practical implications of exits, and to develop the detailed policies that will underpin the use of the powers. We will therefore be consulting widely with all interested parties as we develop our approach and produce exit regulations.

1.15 pm

So what do the Lords amendments actually do? They give the Secretary of State powers to establish, through regulations, a framework that permits incumbent water or sewerage companies—with the consent of the Secretary of State—to stop supplying any retail services to current or future non-household customers in their areas of appointment. The services will then be provided by one or more retail licensees. Any incumbent water company whose area is wholly or mainly in England will be able to apply to the Secretary of State to exit from the non-household retail market for that area.

This approach reflects amendments tabled by parties in both Houses, but builds on them by increasing safeguards. These amendments ensure, for example, that in allowing retail exits we will not make forced separation possible, which an amendment tabled by the hon. Member for Dunfermline and West Fife (Thomas Docherty) would have done. We do not want to take risks with a successful model, given the challenges that we face in building the resilience of the sector, which is a crucial aim of the Bill and our programme of water reform. We cannot risk damaging investor confidence.

The amendments are enabling only, and we are committed to full public consultation on how best to implement the provision for retail exits. We will consult on the content of draft regulations by the end of the year. We will work closely with incumbent water companies, Ofwat, the Competition and Markets Authority, the Consumer Council for Water and others as we develop our approach and produce the regulations. We will also send a copy of the draft regulations to the Environment, Food and Rural Affairs Committee to give it an opportunity to comment. In addition, Ministers will make themselves available to Members of both Houses for further discussions as we develop the regulations, given the limited opportunities for parliamentary scrutiny of this part of the Bill.

Let me explain some key elements of the regulation-making powers. They provide for the protection of both household and non-household customers who are affected by the exit. As I have said, it is of paramount importance that we ensure that customers are protected. The regulations may provide for the transfer of customers, and set out what will happen in an area where a company will no longer be providing retail services for non-household customers. They must ensure the protection of any non-household customers who are subject to a transfer, as well as household customers who remain with the incumbent. The amendments enable the Secretary of State to make regulations that establish strong safeguards.

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That extends to requiring the exiting incumbent to take certain steps before making an application, such as consulting its customers.

Our intention is that any exit must be voluntary, and must be delivered in a way that ensures continued protection both for non-household customers and for householders who will not be able to switch their suppliers. In order to prevent forced separation or exit, the amendments require the Secretary of State to consent to any application to exit.

Lords amendment 54 also sets out some of the grounds on which an application to exit could be refused—for example, if the company could not demonstrate that exit was in the best interests of customers or in the public interest. Lords amendments 59 and 61 also underline our intention that exits should be voluntary. In developing the exit regulations, we recognise the regulatory independence of the competition authorities, and the provisions are not intended to undermine it.

The Enterprise and Regulatory Reform Act 2013 reaffirmed the importance that the Government ascribe to an independent competition regime. Lords amendment 61 enables the Secretary of State to make a statement about the Government’s policy on voluntary exits. Any statement issued would fully reflect the Government’s wider approach to competition and the independence of the regulators. Lords amendment 62 provides a power to make changes in the duties and powers of a number of public bodies, including Ofwat and the Competition and Markets Authority. The amendment is necessary because the exit regulations are likely to involve changes in the existing legislative regime. Its scope is limited to the necessary adaptations of the framework governing the exit arrangements in the water sector. Any changes will be very specific to retail exits.

Let me end by welcoming the hon. Member for Penistone and Stocksbridge (Angela Smith) to her new position. While we may disagree on matters of policy from time to time, I have the greatest respect for the contribution that she makes in the House—and it is good to have someone of Cornish descent facing me across the Dispatch Box.

Angela Smith (Penistone and Stocksbridge) (Lab): May I start by thanking the Minister for his kind comments?

As it is some time since the Bill was debated on the Floor of the House, I want briefly to refresh the memories of Members on it. It includes many important reforms that attempt to build on three important reviews taken forward by the previous Government: the Pitt review on flooding, the Walker review on affordability, and the Cave review on competition.

Throughout the Bill’s long passage through Parliament the Opposition have been supportive. In the Commons we voted for it on Second Reading and on Third Reading. In the other place, although we raised legitimate concerns and challenged the Government, again we remained broadly supportive of the Bill. We have backed measures to increase competition. We have supported measures that will provide a statutory basis for agreement on flood reinsurance, providing affordable insurance to households who would have otherwise not been covered. However, as my hon. Friend the Member for Garston and Halewood (Maria Eagle) pointed out on Third

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Reading, there still remains even now a major hole at the heart of the Bill, and at the heart of the Government’s water policy: the absence of any serious attempt to tackle the impact of rising water bills on household budgets, which is adding to the cost of living crisis.

Unfortunately, the Government have failed to back a new national affordability scheme that would have ended the current postcode lottery in which companies choose whether to offer a social tariff and set the criteria for eligibility. Last year the industry made £1.9 billion in pre-tax profits, of which they returned £1.8 billion to shareholders, yet fewer than 25,000 people are eligible to benefit from social tariffs offered by just three water companies. In many ways, therefore, the Bill represents a missed opportunity and remains seriously flawed, despite its being improved by amendments made in the other place.

Although we will not vote against any of the first group of amendments, that does not mean that we believe that the Bill could not have been made stronger and more effective through the adoption of our amendments. We are where we are, as they say. While, as the Minister pointed out, most amendments in the group present a series of technical and drafting changes, amendments 32 and 33, amendments 49 to 52 and amendments 53 to 64 make significant changes to the Bill that was debated in the Commons.

Amendments 32 and 33, which were originally introduced in Committee by Lord Grantchester, give a new role to the Consumer Council for Water. They will require Ofwat to issue rules that will mean that the CCW must be consulted by water and sewerage undertakers on all charges schemes. That will allow the CCW to play a role at an early stage in the charges process and will enable it to flag up problems, before the relevant bills start arriving on customers’ doorsteps and further problems occur. For example, as Lord Grantchester pointed out in Committee, the CCW had previously challenged the charging plans of some companies that restricted half-yearly payment options for those on direct debit payments. Some customers prefer to pay on a half-yearly basis, as it better enables them to manage their money.

Although we welcome the amendments, which we promoted in the other place, it is a pity that the Government have not gone further by accepting our argument that we need to tackle the impact of rising water bills on household budgets. As I said, the Government could have backed our plans for a new national affordability scheme that would have ended the current postcode lottery in which companies choose whether or not to offer a social tariff, with no minimum standards in place to ensure fair and effective affordability measures.

Amendments 49 and 50 introduce parliamentary scrutiny for any regulations that the Secretary of State may deem fit to introduce under clauses 37 and 39. The amendments, which were introduced at a very late stage—I think on Third Reading in the Lords—mean that the affirmative procedure will now apply on the first exercise of those powers. That is quite right, especially given the importance of the regulations in question. It is a pity, however, that the Government have been forced into this position and have had to be pushed into introducing the amendments by Labour Members and the Delegated Powers and Regulatory Reform Committee in the other place. That Committee made firm recommendations in this regard, and has rightly argued that the Secretary of

7 May 2014 : Column 167

State would have enjoyed so-called Henry VIII powers over many parts of the Act if the Bill had remained unamended, so Parliament is right to assert its right to scrutinise the relevant regulations as and when they see the light of day.

Amendments 53 to 64 deal with retail exit. I want to put it on the record that we have also backed measures in the Bill that increase competition to support businesses that wish to enter the retail market for non-domestic consumers. The measures are similar to those that have been a success north of the border; Scotland became the first country in the world to introduce competition to the non-domestic water market in 2008. We find it odd, however, that the Government have repeatedly dragged their feet in relation to allowing such businesses to exit this market. Without our persistence, which was shared by peers on the Government Benches, the Government’s original proposals would not create a market at all.

Retail exit enjoys a great deal of support, including from Ofwat, the Environment, Food and Rural Affairs Committee and some of the major water companies. Indeed, in Committee, amendments introduced by the Chair of the Select Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), were not supported by the Government. In the other place, Lord Whitty commented that there was bemusement in all parts of the House as to why the Government were so resistant to the concept of exit in the new retail market, and introduced an amendment that would have allowed it. His arguments were not, however, supported by the Government, who gave the lame reason that such a measure would cause investor insecurity. On Report, Lord Moynihan introduced an amendment that would have gained our support, but he withdrew it on advice that the Government would introduce an amendment on Third Reading. Although we welcome the Government’s late conversion, we have to wonder why they resisted such a measure during most of the Bill’s progress through this House and the other place. Surely it would have been more appropriate if the amendments had been brought forward earlier, to allow adequate parliamentary scrutiny. Once again, however, we are where we are.

It is also right that, when and if regulations are brought forward by the Secretary of State, they will be laid before both Houses under the super-affirmative procedure. I pay tribute again to the work of the Delegated Powers and Regulatory Reform Committee in highlighting the need for that even at the 11th hour of the Bill’s passage through Parliament.

Miss Anne McIntosh (Thirsk and Malton) (Con): First, I welcome the hon. Member for Penistone and Stocksbridge (Angela Smith) to her new position, and pay tribute to her predecessor, the hon. Member for Dunfermline and West Fife (Thomas Docherty). I understand that they have performed a job swap. The hon. Gentleman has made a big contribution to this debate and, in the past, to the work of the Environment, Food and Rural Affairs Committee. I can only apologise to both Front-Bench teams that there are not more colleagues from the Committee here today. The reason for that is that we are undertaking a farm visit this afternoon. I had to give my excuses and will be joining

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colleagues later for the completion of the visit today and tomorrow. It would be churlish of me not to congratulate my hon. Friend the Minister and welcome both the outbreak of common sense in the other place and in the Department and a very welcome and worthwhile amendment.

I shall briefly go over the deliberations in the Select Committee and the earlier proceedings in this place. In our report on the draft Water Bill, the Committee strongly recommended that the Bill should include provisions to enable incumbent companies to exit the retail market voluntarily. Indeed, as the hon. Member for Penistone and Stocksbridge mentioned, the Committee tabled a new clause in my name on Report to provide for retail exit. Also, during the course of the inquiry both regulators—Ofwat and the Water Industry Commission for Scotland—the incumbent companies and new entrants were united in calling for the Bill to include an exit route. WICS provided a welcome and helpful explanatory note, and I hope the amendment it proposed during the Commons stages of the Bill will bear fruit today.

1.30 pm

In the Public Bill Committee, Opposition Members proposed a new clause to allow the incumbent companies to choose to provide to the retail market or wholesale market only, subject to approval by the Secretary of State. Regrettably, that amendment was lost, but we heard some powerful arguments in favour of allowing retail exit, which include the following: an exit clause is needed to allow the market to function as a normal competitive market; a company should be able to organise its business in the way it considers best for the interests of shareholders and customers; and an exit clause facilitates entry by new entrants, particularly larger ones, into the water and sewerage retail market, as they would not have to win one contract at a time. Without today’s amendment, economies of scale would work against new entrants, either preventing them from entering the market or, at the very least, reducing the benefits they could provide to new customers because of the higher costs of entry. It is also not in the interest of the companies or customers to force companies to stay in a market when they have no or very few customers. It is, therefore, entirely appropriate that the amendment recognises that this is about the proper functioning of the market.

Many of the amendments in the group are technical and I do not propose to comment on them, but I believe they go some way towards resolving issues with the drafting of the Bill or addressing concerns expressed during the Lords stages of the Bill. Clearly the amendment on retail exit is the most substantial. I echo the hon. Lady’s concerns, as I am sure other hon. Members would, about the lateness of the hour of this move, but the amendment is before us today and we should welcome its content. I believe the Minister recognises that there are a wide range of views in the industry on this subject, and all companies will wish to have the opportunity to provide input on the detailed arrangements that would be needed to ensure that any option for companies to exit voluntarily the non-household retail market did not have unintended consequences. Therefore, we should welcome the positive development of the amendment providing appropriate opportunities, as he explained,

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for full engagement and consultation with all interested parties and for consideration of all potential implications of allowing voluntary exit from the non-household retail market. I particularly welcome the role that will be played by the Consumer Council for Water, because it has, certainly in my area, a positive role to play.

I ask the Minister to elaborate on one comment made by Lord De Mauley in the other place when these amendments were discussed on Third Reading. He said that regulations made under these provisions on voluntary exit would be subject to an “enhanced affirmative” procedure, whereby draft regulations would be laid before the House. I have not heard that expression before, so I would welcome any clarification the Minister can provide on it. The right for companies to exit in this way reflects market conditions and it can only enhance investor confidence, because anything else would have been an intolerable situation, as a company would not have been allowed to exit, thus placing both company and its customers in a difficult position. Obviously, it is pleasing to note that the draft regulations will be subject to the full scrutiny by the Select Committee on Environment, Food and Rural Affairs, and our having the earliest sight of the regulations will permit us to perform that scrutiny within the timetable he has set out. I also welcome the fact that the Department has allowed a full consultation. With those remarks, I welcome this small group of amendments, as I recognise that allowing a voluntary exit can only enhance the Bill’s provisions in this sector.

Dan Rogerson: First, may I welcome you to the Chair, Ms Primarolo? I thank the hon. Member for Penistone and Stocksbridge (Angela Smith) and my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) for their contributions today, and the latter for the contribution she has made as Chair of the Select Committee, both throughout this process and long before any Bill was formally considered in both Houses.

The hon. Member for Penistone and Stocksbridge raised a number of issues and returned to the issue of affordability. The Government have made it clear that the best thing we can do on affordability is keep bills low for everybody by having a robust regulator and setting out to that regulator the policy framework to which we aspire in order for things to happen. The regulator has taken good action to explore with companies what they can do to keep bills lower; that is the trend we are seeing into the next price review period, with some companies bringing it forward into the current period as well, to the benefit of all consumers. Of course, this Government took action to deal with the acute situation in the south-west, where bills were much higher than everywhere else in the country. The hon. Lady rightly points out the contribution that social tariffs can make and the fact that three companies have introduced them. Other companies are bringing them forward in the next year or so, following consultation with their customer base. It is important that that consultation takes place, because introducing social tariffs involves a funding mechanism.

The Opposition have talked of a national scheme, but they did not introduce one when they were in government. We can continue to debate that, but my concerns with such a scheme, and those of the Government, are that the situation in each water company area is different.

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Therefore, one scheme mandated across the whole area will have different impacts on different customer groups across those water company areas and may have perverse impacts on the bills of some, given the different demographics and mix of bill payers. We are not convinced of that approach, but I welcome the Opposition’s support for social tariffs where they have been introduced.

The hon. Member for Penistone and Stocksbridge raised the issue of parliamentary scrutiny, as did the Chair of the Select Committee. We have listened to concerns and examined the use of the affirmative procedure where necessary. When we get into the realms of the super-affirmative procedure I bow to those with more experience of the range of options at the House’s disposal and how such a procedure might be used. We feel that the affirmative procedure is the correct one to take things forward, but we very much welcome the work done by the relevant Committee in another place to make suggestions on how to ensure that Members of both Houses, and those observing our deliberations externally, will have confidence that we have got things right.

I spoke earlier about the position on retail exits, but there are a couple of further things to say in response to the two speeches we have just heard. First, the Government’s position has never been that such exits should never happen and that we would never make proposals for them. We said at earlier stages that we had concerns, given the range of opinions held across the industry. Both regulators have supported such provisions throughout, whereas the Consumer Council for Water had a much more nuanced position. Some companies were very concerned about it, as were some investors, particularly with regard to pressure for the forced separation of companies. We know that investors would be concerned about that, and we want to see continuing investment in improving resilience, which is a key feature of where we are going with our programme. We are very concerned about the position of household customers, who will not have the options under this Bill that non-household customers have.

With that in mind, we have introduced amendments that take heed of arguments made by Opposition and Government Members, as well as people outside the House, and which put in place safeguards that make sure that all customers are protected throughout any process of change. There will be further consultation, as my hon. Friend the Member for Thirsk and Malton has said, which is crucial, and the question of forced separation, for example, can be addressed. On that basis, the amendments introduced by the Government allow us to move forward on the potential for retail exit in a measured way. That is the difference between the earlier debates on the Bill and where we are now. I thank the hon. Member for Penistone and Stocksbridge for her contribution, and I thank my hon. Friend the Member for Thirsk and Malton and the Committee for the work that they have done.

Miss McIntosh: I am most grateful for what my hon. Friend has said, but would he clarify the enhanced affirmative procedure?

Dan Rogerson: When the House considers options on the enhanced affirmative procedure there is a range of processes that can be used, but we believe that the

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affirmative procedure is the correct one with regard to most of the changes that we have discussed this afternoon. I thank hon. Members for their contributions to the discussion on this group of amendments. I hope that the House approves the amendments and that we can agree the changes made in another place.

Lords amendment 15 agreed to.

Lords amendments 16 to 30, 32, 33, 43 to 64, 101 to 103, 107 to 147 agreed to, with Commons financial privileges waived in respect of Lords amendment 142.

Clause 8

Bulk supply of water by water undertakers

Madam Deputy Speaker (Dawn Primarolo): The Minister will move Lords amendment 1 formally. [Interruption.] I am sorry, Minister, I did not intend to cut you off. I meant to say that the Minister will move Lords amendment 1.

Dan Rogerson: I am grateful, Madam Deputy Speaker. I am delighted that the Chair has such confidence in what happened in another place that she does not need to hear anything further.

I beg to move, That this House agrees with Lords amendment 1.

Madam Deputy Speaker: With this it will be convenient to consider Lords amendments 2 to 14, 31, 34 to 42, 65, 66 and 104.

Dan Rogerson: As you have shown, Madam Deputy Speaker, there are many amendments in this group, so I shall try to make my explanation as brief as possible, as I sense that that will be popular.

This group of amendments was tabled in the other place to build on and strengthen further the existing environmental protections under the Bill and to provide reassurance regarding the timetable for abstraction reform and its relationship to the upstream reforms in the Bill. In particular, this group of amendments reinforces environmental protections under the bulk supply and private water storage regimes, improves the resilience duty and the strategic policy statement, and places a new duty on the Secretary of State to provide Parliament with a progress report on abstraction reform.

This group also contains a number of minor and technical amendments. As before, I will not dwell on them, but I am happy to consider any points that hon. Members wish to make. The Government welcome the scrutiny that the Bill has received, and we have listened carefully to all the speeches made in this House and another place. Protection of the environment is close to my heart, and it is important to the Government too. Indeed, one of the Bill’s main objectives is to increase the resilience of our water supplies to ensure a future in which water is always available to supply households and businesses without damaging the environment. I am therefore delighted to bring back a number of important amendments that will ensure the continued protection of the environment.

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First, the Government have strengthened environmental protections under the bulk supply regime under clause 8. There are already several bulk supply agreements in the current system and there is a number of environmental protections in place. However, we have listened to the concerns raised on this issue during the passage of the Bill and have enhanced those protections accordingly. Ofwat can only order, vary or terminate a bulk supply agreement at the request of one of the parties, and after consulting the Environment Agency or Natural Resources Wales. Our amendments strengthen the consultation requirement by clarifying the fact that Ofwat can take environmental considerations into account before ordering, varying or terminating a bulk supply agreement. The amendments add a requirement for Ofwat to consult the Environment Agency and Natural Resources Wales before it issues the codes in this area.

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Water companies have statutory environmental duties that prevent them from entering into bulk supply agreements that would damage the environment. However, our amendments reinforce this protection by adding a requirement for such codes to require the parties to a bulk supply agreement to consult the relevant environmental regulator before entering into the agreement. We have also added an enforceable duty on the supplying party to provide information about the water supplied at the request of the relevant environmental regulator.

Secondly, we have strengthened the environmental protections with regard to water supply agreements under clause 12. We have amended the clause so that the regulations about water supply agreements between incumbent water companies and other relevant parties can require Ofwat to consult the Environment Agency or Natural Resources Wales before ordering, varying or terminating such an agreement. The amendments to clauses 8 and 12 will provide a greater role for the Environment Agency and Natural Resources Wales. We recognise the important role that those bodies play in ensuring that environmental considerations are taken into account. This is a more proactive approach and one that the regulatory bodies support.

Thirdly, I am pleased to note the widespread support for the new resilience duty under clause 22. Following debates in another place, that support has been further strengthened so that it explicitly requires Ofwat to promote the efficient use of water by water companies. That could include, for example, capturing and retaining water by investing in new water storage or by tackling leakage. That will ensure that this precious resource is used as efficiently as possible, and it will contribute to the Bill’s objective of increasing resilience in the water sector.

Fourthly, we have amended clause 24 so that the Secretary of State and Welsh Ministers must have regard to social and environmental matters when setting strategic priorities and objectives for Ofwat. Clause 24 is designed to help Ofwat to weigh all the relevant considerations appropriately when making regulatory decisions. We agree with Members in the other place that the consolidated guidance must include social and environmental considerations. We have therefore clarified the fact that social and environmental matters form an integral part of this process.

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Finally, we have tabled a significant amendment that will place a new duty on the Secretary of State to report to Parliament on progress on abstraction reform in England within five years of Royal Assent. This amendment signals the Government’s determination to progress abstraction reform and ensures that the Government are fully accountable to Parliament for the delivery of this commitment. In practice, this will mean that a written progress report will be laid before Parliament no later than early 2019. We cannot commit to a timetable for introducing legislation on abstraction reform, but our aim is to introduce the necessary legislation early in the next Parliament. The report will also provide the opportunity to update Parliament on the preparations for implementation of both abstraction reform and upstream reform, and how the two are closely aligned, as well as setting out any other progress on moving towards a more sustainable abstraction regime.

Angela Smith: I thank the Minister for introducing the second group of amendments, which relate to some very important provisions in the Bill.

Lords amendments 1 to 14 are largely drafting amendments, but they include some important additions to the Bill. Lords amendments 1 to 3 detail the efficient use of water resources and take into account the effect on the environment of water use, with particular reference to what constitutes a bulk supply agreement with water undertakers, and the effect of such agreements on the environment. Lords amendments 1 to 14 and Lords amendment 31 give a greater role, as the Minister acknowledged, to the Environment Agency and Natural Resources Wales with regard to the effects on the environment of bulk supply agreements. We welcome the strengthening of the role of these two bodies to provide environmental expertise and to prevent bulk supply agreements from damaging the environment.

Amendments 34 to 42 relate to social and environmental safeguards more generally, and amendment 38 in particular requires that the Secretary of State and Welsh Ministers “must” have regard to social and environmental matters when compiling their statements to Ofwat, thereby strengthening the requirement in the Bill. The change from “may” to “must” have regard is a major concession by the Government. Given the importance of securing environmental safeguards at the heart of all aspects of water management, one can say only that it is surprising that the Government did not make that amendment of their own volition, rather than as a result of facing pressure from Members of both Houses on the point.

It is important to put on the record our deep disappointment that the Government have not gone further and recognised the need to make the Bill stronger and more effective by making sustainable development a primary duty for the regulator, as is the case with other regulators. We believe that resilience and the associated term that the Government use here—“the efficient use of water”—are not good enough. In the water White Paper, the Government said that they would carefully consider the case for that, and many environmental organisations are concerned that Ofwat does not have the necessary powers to prevent environmental damage and damaging water exploitation. That is particularly important in the light of greater competition, where companies will be looking to maximise efficiency however they can. Without a tough regulatory

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duty, that could come at the expense of the environment. My question to the Minister about the Government’s failure to grasp the opportunity presented by the Bill to strengthen regulation in this regard is this: why have they failed to respond to this vital issue in a robust manner and safeguard our environment?

On water abstraction, the Government’s White Paper, “Water for Life”, published in 2011, set out the case for a comprehensive reform of abstraction licences, suggesting that the current licensing system was outdated and in need of urgent reform to deal with increasing pressure on water resources—an issue with which we are all now familiar. Pressures develop because of population change and climate change. The Government tabled an amendment requiring the Secretary of State to publish a report on abstraction reform within five years. That is in the context, however, of the Government’s decision to allow the introduction of greater competition in the upstream market to take effect before reform of the abstraction regime.

We, along with leading environmental experts, are concerned that without comprehensive abstraction reform, upstream competition could incentivise existing abstraction licence holders to sell their water to water companies, even when the catchment is already over-abstracted or over-licensed. In response, the Government have said that the Environment Agency is adequately placed to review and/or change abstraction licences. We do not agree with that assessment.

In his response to their lordships’ amendments, Lord De Mauley said: