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Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): I associate myself with the comments of the Prime Minister and many other hon. Members about Fusilier Lee Rigby. The Prime Minister has repeatedly referred to the importance of schools and universities in tackling the threat from radicalisation, yet I have spoken to many young people who are concerned about the absence of, or lack of consistency in information provided to them about how to report and tackle extremism that they find online. I am concerned that it appears that there have been no inter-ministerial meetings about that issue between the devolved Administrations and UK Ministers with responsibility for education and universities. Will the Prime Minister commit to working with education and universities Ministers across the UK to ensure that consistent information is provided to our young people, teachers and youth workers?

The Prime Minister: The hon. Gentleman makes an important point. That is one of the reasons for having the public duty on public bodies, including universities, to combat extremism and terrorism. We will set out the guidance on that as the legislation goes through the House. It is important to ensure that this happens on a UK-wide basis. Combating terrorism is a reserved, UK-wide responsibility. We need to discuss with the devolved authorities exactly how they put that in place, but obviously whether it is done is a matter for the UK Government.

Nadhim Zahawi (Stratford-on-Avon) (Con): It is the job of the House to pass laws to require internet companies to help to prevent terror attacks, but does the Prime Minister agree that companies such as Facebook, Twitter and other social networks have a moral responsibility—they owe it to the memory of Lee Rigby—to introduce systems, similar to the ones we have introduced to deal with child pornography, to identify terror threats? When they do identify them, they should have a Rigby rule and pass them to the authorities.

The Prime Minister: My hon. Friend is absolutely right. Obviously, we can put down legal obligations in terms of complying with warrants from the Home Secretary and legal requirements on providing communications data that are vital in solving crime, but there is a moral responsibility, too. If companies know that terrorist acts are being plotted, they have a moral responsibility to act. I cannot think of any reason why they would not tell the authorities. The debate that will happen following the publication of the report will help to keep us safe.

Jenny Chapman (Darlington) (Lab): Will the Prime Minister urgently examine whether the Prison Service has the resources and, crucially, the skills to deal with radicalisation in our jails?

The Prime Minister: The hon. Lady makes an important point, which we discussed in the extremism taskforce. It is a tragic fact that a number of people have gone to prison and become radicalised in prison because there have not been the appropriate services in prison or there has not been the right sort of religious instruction. Therefore, we have a programme going through all our prisons to ensure that that is in place. That is important.

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Mr Peter Bone (Wellingborough) (Con): I think the whole House will thank the Prime Minister for the speed with which he has come to the House and for fact that he does so regularly. In his statement he said, “But the automated systems in the internet company concerned did not identify this exchange.” Therefore, it does not appear that there was a deliberate attempt by the internet provider not to provide the information. It seems that its systems were wrong. Has he found out why those systems did not work? I also think that he could say which company it was.

The Prime Minister: I do not think that saying which company it was would be right, because I do not want to give a running commentary on which companies are better than others at analysing this problem and reporting it to the Government, for what I would have thought were quite obvious reasons about the signal that that would send to people who want to do us harm. My understanding of what happened in this case is that the company discovered the exchange after the murder took place, when it was searching its systems, and it found out that one automatic shutdown of an account had not been, as it were, referred upwards. We think it is very important to discuss with that company what it is going to put in place to ensure that that does not happen again.

Debbie Abrahams (Oldham East and Saddleworth) (Lab): Further to the comments from my right hon. Friends the Members for Salford and Eccles (Hazel Blears) and for Greenwich and Woolwich (Mr Raynsford), I very much welcome the development of the Prevent programme. Will the Prime Minister expound on the expectations that will be placed on schools, universities and community groups to deliver on the legal duty?

The Prime Minister: The concept is a simple one. This is linked to what the hon. Member for Ilford South (Mike Gapes) said, which is that the effort of combating extremism is a matter not just for the police and the security services but for everybody. So if schools, universities and colleges know that someone is promoting terrorism in their organisation, they have a duty to act. Some colleges and universities might have taken a very laissez-faire attitude towards this, but that is wrong. We will clearly need to set out in guidance more details of what we expect and how we define this problem.

Steve Baker (Wycombe) (Con): High-quality Islamic scholarship is surely crucial as a tool to confront the extremist ideology that leads to terrorism. Do the Government recognise that it is extremely difficult to find the individuals who have the necessary breadth and depth of knowledge of Islamic theology to make that possible?

The Prime Minister: My hon. Friend raises an important point, which we have spent some time discussing. I do not think that we have yet found the right answer. Some other European countries insist on particular training programmes and language abilities for imams, so that they are able to connect with the young people in their mosques. This is an area in which we still need to do more to ensure that people who are in danger of going astray have more people in their community to help to keep them grounded.

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Henry Smith (Crawley) (Con): The first British-born suicide bomber in the Syrian civil war was from my constituency. The incident occurred in February this year, and I am grateful to my right hon. Friend the Home Secretary for putting in place a number of Prevent programmes in my constituency over the summer as a result of that. Given the concern about how internet companies and social media might be aiding terrorist activity, will the Prime Minister tell us how we can use those platforms to counter this poisonous ideology?

The Prime Minister: First, let me share with my hon. Friend the sense that it is absolutely dreadful that there are people from our own country—many of whom were born, brought up and schooled here—who have had their minds poisoned by this extremist ideology and gone to fight or, in some cases, tried to commit atrocities on our own soil against their fellow countrymen. That is deeply shocking, and it shows how much effort we need to make to combat those activities.

Social media can of course be a great force for good as well as a force for aiding terrorists to talk to each other, and we should be using social media to point out all the positive things that we are doing. For instance, when young people in Muslim communities or other communities are concerned about what is happening in Syria, it is important that they can see instantly that this country is one of the most generous in the world for getting aid to people and giving them shelter, food and a chance of life. We must use social media to communicate that message rather than just leaving it open to the radicals and the extremists.

Julian Smith (Skipton and Ripon) (Con): There has been a pretty concerted campaign by The Guardian, which has been supported by some Members of this House, relating to the transparency and oversight of our security services. Does the Prime Minister agree that this incredibly detailed report will finally put paid to the myths that have been developing over the past few years?

The Prime Minister: My hon. Friend makes a good point. There is a balance here. What we have tried to do is improve the institutions that oversee our intelligence agencies. For instance, the Intelligence and Security Committee now has more power, resources and independence, and I have just said that we are going to make the Intelligence Services Commissioner put the role of the agencies on to a statutory basis. So we have updated and upgraded what we do, and I think we have now got to a pretty good place. We should always ask

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ourselves whether the next step we are going to take will really add to the democratic accountability and legitimacy of what we are doing, or whether it could hold us back.

Philip Davies (Shipley) (Con): The Prime Minister has often said that one of the purposes of overseas aid spending is that it contributes to our security. Given that finances are tight, to say the least, and given the extreme pressure that the Prime Minister admits the intelligence and security services are under, is it not time to divert some of that overseas aid spending to our security services at home? This is the elephant in the room, and to increase spending on the security services by £130 million at a time when overseas aid spending has gone up by about £5 billion is completely unacceptable. Will he put his dogma on overseas aid spending to one side and give the security services the funding that they need to keep us safe? That is what the public expect from him.

The Prime Minister: First, we have not only protected but recently increased spending on the security and intelligence services. I do not think that it is an either/or. We should be doing that as well as keeping our promises to the poorest people in the world, not only because we made that promise but because when it comes to dealing with problems in other countries so that they do not come and visit us here, overseas aid has a role.

Mr Philip Hollobone (Kettering) (Con): My constituents were horrified by the murder of Lee Rigby. It is clear from the report that the security services were perhaps not as adept as they might have been at intercepting his killers before the murder took place, but my constituents will be reassured that those two individuals were known to the security services. They would have been more worried had they not been known to them. We have heard many questions to the Prime Minister today about electronic and digital surveillance, but no one has mentioned the “mark 1 eyeball” or the importance of human intelligence. My right hon. Friend sees more of these things than the rest of us. Is he satisfied that proper emphasis is being placed on the infiltration of these radical organisations at a human level, rather than an over-emphasis on electronic and digital surveillance?

The Prime Minister: My hon. Friend makes an important point. He is absolutely right to say that, without human intelligence and all of that kind of interaction, a lot of the digital surveillance to which he refers would come to nothing. One thing that has changed since 9/11 is that an enormous amount of effort and work has gone into building up our intelligence and security services in those ways as much as in others.

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Iran (Nuclear Talks)

1.47 pm

The Secretary of State for Foreign and Commonwealth Affairs (Mr Philip Hammond): With permission, Mr Speaker, I will make a statement on the negotiations between the E3 plus 3 and Iran regarding the future of Iran’s nuclear programme. In November 2013, the E3 plus 3 signed an interim agreement with Iran which came into force on 20 January 2014 for an initial period of six months. Under that agreement, Iran committed to freezing the areas of its nuclear programme of greatest concern to the international community. In return, Iran received limited sanctions relief and the repatriation of $4.2 billion in oil revenues. Crucially, that interim agreement gave us the time and space to build confidence and begin negotiations on a comprehensive deal to ensure the peaceful nature of Iran’s nuclear programme.

Since February, we have engaged in extensive negotiations with Iran at both official and ministerial level. We always knew these negotiations would be difficult and complex, and they have been—even more so than negotiating the Geneva interim agreement. At the heart of the negotiations is the need to reconcile Iran’s aspirations for a peaceful civil nuclear programme with our insistence on ensuring Iran cannot develop a nuclear weapons capability.

By July 2014, after several rounds of talks with Iran, we had deepened our understanding of the positions of both sides and made progress on areas of the negotiations, but we were still far short of reaching agreement on core issues. The E3 plus 3 and Iran therefore decided to extend the negotiations until 24 November—yesterday.

Since July, negotiations between the E3 plus 3 and Iran have intensified, and we have closed the gap between the parties on a number of important issues, but significant differences remain. I and other Foreign Ministers from the E3 plus 3 met the Iranians in Vienna last Friday and again yesterday to evaluate the prospects of reaching agreement on a political framework for a comprehensive deal within the deadline. The discussions in Vienna highlighted the need for further movement on some big issues by the Iranians and the need for flexibility on both sides. Despite the efforts of all parties, it was clear yesterday morning that we need more time to close the gaps between the E3 plus 3 and Iran, particularly regarding the issue of Iran’s enrichment capacity, which remains at the heart of this negotiation. But, based on the significant progress we have made to date, I remain of the view—one shared by my fellow E3 plus 3 Ministers and Iranian Foreign Minister Zarif— that a comprehensive deal remains possible. We must capitalise on the momentum we have gathered and push forward to achieve that prize.

Iran and the E3 plus 3 have therefore agreed to extend the interim agreement again until the end of June to allow more time to bridge remaining gaps and tie down technical details. We will continue negotiations in December with the shared aim of securing an outline agreement within four months. We would, of course, have preferred to reach a comprehensive deal by yesterday’s deadline, but only if it was the right deal. As we continue to work towards such a deal, we have an interim agreement in place that maintains important constraints on Iran’s nuclear programme and the vast majority of nuclear-related

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sanctions. Under that arrangement, Iran will continue to be able to repatriate some oil revenues on a similar basis to the current arrangements.

Successive Governments have enjoyed cross-party support in the House for the twin-track approach of sanctions and negotiations. I remain convinced that that approach is the right one, and that it is yielding progress, albeit slow progress. The negotiations with Iran are tough and complex, but a comprehensive agreement would bring enormous benefits to all parties. For Iran, it would herald the beginning of reintegration into the international community, and open the door to an easing of sanctions and access to significant frozen assets. For the international community, it would mark a considerable advance for regional and global security. We cannot and will not succumb to the temptation of sealing a deal at any price, but we will remain steadfast in pursuit of a comprehensive agreement that respects the clear principle that Iran must not be able to develop a nuclear weapons capability. I commend this statement to the House.

1.53 pm

Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab): I thank the Foreign Secretary for his statement and for advance sight of it. First, on behalf of the Opposition, I wish to acknowledge the work of the EU’s outgoing High Representative for foreign affairs, Baroness Cathy Ashton. Over the past five years, she has played a decisive and constructive role on the world stage, particularly in relation to the Iranian nuclear dossier. Her contribution will be missed, but her legacy—I hope—will prove in time to have been significant.

On yesterday’s events in Vienna, the fact that it was not possible to reach agreement by the already extended deadline of 24 November is, of course, a setback, but it is better than either a bad deal or a rupture in the negotiations that would have freed Iran from its commitment not to accelerate its efforts to develop nuclear energy while negotiations proceed. For many years, Iran has chosen to exploit regional sectarian tensions through supporting terrorist groups in other parts of the region. Today, Iran has the capability to play a much more constructive role. So there should be no doubt that in an already volatile region, at a particularly perilous period, a nuclear-armed Iran would pose a threat not only to Israel and its neighbours, but to wider global security. Therefore, the interim agreement in November 2013 was a significant step forward. The June 2015 extension could allow for a further opportunity for progress to be made towards a vital comprehensive deal. This afternoon, I seek a number of assurances from the Foreign Secretary about the content, extension and negotiation of this proposed deal.

First, on the content of the final agreement, reports suggest that one of the main obstacles to securing a deal remained the crucial issue of the number of centrifuges Iran could operate. The Foreign Secretary did not mention that issue in his statement, so in his response will he set out the Government’s assessment of the appropriate number of centrifuges that Iran can retain while still offering sufficient protections on the so-called “break-out” time?

Secondly, the extension of negotiations must be agreed only alongside sufficient guarantees that it will not allow Iran to gain by running down the clock. The

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terms of the now-extended agreement explicitly forbid Iran from adding new enrichment capacity and accumulating more enriched uranium, and ban 20% enrichment altogether. Can the Foreign Secretary confirm that those restrictions will remain in place and will continue to be monitored, and that any sign of a breach will warrant an effective response? In particular, is he satisfied by the level of International Atomic Energy Agency access going forward?

Thirdly, could the Foreign Secretary also confirm that Iran will not enjoy any net financial gain through this extension? As he said in his statement, there has been cross-party support for a twin-track approach for a number of years. Yesterday, he confirmed the following:

“The expectation is that there will be a rollover of the current arrangements for Iran to access around $700 million per month of frozen assets”.

In his statement, he said that Iran will continue to repatriate oil revenues on “a similar basis” to before, so can he confirm explicitly that that does not allow for any further extension of sanctions relief without anything in return from Iran?

Of course the focus of today’s statement is on the nuclear negotiations but, with your permission, Mr Speaker, I wish to ask a question about reopening the British embassy in Tehran. I welcomed the announcement in June by the former Foreign Secretary—he is now Leader of the House—that the embassy will be reopened. The Foreign Secretary’s recent written answer to me stated that issues associated with getting the embassy back to a functional level and re-establishing a visa service are still under discussion. Can he offer further details about when he envisages those issues will be resolved? Three years since the attack on the embassy, ensuring its swift but safe reopening must surely remain a priority for those from all parts of this House.

Secretary of State Kerry was right to say that these talks will not get easier just because they go on longer. Unless there is a real breakthrough soon on the key heads of agreement, including on centrifuges and stockpiles, 2015 could see a progressive unravelling of political momentum for a deal on both sides. The onus therefore remains on Iran to be able to give the international community confidence that its nuclear programme is a purely civilian one, and the responsibility of the international community is to negotiate a deal that achieves that goal. As the Foreign Secretary recognised, there has been a bipartisan approach in this House, and he continues to have our support in seeking such an outcome.

Mr Hammond: I am grateful to the right hon. Gentleman for his expression of support at the end of his remarks. May I join him in thanking Baroness Ashton and congratulating her on the significant role she has played in these negotiations over the last period? I should also welcome her successor, Federica Mogherini, as new EU High Representative. The E3 parties are discussing—we began a discussion yesterday and will continue it—how we carry forward this process, because, clearly, Baroness Ashton had a large store of accumulated knowledge and had built important relationships. We will discuss with the new High Representative how best we can carry forward these negotiations in a way that gives them the maximum chance of being successful.

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I strongly agree with the right hon. Gentleman’s expressed view that no deal is better than a bad deal; a nuclear-armed Iran would be a major destabilising force in the region and, conceivably, in a short period of time, far beyond it. That is not an outcome we can allow to happen, and we are all clearly focused on that. He has asked me for some specific assurances, and I will answer his questions in so far as I can. We agreed yesterday in Vienna that it would not be helpful to have on public display all the various heads of discussion and the various specific ideas that are in play and being discussed. We are clear among us that nothing is agreed until everything is agreed. If we want the discussions to proceed in a spirit of openness, with people testing new ideas, we have to respect the confidentiality around that process. I did say in my opening remarks that Iran’s enrichment capacity—a proxy for centrifuge numbers or centrifuge capability—remained a key issue to be resolved. We are exploring a number of ways of approaching that issue, and will continue to do so with the Iranians.

The right hon. Gentleman asked me to confirm whether the restrictions under the recently expired joint plan of action and the monitoring arrangements would remain in force and also whether access under those monitoring arrangements is considered to be adequate. I can confirm all of those things. He also asked about financial gain. As I said in my opening remarks, Iran will continue to be allowed, for as long as this arrangement is in place and the restrictions on Iran’s activity continue, to access approximately $700 million a month of its oil revenues, as has been the case since the beginning of this year.

Finally, the right hon. Gentleman asked me about the Tehran embassy. Yes, we are committed to reopening embassies between our two countries as soon as possible, but as he knows and has acknowledged there have been some technical issues that we have not found easy to resolve. We need to import into Iran a significant amount of equipment for the embassy to replace what was destroyed during the events of November 2011. If we are to operate effectively, we need to be able to take in that equipment in a way that is secure and that maintains necessary confidentiality. We have not yet been able to agree a way of doing that with the Iranians or to establish how we can deliver an effective visa service in Tehran that will meet the level of demand that is expected. At the same time, we also have to comply with various restrictions that the Iranians have in place, which limit our scope to deliver that service. We are continuing to engage with the Iranians on that issue. We are clear that this is a separate discussion; it is not dependent on, or in any way connected to, the nuclear discussion.

Finally, let me pick up on the right hon. Gentleman’s last comment. He said that to make progress, there needs to be a real breakthrough soon. I know that, in these sorts of discussions, it is always tempting to think that there has to be a sudden breakthrough. I say to him that progress thus far would be better characterised as slow but incremental, a painstaking inching towards each other, a testing of new ideas, and an exploring of new possibilities and of new ways of looking at old problems. We have made significant progress, albeit in very small steps, over the past few months. Rather than having a sudden breakthrough over the next couple of months, I expect us to edge towards each other in this incremental way.

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Mr Kenneth Clarke (Rushcliffe) (Con): I am sure that everybody who wants one day to see a return to stability in the middle east will be hoping for eventual success in these negotiations. No one wants to see sanctions maintained on Iran and the Iranian people for any longer than is necessary. Will my right hon. Friend assure me, within the sensible constraints of what he can say during negotiations, that any eventual solution must include a system of inspection and monitoring that will continue for the indefinite future so that every interested party can be reassured that any deal will not be slid back on either by the present Iranian Government or any future regime in that country?

Mr Hammond: I can reassure my right hon. Friend that transparency and an inspection and verification regime are at the heart of these negotiations. The Iranians understand that the regrettable but none the less undeniable lack of mutual trust between the two sides means that there will have to be robust inspection and verification procedures in place throughout the duration of any agreement. Indeed, there will have to be proper transparency and inspection arrangements in place beyond the duration of any agreement under the usual terms of the nuclear non-proliferation treaty in respect of a non-nuclear power.

Mr Jack Straw (Blackburn) (Lab): I draw the attention of the House to the fact that I am co-chairman of the all-party group on Iran. The Secretary of State’s characterisation of negotiations with the Iranians as tough, complex and painstaking sounds all too familiar. I have every sympathy with him and commend him on his work. All of us want to see a satisfactory deal, but does he accept that there is a danger, if this drifts on, of a hardening of sanctions by the United States Congress and, at the same time, a degradation of sanctions by some of the other parties in the E3 plus 3? Has he any comment to make on the report in Fars News, an Iranian news agency, yesterday that President Vladimir Putin had a telephone conversation with President Rouhani of Iran in which he proposed

“to lift the anti-Iran sanctions in a unilateral and gradual process.”

Mr Hammond: I can tell the right hon. Gentleman that Foreign Minister Zarif refers often to the negotiations that took place in the middle of the last decade. I suppose he does that to emphasise that he was involved in the discussion long before any of us at the table were. It is, as the right hon. Gentleman suggests, absolutely essential that the sanctions regime remains robust. Last November, we said that the easing of certain specific sanctions under this deal did not imply, and would not be allowed to imply, a general weakening of the sanctions regime. We have seen nothing to suggest that the sanctions regime has weakened. We monitor it carefully and it remains effective and robust and it must continue to do so. I too saw, while I was still in Vienna yesterday, those remarks attributed to President Putin. I was with Foreign Minister Lavrov, who gave me no reason to believe that they were likely to be true, and I note that they were reported by an Iranian source. We are seeking clarification from the Russians, but I do not expect to see them break ranks. The Russians have been entirely constructive and very much engaged in this process, as have the Chinese.

Mr Speaker: Having called one co-chair, a most illustrious co-chair, of an all-party group, I am inclined to call another. Mr Richard Bacon.

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Mr Richard Bacon (South Norfolk) (Con): I congratulate the Government and the Foreign Secretary on the wisdom and patience of their approach, which is plainly required in the nuclear talks. It is plain that the Vienna convention requirements must be adhered to before we can consider reopening embassies, but does he agree that, on a broader range of matters such as the return of citizens and nationals, the opening of embassies should be seen not as some sort of reward but as a useful tool that could help in the resolution of a number of the normal kinds of disputes that occur between nations and that on many of those there is in fact some room for negotiation?

Mr Hammond: I agree that the opening of an embassy is certainly not a reward; it is a practical step to give effect to what we hope will be an increasing level and intensity of bilateral relations. In particular, we know that there are significant numbers of Iranian citizens who would like to visit the UK, but who find the current visa application regime onerous—I am talking about requiring them to travel outside the country to obtain a visa. We are moving towards reopening the embassy as soon as we practically can. For that to happen, we must have support from the Iranians to facilitate the work that we need to do to rehabilitate the embassy and all its operating equipment.

Sir Gerald Kaufman (Manchester, Gorton) (Lab): Is the right hon. Gentleman aware that despite Iran’s vile internal policies—I hope that he has been making protests to the Government of Iran about the imprisonment of a British woman for seeking to watch a volleyball match—there is no evidence that it has been seeking to acquire nuclear weapons capability? A Daily Telegraph journalist has written a very carefully researched book about that. Furthermore, Iran has never committed an act of aggression against another country. That being so, does the right hon. Gentleman accept that it is absolutely right to continue the negotiations, and will he make that clear to the Israeli Government? Will he continue to adopt the Churchillian rule that jaw-jaw is better than war-war?

Mr Hammond: We regularly raise consular issues with the Iranians, and we were of course pleased to see the news that Ghoncheh Ghavami has been released on bail pending her appeal. The right hon. Gentleman referred to her as a British citizen. Part of the problem is that she is a dual British-Iranian citizen, and the Iranian constitution does not recognise duality of citizenship, so the Iranians regard her as simply an Iranian citizen. The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood), met her fiancé this morning; the Prime Minister raised the case with President Rouhani when he met him at the UN General Assembly; I have raised the case with Foreign Minister Zarif, and we will continue to do so.

The right hon. Gentleman talked about the absence of Iranian aggression, and I am happy to agree with that as a matter of historical fact. He will know, however, that there are many in the middle east who see the hand of Iranian asymmetric engagement in their internal affairs and would very much urge the Iranians not to intervene in a way that destabilises the situation in

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various countries around the Gulf. I can tell him that the Israeli Government are well aware of our position, and equally we are well aware of their position.

Sir Richard Ottaway (Croydon South) (Con): I congratulate the Foreign Secretary on his statement and on the fact that the talks are still live. He says that there are significant differences, but from where I am standing it looks more like an unbridgeable gap, and I would be grateful if he could tell us how he intends to bridge that gap. Can he tell us a bit more about what is going on in Tehran? On the one hand, we have President Rouhani, who clearly wants to move towards a negotiated settlement; on the other, the vibes from the supreme leader’s office are that Iran’s priority is the removal of sanctions but with no retreat from the nuclear programme. Will not those divisions make progress impossible?

Mr Hammond: One of the characteristics of the negotiations is that the two key protagonists—on one side the Iranians, and on the other the United States—have complex and non-homogeneous internal political audiences, in which different parts of the system may have very different views. We are quite familiar with dealing with that situation in our own environment, and we have to recognise that it sometimes exists in other countries as well.

I do not agree with my right hon. Friend that there is an unbridgeable gap. If we thought that, we would have called a spade a spade and, if I can mix my metaphors, pulled stumps and gone home on Monday—I am not sure whether the Iranians play cricket. We do not believe that there is an unbridgeable gap; we believe that there is a substantial gap. It is a lot smaller now than it was a month ago, and there was a genuine sense of momentum in the room in Vienna over the weekend. The fact is that the Iranians clearly want to do a deal, and we want to do a deal, but we have to make sure that it is a deal that addresses our absolute and unshakeable conviction that Iran must not obtain the capability to build a nuclear weapon.

Angus Robertson (Moray) (SNP): I commend the Foreign Secretary for making the effort to travel to Vienna and be part of the discussions, and I wish him success with the new time scale. The next nuclear talks in Vienna take place in a fortnight in the international conference on the humanitarian consequences of nuclear weapons. The United States, more than 100 other countries, the United Nations and the Red Cross have all committed to attending; the UK has in the past boycotted the event. Will the Foreign Secretary confirm today whether the UK will attend that conference in Vienna? The question has been asked a number of times, but no answer has yet been forthcoming.

Mr Hammond: The hon. Gentleman has asked the question a number of times, and his question has been noted. I have been discussing the conference with other P5 colleagues, and I can assure him that a definitive position on the UK’s attendance will be announced in the next few days.

Martin Horwood (Cheltenham) (LD): The Foreign Secretary is exactly right to highlight the relevance of this issue to regional security, a major factor in which has been the continuing hostility between Iran and

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Sunni Arab states. How confident is he that the process is accepted and supported by countries in the region such as Saudi Arabia?

Mr Hammond: As the hon. Gentleman knows and as I think we would expect, some of Iran’s neighbours are deeply nervous about the process. They want to be absolutely reassured that if a deal is done which relieves the sanctions pressure on Iran, it is done in exchange for a cast-iron, copper-bottomed guarantee, if one can have such a thing. Perhaps it is cast-iron round the sides and copper at the bottom.

Mr Bacon: And gold-plated.

Mr Hammond: Indeed. Iran’s neighbours seek an absolute guarantee that it will not be able to use its civil nuclear programme to develop the capability to build a bomb.

Mr Frank Roy (Motherwell and Wishaw) (Lab): There are many other middle east countries with legitimate security concerns who are not at the negotiations. Can the Secretary of State tell the House whether their concerns were addressed in Vienna?

Mr Hammond: If the hon. Gentleman is referring to the Gulf countries, I can say that all of the E3 participants have regular discussions with Gulf colleagues, and indeed with Israeli Government representatives. We are very much aware of the views of other countries in the region who are not represented around the table.

Dr Julian Lewis (New Forest East) (Con): It is often said that, because of the mutual hatred between Iran and Saudi Arabia, if Iran got nuclear weapons, Saudi Arabia would follow suit. How realistic is that danger?

Mr Hammond: I am not in a position to comment on how Saudi Arabia might react to any hypothetical situation. Our focus is on ensuring that Iran does not acquire nuclear weapons and does not acquire the capability to build them in future.

Mr Nigel Dodds (Belfast North) (DUP): I welcome the Foreign Secretary’s statement and the decision to extend the negotiations because that is clearly a better position than agreeing a bad deal, both for the region and for the world. Can he reassure the House that there will be no question of dismantling sanctions before it has become very clear that Iran’s nuclear capacity has also been dismantled?

Mr Hammond: Yes, there will be no question of removing the sanctions until we have seen compliance by Iran with the terms of an agreement. I am clear that that agreement will include a restriction of Iran’s capabilities in terms of enrichment to a level appropriate to the legitimate purposes that it has.

Mr David Jones (Clwyd West) (Con): Last week the Foreign Secretary expressed the view, which he has just repeated at the Dispatch Box, that no deal is better than a bad deal. Can he confirm that that view is shared by the other P5 plus 1 negotiators, and further that it will inform their negotiating position over the months ahead?

Mr Hammond: That is the stated view of all the P5 participants—that no deal is better than a bad deal—and I hope that it will inform their negotiating stance over the months ahead.

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Mr Nick Raynsford (Greenwich and Woolwich) (Lab): Although I endorse the approach that the Foreign Secretary has taken towards the negotiations and the obvious long-term benefit of reaching an agreement, may I express a little bit of surprise at the reasons he has given for not progressing faster with the re-establishment of our embassy in Tehran?

The Foreign Secretary will know that this is not the first time we have had to re-establish an embassy; he may not know, but I do, that I visited as a Minister in 2000 when the Khatami regime was opening up the prospect of re-establishing relationships. Although there are undoubtedly difficulties that have to be overcome to guarantee the freedom of our ambassador and staff to work effectively, I would have thought that if there was a will, there would be a way—and I hope that he will pursue that.

Mr Hammond: I assure the right hon. Gentleman that we are pursuing the issue actively with the Iranians, but we are clear that we do not want to reopen an embassy on a half-baked basis. If we are to go back in and reopen our embassy, we have to be able to set up the communications and IT systems that we need, and we must be able to import into Iran the equipment that we need to do that. We continue to discuss with the Iranians the arrangements that we might be able to agree with them to enable us to do that, but we have not succeeded in reaching an agreement.

James Morris (Halesowen and Rowley Regis) (Con): One of the reasons why the Iranians came to the negotiating table in the first place was the tough international sanctions regime. In some sense they have already received a concession through the interim agreement. Does the Foreign Secretary agree that we need to be cautious as these negotiations proceed, to make sure that we do not create a perverse incentive for the Iranians to continue to extend these negotiations as they begin to chip away at the sanctions regime?

Mr Hammond: It is important that I reiterate that the Iranians are not chipping away at the sanctions regime. Some specific reliefs from sanctions have been provided, but the sanctions that deal with proliferation issues remain in place, so the Iranians cannot get access to equipment that would help them in a nuclear programme, the vast majority of their financial assets remain blocked, and in exchange for the limited relaxation that has been given they have had to enter into a series of detailed obligations that involve reducing the usable stockpile of enriched uranium and diverting new enriched uranium as it is produced into uses that could not be converted to military use at a later date. I consider that to be a sustainable situation for both sides while we continue to negotiate.

Mr Andy Slaughter (Hammersmith) (Lab): The Foreign Secretary, in response to my right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman), mentioned my constituent, Ghoncheh Ghavami. I am grateful to the Minister with responsibility for the middle east, the hon. Member for Bournemouth East (Mr Ellwood), for meeting Ghoncheh’s family and me earlier today and I am obviously very pleased that she is out of jail. However, she is only on bail; if she loses her appeal she could be returned to prison for at least another seven months and she has a two-year travel

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ban. Will the Foreign Secretary use the improved atmosphere between the two Governments to encourage the Iranian authorities to allow Ghoncheh now to return to her home in Shepherd’s Bush?

Mr Hammond: As I have already told the House, we have raised and will continue to raise this case with the Iranians, but they simply do not recognise our locus. The Iranian constitution does not recognise the concept of dual nationality and therefore our protestations are received politely, but without any obvious effect.

Mr John Baron (Basildon and Billericay) (Con): The extension of the deadline is the second-best option, but one that is welcome all the same—going the extra mile to try to resolve the impasse could unlock so many thorny problems in the region. May I press the Foreign Secretary for absolute clarity as to the west’s position? He said that he does not want Iran to acquire nuclear weapons or to develop nuclear weapons itself. Is it the west’s position that Iran would be allowed to harness technology and capability to the point of break-out?

Mr Hammond: The clear position of the E3 plus 3 is that Iran should be allowed to pursue a peaceful civil nuclear programme, but that safeguards should be in place that prevent Iran from acquiring the capability to develop a nuclear weapon.

Jim Shannon (Strangford) (DUP): Three weeks ago, I had in my office a deputation of Iranian Christians who had fled Iran due to persecution and business men who still carry out business in Iran. Both groups informed me that Iran’s verbal statements on its nuclear strategy are untrue and that behind backs Iran is fully focused on developing a nuclear bomb. What discussions has the Foreign Secretary had outside Government with those in Iran who clearly know what is happening on the ground in relation to the nuclear strategy?

Mr Hammond: Let us be clear about this: Iranian society, like pretty much every other society, is not homogenous. I would be astonished if there were not people in Iran saying that Iran needs to develop a nuclear bomb. That is not the issue. The issue is the position of the Iranian Government and the Iranian senior leadership.

What we are seeking to do is establish a robust framework within which Iran can develop a civil nuclear programme, while assuring us that it has no intention of developing, and will have no capability to develop, a nuclear weapons capability. It would be unreasonable of me to expect the Iranian Government to vouch for there being not a single individual in Iran who thought that the Government’s stance in engaging with the west in these negotiations was wrong. I am sure there are hard-liners who would prefer these negotiations to break down. Fortunately, that is not the position of the Government of Iran.

Mr Jonathan Djanogly (Huntingdon) (Con): I do not think this has been mentioned yet this afternoon, but there are many people who believe that Iran has no intention whatever of getting rid of its nuclear weapons programme and is using negotiations as a delaying tactic. That being the case, if in four or seven months no progress has been made, where do we move to then? Would military action be considered?

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Mr Hammond: I hear my hon. Friend’s point, but if negotiations under the terms of the joint plan of action are a delaying tactic, they are a very poor one, because what Iran has to do during this period is systematically and steadily to convert its stock of enriched uranium into materials that cannot be used and could not be used for further enrichment and therefore for military purposes. It is a rather poor tactic, if that is what it is.

We are focused on trying to pursue this negotiation and get to a comprehensive agreement. I do not think it would be helpful to speculate on what might happen if we fail, but we are very clear: we are not going to enter into a bad deal. If we cannot get a deal that gives us clear reassurance that Iran is not going to acquire the capability to build a nuclear weapon, we will not do the deal. We will then have to deal with the consequences of such a situation, but it is not helpful to speculate on those now.

Rehman Chishti (Gillingham and Rainham) (Con): I welcome the statement from the Foreign Secretary and the work done by his predecessor on this matter. Along with what is going on in relation to its nuclear capacity, has a lot of pressure been put on Iran for it to stop supporting and harbouring terrorism—whether from Hamas in Israel, from Hezbollah in Lebanon, from interference in Iraq or from support for the brutal regime in Syria? If we want Iran to be a key player in the international community, it must abide by international norms.

Mr Hammond: We have a separate bilateral dialogue with the Iranians in which we urge them, as I said earlier, not to meddle in the internal affairs of other countries and not to take actions that would destabilise the region, but these nuclear discussions are taking place at P5 plus 1 or E3 plus 3, whichever people choose to call it. On many of the issues that my hon. Friend listed we would not get agreement among the P5 plus 1 about what is happening on the ground, so we have chosen—I think it is the right decision—to keep these nuclear talks ring-fenced and separate from all other bilateral and multilateral strands of discussion with Iran.

John Howell (Henley) (Con): Does the Foreign Secretary agree that Iran must be asked to provide details of its previous nuclear activity? Otherwise a mechanism for monitoring Iran’s future actions will be fundamentally flawed.

Mr Hammond: Yes. An essential part of the agreement will be a proper investigation into, and understanding of, past breaches of Iran’s international obligations in respect of nuclear weapons.

Geoffrey Clifton-Brown (The Cotswolds) (Con): Does my right hon. Friend agree that a successful conclusion of these E3 plus 3 negotiations could lead to greater normalisation of relations with Iran, which would make a number of the problems that my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) mentioned earlier much easier to resolve?

Mr Hammond: I agree entirely with my hon. Friend’s point. Iran feels isolated and behaves in a way that sometimes reflects that. The big prize here is that we get

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Iran to become an active part of the international economy. Iran is a big country, with some sophisticated capabilities, and having it back as a partner in the international economy will be significant. Once Iran feels that it is playing a full role as a normal state in the international community, I hope that we will start to see Iranian behaviour reflecting that, and Iran wanting to resolve issues through bilateral and multilateral discussion rather than through the kind of unilateral action that, unfortunately, we have seen in the past.

Nadhim Zahawi (Stratford-on-Avon) (Con): May I echo the Foreign Secretary’s thanks and congratulations to Baroness Cathy Ashton for the tremendous work that she has done during the many years she has been involved in the process? He rightly wants the P5 plus 1 to focus solely on the nuclear negotiations, but Iran exercises enormous political and security influence over Iraq and is shoring up the murderous Assad regime. Have the Iranian authorities attempted to link these nuclear negotiations with help in defeating ISIL?

Mr Hammond: No.

John Glen (Salisbury) (Con): I welcome the Foreign Secretary’s determination to make progress on the nuclear issues, but will he reassure the House that he will continue to stand up for persecuted religious minorities in Iran—in particular Pastor Saeed Abedini, who has been locked up for two years without access to legal representation or medical treatment under this brutal regime?

Mr Hammond: Yes. Iran’s human rights record is poor, to put it mildly, and while there have been some limited steps in the right direction, it is clear that a huge amount remains to be done. We do raise human rights issues with the Iranians on a regular basis. My hon. Friend is right to draw attention to the particular problem of religious persecution and the unwarranted imprisonment of those practising minority religions in Iran.

Crispin Blunt (Reigate) (Con): It is fairly clear that the negotiations will get much more complex when both Houses of Congress are hostile to the Administration’s negotiating policy. Looking back to Iran, what can the Foreign Secretary tell us about the confidence that the Iranian negotiating team enjoys from the Iranian Parliament? Is there anything that can be done to address the flattering but rather hilarious view in Iran that Britain is at the centre of all evil that befalls Iran and is the directing evil genius of policy towards it?

Mr Hammond: Yes, my hon. Friend is right—and not only about Iran. I often discover that we wield a great deal more power and influence in the world than appears to be evident from my seat in the Foreign Office. He is right to say that American congressional politics is a significant complicating factor in moving forward, and, as I said a few moments ago, it very much reflects the diversity of view in Iran also about how this negotiation should be conducted. But the reality, and the thing that is driving things forward, is that there is a huge prize for both sides in getting to an acceptable deal. So long as there is a win-win and something substantial in it for both sides, there will be continued momentum.

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Mr Philip Hollobone (Kettering) (Con): In his statement, the Foreign Secretary confirmed that the November 2013 interim agreement commits Iran to freezing certain areas of its nuclear programme in return for limited sanctions relief and the repatriation of $4 billion-worth of oil revenues. Although the sanctions relief and the oil revenues are transparent and measurable, freezing areas of its nuclear programme is not. Given that there is either limited or no inspections access to nuclear and weapons facilities at Fordow, Natanz, Arak and Parchin, how confident can he be that Iran is freezing these areas of nuclear development, and is not secretly using this extended deadline to produce enough fissile material to develop nuclear weapons?

Mr Hammond: We are highly confident of that. The technical representatives of the E3 plus 3 review these issues regularly. We do have access to and visibility of what is going on. The arrangements under the interim agreement for monitoring are effective, and we are confident that Iran is complying with its obligations—in some cases, complying with our interpretation of an obligation even where there may be some uncertainty in the wording of the document itself.

Mr Peter Bone (Wellingborough) (Con): I thank the Foreign Secretary for coming to the House and keeping us informed. There are some reports in the media saying that effectively the west is being played for a fool by Iran and that it is developing a nuclear programme, as my hon. Friend the Member for Kettering (Mr Hollobone) suggested. Will the Foreign Secretary tell the House frankly whether he thinks Iran will have nuclear weapons in the future?

Mr Hammond: That will depend, crucially, on whether we are successful in reaching an agreement. If we reach an agreement, Iran will have a civil nuclear programme with the support and assistance of the international community, but will not be able to develop the capability to build a nuclear weapon. If we do not reach agreement—indeed, if we had got to the deadline yesterday and not rolled over the interim agreement—Iran would have been able, albeit under the current sanctions regime, to continue to enrich uranium and build a stockpile of fissile material, which is absolutely not in the interests of the international community. There is no alternative to pressing forward, giving it our very best shot, to get an acceptable deal with Iran. If we cannot do that, we cannot do it, but we will give it our very best shot.

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Universal Credit

2.37 pm

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): I rise to make a statement about the new announcements on the roll-out of the next part of universal credit. Universal credit is a major reform, transforming the welfare state in Britain for the better and bringing £35 billion in economic benefits to the UK. Rightly, for a programme of this scale, the Government’s priority continues to be its safe and secure delivery. That is why, after the successful launch of the pathfinder in April 2013, a controlled expansion of universal credit has been taking place since last year, and in the north-west since June—first to singles, then couples, extending to families from today, across Birkenhead, Warrington, Bromborough, Upton, Wallasey and Hoylake.

In addition, universal credit is live in 81 jobcentres. National roll-out will follow from next year, bringing universal credit to one in three jobcentres by spring 2015. This careful, controlled expansion is the right approach, testing and learning as we go, avoiding some of the big bang failures that have dogged programmes in the past.

Already, universal credit is delivering major benefits. The early results show that the majority of recipients agree that it is easier to understand, easier to claim and provides a better financial incentive to work. I know that many colleagues have visited those centres and will testify to that. People are spending almost twice as much time looking for work as they were before and, above all, universal credit is on track to help them move out of unemployment more quickly, with those in the new system reporting that they are working more over a six-month period than those on jobseeker’s allowance.

Ensuring that work always pays, universal credit will generate up to an additional 300,000 people in work once fully rolled out. Some 3 million households are set to gain by £177 on average and 500,000 working families will receive more help with child care, with 100,000 of those in part-time work or mini jobs benefiting for the first time from entry into work. With the rate of child care support increased from 70% to 85% of costs, parents can receive up to £646 for one child, and £1,108 for two or more children. It is important to point out that that is the element of the roll-out in this particular area and that it covers all the hours that they will be in work—unlike the present system, which puts them only in certain batches of hours.

The number of people reaping those benefits is set to grow exponentially as the universal credit roll-out ramps up. The latest published statistics—up to November—show that nearly 40,000 have made a claim for universal credit, over 20,000 have completed that process and gone on to receive universal credit, and 17,850 are on universal credit currently. Illustrating the scale of the increase, nearly 6,000 claims were made in the month between October and November—over five times as many as there were in June, before we started the north-west expansion.

At the same time, we are bringing forward changes to legacy benefits. That is a ripple effect of the massive cultural shift that universal credit delivers. Around 1 million jobseeker’s allowance claimants have now signed a claimant

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commitment, which is part of universal credit, making unequivocal once and for all the deal between those looking for work and the taxpayers who support them. That is the massive cultural change that universal credit entails.

Our plans to deliver universal credit are on track, taking the same approach that has delivered success so far, rolling out once we are confident in our capacity and capability. The plans have been assured by the Major Projects Authority, the independent body advising the Government, just as the universal credit business case has now been signed off by the Treasury. The current business case assumes that the last claims to legacy benefits will be accepted during 2017. Following that, the stock of remaining cases will progressively decline, with the rest migrated to universal credit. Should there be no change in the labour market outlook or the pace at which claims are migrated, the current business case assumes that the bulk of this will be complete by 2019.

Our careful approach is set to deliver universal credit under budget, with implementation costs down from £2.4 billion to £1.8 billion, according to the latest figures. The value of the programme to date is unmistakably clear, I hope. Specifically, the investment in IT has a value that hugely outweighs the cost. There are over £130 million-worth of universal credit assets on the balance sheet, as agreed by the National Audit Office. That IT is being used day in, day out, and it will continue to be used even as we start to test an enhanced digital solution from this week. Our decisions will continue to be informed by that digital development.

The important point is that this is about de-risking the roll-out, which the MPA agrees is happening now as a result of this programme. I believe that that represents value for money. It is delivering the maximum benefit from this vital process of welfare reform, renewing work incentives, restoring fairness and rebuilding a welfare system fit for the 21st century.

2.41 pm

Rachel Reeves (Leeds West) (Lab): I thank the Secretary of State for his statement. However, the announcement in this morning’s press release confirms that universal credit is rolling out at a glacial pace. It is just another example of Tory welfare waste. We all know that simplifying and integrating our benefits system has the potential to help people into work and to progress in work. That is why the Opposition have always supported the principle of universal credit and want it to succeed, despite the Secretary of State’s best attempts to make a complete and utter shambles of it.

The Secretary of State has already informed the House that universal credit would be rolled out to families with children this year, but today’s statement tells us nothing more about how many families will be claiming it, in which areas of the country, and whether that will include families with someone in work or families with a disabled member. We were told that at the beginning of next year universal credit would be rolled out to all jobcentres across the country. That has now turned into one in three jobcentres by next spring, but we still do not know which jobcentres, in which

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parts of the country, whether those jobcentres themselves have been informed and, more importantly, whether local partners, including councils and voluntary sector organisations, which have such a critical role to play in making the roll-out work, have been informed.

However, there was one new revelation buried at the bottom of this morning’s press release: an admission from the Secretary of State that the delivery of this policy will now not be completed until the end of the decade, if then, with only “the bulk” of claimants on legacy benefits transferred by 2019. Let us remind ourselves what the Secretary of State said he would deliver four years ago so that we can see how far plans have gone astray. The White Paper presented to the House in 2010 set out a timetable for

“completing the transfer to Universal Credit by October 2017”.

Since then, the Secretary of State’s timetable has repeatedly slipped, despite repeated assertions that the project was

“on time and on budget”.

In November 2011 the Secretary of State said that he would have 1 million people on universal credit by April 2014. The truth turned out to be just 1% of that figure. The Government told us that they would have 1.7 million people on universal credit by May 2015, but his latest target is for just 100,000 to be on the system by then. As recently as this month, he was insisting that the transfer of all claimants to universal credit would be completed in 2018.

On 5 November, less than three weeks ago, he said in evidence to the Work and Pensions Committee, in response to a question from my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce), that

“we do envisage Universal Credit being complete by the end of 2018.”

Yet buried at the bottom of today’s press release we find the admission that only

“the bulk of this exercise will be complete by 2019”.

I hope that the Secretary of State can answer the following questions and give us some clarification and assurance. First, what on earth does he mean by “the bulk”? Is it a new statistical term that we can appeal to the UK Statistics Authority for clarity on? More importantly, given the concerns and the amount of public money at stake, can he not be more precise about how many people he expects to be left on legacy benefits after 2019? Which claimants will those be, and when can we expect them to be transferred on to universal credit?

Secondly, what are the implications of this further delay in the completion of the roll-out and transfer for the project’s administrative costs and the expected savings and benefits being claimed? Can the Secretary of State confirm that the estimate of £35 billion for the project’s benefits remains correct, and has the full business case now been signed off by HM Treasury?

Thirdly, why did the Secretary of State claim on the BBC’s “Today” programme this morning that “almost 40,000” people are “actually claiming” universal credit when the latest figures show that the current caseload is 17,850? Fourthly, can the Secretary of State tell us how many families he expects to be receiving universal credit by the end of 2014 and by May next year? Will only families with both parents out of work be able to claim? Will families including a disabled member be able to claim by May 2015?

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Fifthly, will the Secretary of State place in the House of Commons Library a full list of the “one in three” jobcentres that he expects to be handling universal credit claims by the spring? Sixthly, will the extension of universal credit to families with children, and to jobcentres, be on the new digital platform being developed by the Department, or will it still be running on the old system that we know is inadequate for handling large-scale caseloads? Finally, would the Secretary of State care to repeat his claim that this programme is

“on time and on budget”?

I hope that the Secretary of State will be able to answer those simple and fundamental questions about a programme that was held up as the Government’s flagship welfare reform and has already eaten through more than half a billion pounds of public money. If he cannot give straight answers to straight questions, Members of this House and voters will be forced to conclude that, as with the delays we have seen with disability benefits, the failure of the Work programme and the Youth Contract to help key groups into work, and the failure to tackle the low pay, insecurity and housing shortages that are driving up benefit bills, this is just adding to the legacy of Tory welfare waste—wasted money, wasted time, wasted talents and a wasted opportunity to get our economy and our social security system working for all the people of our country.

Mr Duncan Smith: I must say that I think that the hon. Lady thought that up about a week ago, before she even got near what I have just said in the statement, but never mind—she likes to rehash the old ones, and we will deal with them. She made the point at the end of her statement that somehow the Work programme is not working. The Work programme is outperforming all of the figures that it was meant to. It is also outperforming what we were left by the previous Labour Government: record unemployment and more people who had lost work as a result of their crashed economy. We have more people in work than ever before and more young people now returning to work. Those are the standing plans.

Let me deal with some of the other issues the hon. Lady raised. She talked about what we are doing on universal services. We have already undertaken a huge amount of consultative processes with local authorities and all other partners in the areas. We have a programme called universal services, to be delivered locally, and we are working closely with the Local Government Association in trialling all sorts of elements of that, including the exchange of information on housing, which is an area that previously was not working. The LGA is represented on the programme of governance, the partnership forum and the universal credit transition working group. As universal credit is expanded nationally, delivery partnership agreements will be established locally so that local authorities, jobcentres, landlords and employers can adjust their requirements to prepare for the UC roll-out. That is taking place at the moment and it is helping to inform hugely the process of helping to improve the nature of the roll-out.

As I said in my statement—I repeat this because the hon. Lady seemed not to have picked it up—40,000 people had claimed, over 20,000 had completed the claim process, and 17,500 were currently on universal credit. [Interruption.] No, that is exactly what they have done. Forty thousand had claimed, 20,000 had made

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the claim and received—

[

Interruption.

]

I do not want to go through this nonsense with her. Let me remind her that many of those who started a claim went to work and therefore never completed the process. In case she thinks it is not worth people claiming the benefit because they are not staying on it, our position is that the purpose is to get them off the benefit and into work.

I will be happy to give the hon. Lady a list of the one in three jobcentres that will be covered by the spring. As I said, by the end of this year one in eight jobcentres will be covered. Families will be included. Depending on the type of claimants and their particular issues, they will be dealt with in jobcentres as the benefit is rolled out to them. The timing and delivery remain exactly as they were.

As we have announced today, we will also be rolling out the first part of the digital trial process, and that will inform us hugely on how we will be able to roll out and expand the system. The hon. Lady said that I had only just announced the timing of the roll-out, but in fact I had said it previously. She might want to ask the right hon. Member for East Ham (Stephen Timms), who is sitting next to her, about that. All the dates were in the answer to a parliamentary question from him about a week and a half ago; I cannot remember the exact date. Nothing has been hidden at all—we have been very clear about it.

The long-term strategic outline business case covers the lifetime of the programme from 2023 to 2024 and provides even more granular detail on costs and benefits and delivery planning until, it is expected, 2025. The MPA has approved our roll-out plans and given them a very strong sign-off.

The hon. Lady asked about the information that will be shared automatically. Claimants are asked to give consent to our universal credit teams sharing information about their claims with local authorities to help to highlight extra support that may be needed.

The hon. Lady says that she is in favour of universal credit in principle, but she has voted against it and attacked every single thing to do with it, just as Labour Members say they are in favour of welfare reform in principle but attack and vote against every single part of what we are doing. I have to say that the way she is going, she will get a lot of practice at being in opposition.

Mr Mark Hoban (Fareham) (Con): I commend my right hon. Friend for the methodical way in which he is going about the implementation of universal credit. My constituents suffered from over-payments, under-payments and mis-payments under tax credits because Labour in government botched the implementation of the system by doing it as one big bang. We cannot afford the same thing to happen in this case. That is why he is absolutely right to introduce in the way that he is to make sure that it works before it is rolled out further. We should be commending him for that and for not repeating Labour’s mistakes.

Mr Duncan Smith: I thank my hon. Friend; he is exactly right. We have worked on this together. As he knows very well, taking the early decisions to ensure that the programme rolls out safely and securely is far more important than, as the hon. Member for Leeds West (Rachel Reeves) seems to suggest, rattling ahead

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regardless of the consequences. That is exactly what happened with tax credits, where, on day one, 400,000-plus people did not receive any benefits. The disaster of tax credits has stayed with us ever since.

Dame Anne Begg (Aberdeen South) (Lab): Will the Secretary of State confirm that the reason the volumes are so low is that only the simplest cases in the simplest groups are covered? Although it has been rolled out to families, they will still be only the simplest and easiest-to-deal-with families. Given that 250,000 jobseeker’s allowance claims are usually made every month, I wonder how he thinks we are going to get from today’s position of having had 20,000 claims in over a year to having 250,000 in a month. It seems quite a task to get the volumes up to that level and to be able to roll it out across the whole country.

Mr Duncan Smith: As the hon. Lady knows, we started with single people, but whenever somebody’s circumstances changed—they may have become a couple or had a family—they stayed in the system and have been dealt with. It is not correct, in any way, to say that these are the simplest cases. The roll-out to families introduces further complications, but we are doing this in way that makes sure that we get it right. By the end of this year, the north-west will have universal credit, so if someone falls unemployed and then goes into work, they will do so on universal credit. That is the key point. All the complications will be dealt with within the existing system.

Nigel Mills (Amber Valley) (Con): I welcome the progress announced in the Secretary of State’s statement. Will he confirm that the Treasury has now signed off the whole business case and laid to rest the fear that it was not going to do so?

Mr Duncan Smith: That is exactly what was being asked before the summer break, and the answer is that the Treasury has done that. The MPA has also signed off the roll-out process in saying that it de-risks the nature of the roll-out and approves it exactly as it stands at the moment.

Glenda Jackson (Hampstead and Kilburn) (Lab): Somewhat unusually, but fortunately, the House was not subjected this afternoon to a self-serving sermon in the guise of a statement. Does the Secretary of State have as a principle the idea that promises, like pie crusts, are made to be broken? Every promise he has made at that Dispatch Box about the cost of implementing and rolling out universal credit has been broken, so is today’s semi-statement merely more porky pies in the sky?

Mr Duncan Smith: I will not follow the mixed metaphors about pies and pie crusts in the sky; I usually like them on a plate myself. The hon. Lady has a choice to make. I would much rather make it clear that we want to deliver this thing safely and securely. After all, we have listened to the MPA and we had the National Audit Office in to look at it last year. We took all the advice, and we are rolling it out in the way that it should be rolled out. I have to say—this is not arrogance—that I believe that future Government programmes will be best rolled out using the test-and-learn process that is securing these

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roll-outs. That is the right way. Let us get this safely and securely rolled out, not smashed to pieces like tax credits on day one.

Maria Miller (Basingstoke) (Con): I thank the Secretary of State for coming to the House to update us and explain exactly what the situation is with universal credit. Four million people spent most of the last decade trapped on out-of-work benefits. Universal credit is already giving people the opportunity to get back into work more effectively. Why on earth would a Labour Government want to halt these vital reforms for three months when a full roll-out has been approved by the Major Projects Authority? Surely we should be hearing from Labour Members how they would help us to support this being brought forward even more rapidly.

Mr Duncan Smith: Of course it is legitimate, as it always is, for the Opposition to question this. All I am saying is that we have taken the decisions to ensure the security and safety of the roll-out. We will not take any decision unless it is clear that it is the right thing to do, and we want to deliver this safely and securely. The experience of those who are on universal credit is getting better. We now find that word of mouth from those groups is so good that people are going into jobcentres wanting to claim universal credit rather than be on jobseeker’s allowance.

Margaret Hodge (Barking) (Lab): Having listened very carefully to the Secretary of State’s statement, I wonder whether he is playing a rather worrying political trick by making a statement on the day before the NAO brings out its publication on progress on universal credit. He well knows that there are huge risks with the value for money of the project and substantial potential for waste of taxpayers’ money. For example, if there are further delays in the implementation of the digital programme, taxpayers will have to continue to pay for the expensive, mainly manually operated live service. Why does he not, just for once, give us an open and straightforward account of the state of play?

Mr Duncan Smith: I am sorry that the right hon. Lady takes that view. She may not know the genesis of the statement, so perhaps I can explain it to her. Labour Front Benchers asked for an urgent question today, and I gather that it was negotiated between the various authorities that there would be a statement, not a UQ, because there were to be some very important statements today. The Speaker made that decision, which is quite correct. The reason I am here today is that I was originally asked to be here by the Opposition.

In answer to the right hon. Lady’s question, I fully respect the NAO and we listen carefully to what it has to say. She knows that she will have its team before her when she undertakes the inquiry process. I cannot second-guess what is in tomorrow’s report, but my general belief and hope is that it will welcome this as being the right direction, the right process and the right prioritisation of safe delivery that makes sure that we do not waste money. In cost terms, as I said, we will be spending less, at £1.8 billion, than we were originally set to spend.

Dr Julian Lewis (New Forest East) (Con): Many people are concerned about both welfare tourism and benefit fraud. Will my right hon. Friend explain how they might be diminished as a result of the new system?

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Mr Duncan Smith: On migrants, we have already made it clear that universal credit is a different type of benefit, so people who come here and are out of work will not be able to claim it as a benefit. The issue of how migrant workers can claim in-work support will be negotiated. We are clear that, under universal credit, family benefits will not be paid to people who are not accompanied by their family, so we will secure such claims, thus cutting costs. On fraud, the automatic processes that check what people are earning and whether they are in work mean that we will cut down on all the fraud related to tax credits.

Sheila Gilmore (Edinburgh East) (Lab): Given that the Department is such a fan of safe and secure roll-out, it is a pity that it did not take a similar view to the personal independence payment. A lot of people were treated like guinea pigs while it was being rolled out—that topic is being debated in Westminster Hall as we speak. The Secretary of State must be aware that 61% of the current claimants of universal credit are under 24 years old. They are the simplest of cases and, after such a long period, 17,000 is a very small number indeed. We have been hearing the “safe and secure” mantra for at least two years. When will the Secretary of State admit that his Department has very serious problems with implementation?

Mr Duncan Smith: I would have thought that the hon. Lady, who sits on the Work and Pensions Committee, would be attracted to the idea of trying to land the programme safely and securely. On the one hand she says that she agrees with it, but on the other hand she attacks it for not being fast enough. My view is that it should be expanded and delivered on a safe scale. Of course, the majority of cases will have been simpler ones because we have started with singles, but over the next few months we will see more complicated cases as we roll out to families. The north-west will be fully family when we start rolling out nationally. I am waiting for the hon. Lady to say one day, perhaps in a few years’ time, “You know, they did a jolly good job, because this has benefitted everybody, particularly those on low income.”

George Hollingbery (Meon Valley) (Con): Given the huge importance of universal credit and the scale of the programme, has my right hon. Friend had any confirmation from the Labour party as to whether it actually supports universal credit, as opposed to vaguely supporting it in principle?

Mr Duncan Smith: The answer is that I have not, but my hon. Friend probably reached that conclusion after the earlier statement made by the hon. Member for Leeds West, which was really miserable. That is Labour’s position: its Members hate the idea that we are doing this securely and safely. They say that they support it in principle, but attack everything to do with it and never miss a chance to tell everybody how terrible it is when, in actual fact, if they visited and talked to claimants rather than just dash out of the office, they would find that those who are on universal credit think it is the best thing that has happened and it is helping them enormously.

Yvonne Fovargue (Makerfield) (Lab): The Secretary of State has said that 40,000 people have made a claim and 17,850 are in payment, which is less than 1% of the

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total number affected. In my area, which is a pilot area, local charities that operate food banks say that delays in processing are a significant reason for single people applying for their help. How will the Secretary of State ensure an improvement in processing time if he cannot even deal with 1% at the moment?

Mr Duncan Smith: Actually, the number of delays in processing has fallen since this Government came to office. There are now fewer cases of delayed payments. The universal credit process will ensure that even that is improved on, as the automatic payments work quite quickly. All of the centres already provide advice on debt management and any particular personal problems people may have. There are debt advisers available and we are also ready to provide advanced payments if people have such problems. That is all part of the services delivered locally through universal credit. If the hon. Lady wants to raise a particular problem, I would be very happy to deal with it, as would the jobcentre. Jobcentres are able to pay money early to people, and if the hon. Lady has a problem case they will certainly be able to help her.

Chloe Smith (Norwich North) (Con): It was only on Saturday that a constituent of mine—a mother of four, including a disabled child—described to me her current restriction on taking a little paid work. She told me that universal credit would solve that. May I urge my right hon. Friend to proceed as quickly and as safely as possible; to let me and the House know how many households in the country and my constituency will benefit; and to do a good job for my constituents?

Mr Duncan Smith: I accept those blandishments from my hon. Friend. There are two very important issues to remember. Universal credit is not just about the IT system; more importantly, it is about the relationship between the claimant and the adviser. When someone claims a benefit under jobseeker’s allowance, after they take a job—a part-time job or whatever—they have to sign off, which means that they do not have any contact with the jobcentre until they fall out of that job and go back again. Under universal credit, they will not sign off. They will be able to afford to take a job with fewer hours, build up their hours, go back to see their adviser and take another job. In other words, the adviser will stay with them until they come off the benefits system. It is that dynamic that is changing the lives of so many claimants and I intend to extend that to all of them,

Nia Griffith (Llanelli) (Lab): We all want to see work paying properly. The Secretary of State will be aware that the Joseph Rowntree Foundation has said that the taper is far too steep and that some families will lose significantly by going into work. In other words, they will get only a couple of pounds more working a full week than they would get if they were entirely on benefits. What is the Secretary of State doing to address that problem with universal credit so that that does not happen and that work will always pay?

Mr Duncan Smith: That is a really important question and I thank the hon. Lady for being positive. Two things should be understood about universal credit. First, in-work allowances, which are rather like tax allowances, allow different groups of people—such as

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those with disabilities and single parents—to earn a certain amount of money before the taper comes in. That gives them a real step up, which is why the bottom 40% with regard to income will benefit to a greater degree than anybody else.

Secondly, I am fully prepared to accept that there is a debate about the taper, but when any future Government budgets they will be able to say, “We want to lower the taper because we want people to be able to up their hours quicker.” Alternatively, if there is full employment, they may say that the taper is not so relevant. That is a debate for Governments. We have instituted a very simple process whereby Back Benchers and others can say whether they want a higher or a lower taper. We have set it at what we think we can afford, and that still makes it better for those claimants going into work. There will always be a debate, so the hon. Lady will be able to argue whether the taper should be raised or lowered.

David Mowat (Warrington South) (Con): The Secretary of State must have been relieved to hear the Opposition reiterate their support for universal credit, even though they are concerned that it is being rolled out too slowly. Has he had a chance to review their four-point plan, which I presume is designed to address the issue? The first point is to stop the roll-out and lay-off about 1,000 people while Labour reviews the programme, and the second and third points are uncosted, significant scope increases, introduced at a late stage in the programme, which will almost certainly mean much higher costs.

Mr Duncan Smith: I think my hon. Friend has a point. The Opposition think that the programme is rolling out too slowly, so they want to roll it out even slower or stop it and not roll it out at all. They are caught in a classic Opposition trap—we have all been there; I spent some time in opposition—which is that they know that what the Government are doing is right, but they do not want to say so because that would make it look like they had nothing to say. Therefore, they are talking about little bits and pieces and nit picking, instead of saying that it is a good programme. When I was in opposition, if something was really good I used to say, “Let’s get behind it and support it, and we can deal with the detail later.”

Mr Andrew Love (Edmonton) (Lab/Co-op): Is the Secretary of State’s failure on universal credit the reason that fraud and error are likely to increase by £700 million in his Department?

Mr Duncan Smith: Actually, we are working very hard to bring down fraud and error. Of course, universal credit will bring down fraud and error. That is one of the driving reasons that it is important to implement universal credit, which is why we are delivering it safely and securely. We all want fraud and error to come down. Of course, we always hear about the mix-up between error and fraud. There is a tendency to think that everyone is defrauding the system, but that is not the case; sometimes, official errors get into the system. Universal credit gets rid of that by simplifying the process, which should make it better. The hon. Gentleman is right to say that we have more to do on fraud and

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error. We need to keep bearing down on it, which is what any Government would want to do, and universal credit will help enormously.

John Glen (Salisbury) (Con): The working-age welfare budget increased by 40% in real terms between 1996 and 2009, while long-term unemployment doubled. In 2009, a quarter of the unemployed had been on in-work benefits for nine of the previous 10 years. That was the legacy of the previous Government. What does the Secretary of State think the legacy of his Government’s careful roll-out of the very well organised and researched universal credit will be once his period in office ends a long time in the future?

Mr Duncan Smith: That is exactly the point. On the first part of my hon. Friend’s question, the Opposition are in a kind of amnesia: they seem to forget that they crashed the economy in the biggest disaster it has ever had, with a fall of some 7% in GDP, and that many people lost their jobs. We have managed to get more people back to work and now have more people in work than ever before, with unemployment falling dramatically, youth unemployment falling and even more people with disabilities now going back to work. As it is rolled out, universal credit will deliver even more to those people—a better income, better support and a much simpler process that they can understand, rather than the chaotic system of tax credits that we have at the moment.

Mr Marcus Jones (Nuneaton) (Con): Universal credit is a life-changing and positive policy. May I urge my right hon. Friend to take his time and make sure that we get this right? The impact of getting it wrong, as with tax credits, would be a complete disaster for many of the families whom I represent, and I hope he will not want to go down the path trodden by the Labour party.

Mr Duncan Smith: My hon. Friend is right. I set out to change the roll-out plan because I felt that we would just replicate all the problems of previous roll-outs, in which people tried to rush against an artificial deadline and ended up with a big crisis because they had not thought things through properly. The process of testing, learning and implementing is the way that I believe future programmes should be rolled out. It may not be delivered in the fastest way, which is what people want, but it is about securing people’s lives and, to my mind, that is more important than meeting artificial deadlines.

Andrew Jones (Harrogate and Knaresborough) (Con): I congratulate my right hon. Friend on his statement. My constituency has been included in the roll-out of universal credit so far, and I visited the jobcentre to see the progress that has been made. I met a team there, as well as employers and, most importantly, jobseekers, and the feedback was universally positive. They said, “Universal credit is simply making work pay.” That is why I welcome the roll-out, but may I specifically ask how universal credit will support child care?

Mr Duncan Smith: I have been to many such jobcentres. I was in Hammersmith last week, when I talked to a number of people who have claimed the benefit. They were very clear about the difference that being able to stay with an adviser in the jobcentre has made to their lives. All of them said that it had allowed them to develop, get on and get a better job as a result.

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On the second part of my hon. Friend’s question, we have announced the child care package today. Basically, people will get child care support at 85% of the costs. The reality is that that will be for every hour that they are in work. Unlike with tax credits at the moment, whether they are doing five or 10 hours or 20 or 25 hours, they will get help with child care. That will be a huge help for those with caring responsibilities, particularly lone parents who have to get back to work as well as look after their household.

Mr Peter Bone (Wellingborough) (Con): It is rare to have a Secretary of State who is so passionate about a subject, has so much ability and has so much determination to see something through; in fact, he stood up to the Prime Minister to keep himself in his Department. He has two very able Ministers to support him, the Minister for Employment and the Minister for Pensions—I hope that that does not embarrass the Liberal Democrat on the Front Bench—and there are two worthwhile Opposition shadows, the hon. Member for Leeds West (Rachel Reeves) and the right hon. Member for East Ham (Stephen Timms).

It must be a matter of congratulation for the Secretary of State that universal credit is working. The Opposition want it in as quickly as possible so that they can congratulate him, but I think that he is right to keep rolling it out. Is that not the way to handle future Government programmes?

Mr Duncan Smith: My hon. Friend will forgive me if I do not repeat to the Prime Minister the first part of his question. Certainly, the Prime Minister and I are in complete agreement on all these measures, and I am of course implementing only what he wishes to see. I want

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that point on the record, if possible. Yes, the key thing is that we are trying to deliver universal credit safely and securely. I am pleased that my hon. Friend, from his position, is so supportive.

Mr Philip Hollobone (Kettering) (Con): Her Majesty’s Treasury and the Major Projects Authority must have been attracted by the potential for universal credit to cut administrative costs and reduce benefit fraud or they would not have signed off the programme. Surely one major feature of universal credit is that it makes work pay by giving people extra incentives to keep more of their income as they move into the world of work. What evidence can the Secretary of State point to of jobseekers who are already recipients of universal credit changing their job-search behaviour?

Mr Duncan Smith: Interestingly, my hon. Friend is right. The whole point is that there is a static effect, which we know will save money even without any dynamic effect. In other words, offsetting the savings we make from changing tax credits and so on against expenditure puts us in a net positive position.

We are already beginning to run trials on the dynamic effect. So far, people are going into work quicker, and they tend to stay in work longer. They are doing many more job searches than before, because it is easier to do them. That proves my point that most unemployed people want work desperately. They want to be helped to get work, and if we make the system easier, simpler and more accessible, they will do a lot themselves. What is essentially happening is that they have cottoned on to the usability of universal credit, and it is gratifying to see the way in which they are getting back to work quicker.

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Parliamentary and Constitutional Reform

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

3.16 pm

Andrew Rosindell (Romford) (Con): I beg to move,

That leave be given to bring in a Bill to reform the powers and structures of the United Kingdom Parliament and the devolved administrations so as to establish a new constitutional settlement for the United Kingdom of Great Britain and Northern Ireland to uphold equal democratic rights, historic identities, liberties and freedoms for the people of England, Scotland, Northern Ireland, Wales and for all British citizens; and for connected purposes.

The result of the Scottish referendum has opened the door to a much-needed debate on England’s constitutional status, but I believe that any new settlement must be in the interests not just of England, but of all the component parts of the United Kingdom and the wider British family. Today, we have a unique and exciting opportunity to be bold and imaginative in the evolution of our British constitution, putting our entire nation on a stronger footing.

The House of Commons is the British Parliament, elected by the British people, and has always included English, Scottish, Northern Irish and Welsh MPs, all of whom sit here as equals. Indeed, our constituents elect us to the House as equal Members of Parliament, with the right to speak, vote and participate on all issues, whichever corner of the Kingdom we may represent.

To change that principle by preventing MPs from one part of the Kingdom from speaking or voting on certain issues would, I fear, be a dangerous road to travel. I believe it would change the nature of this House for ever. With MPs no longer sitting here on an equal basis, I fear that the House of Commons might eventually be seen by those representing parts of the Kingdom that are excluded from certain business as no longer being a Parliament that truly represents the interests of the whole British nation and its peoples. My Bill seeks to ensure that for as long as England, Scotland, Northern Ireland and Wales remain part of the United Kingdom, their elected representatives will always be considered as equal in this Chamber. The House of Commons is not an English Parliament and must never become one.

I believe that the decision taken by the people of Scotland to remain within the United Kingdom was the right one, but many would of course have preferred Scotland to become an independent country, and they still do. The former First Minister of Scotland accepted the democratic verdict of the people, and he was right to do so, but it would be wrong to believe this issue has now been settled for good. On the contrary, there remains a constitutional imbalance in how the United Kingdom is governed, and it must now be our duty to devise a new constitutional settlement for all Britons.

My Bill would seek to create a new framework, evolving and enhancing the role of our UK Parliament, the Scottish Parliament, and the Northern Ireland and Welsh Assemblies, by creating a British-style federal model of Parliaments and Governments, similar to that which has worked successfully in Australia and Canada—nations with which we already have much in common, not least our constitutional monarchy. The Parliament of the Kingdom would retain overall British responsibilities, for example for defence, the armed forces, foreign

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affairs, international relations, national security, border control and immigration, management of our British currency, the pound sterling, and other clearly defined areas. A Parliament for England, alongside strengthened Parliaments for Scotland, Wales and Northern Ireland, would provide democratic self-government for all four countries, with autonomy and freedom over their own affairs, and the ability to uphold their own identities, traditions and laws, made by their own MPs in their own Parliaments.

For England I would not propose a separately elected set of English MPs. We do not need additional layers of politicians and vast costs, so English MPs would have a dual role as both British MPs sitting in the House of Commons, and English MPs sitting in the Chamber of an English Parliament. An English Chamber cannot be the one in which we sit today—these green Benches are British and must always remain so. An English Parliament would need its own home. The City of London would be my preference, but whatever the location, it must be one in which the people of England can take pride with their own symbols, English culture and traditions and the St George flag, just as the Scottish take pride in their Parliament, with Scottish symbols, culture, traditions and, of course, the flag of St Andrew—the saltire.

If further devolution in England is sought, it would be a matter for the English Parliament to decide on. It could perhaps be established or based on our traditional counties and great cities, which bring with them historical, social and geographic identities that are cherished by local people and have stood the test of time, rather than large artificial regions.

My Bill would establish a new settlement for the governance of the whole United Kingdom, with four equal countries and a consistent framework for our parliamentary democracy throughout the nation. We must also consider extending those democratic rights equally to the wider British family. Within a new federal structure, there would no longer be any reason not to invite equal representation from all British territories and dependencies. Why not also allow representation from British citizens overseas and armed forces stationed abroad, thus making it fully representative of all Britons?

My Bill is about strengthening the entire scope of our nation and its peoples in every corner of Her Majesty’s Britannic realm. If we are going to do this, let us do it properly and in the overall interests of the entire British family. As an English MP who represents an English constituency, I care deeply about England. Together with many Members from across the House, I believe that the time has come for England to find its voice, but to do so without full consideration of what the consequences might be for the rest of the Kingdom would be divisive and mistaken. My Bill allows for a genuine debate about how we as Britons can work to find a lasting constitutional settlement for our entire nation and all its component parts. With the support of Members from seven different political parties represented in the House of Commons, and from all four countries of which the United Kingdom is comprised, I hope that my Bill will provide a foundation for the next chapter in the evolution of our great British democracy, and I commend it to the House.

Question put and agreed to.

Ordered,

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That Andrew Rosindell, Mr Frank Field, Kate Hoey, Mr Douglas Carswell, Greg Mulholland, Mr Elfyn Llwyd, Mr Angus Brendan MacNeil, Sir William Cash, Mr John Redwood, Jim Shannon, Martin Vickers, and Mr Graham Brady present the Bill.

Andrew Rosindell accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 23 January, and to be printed (Bill 125).

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Pension Schemes Bill

Consideration of Bill, as amended in the Public Bill Committee

New Clause 1

Policy about factors used to determine each benefit

“(1) Regulations may require the trustees or managers of a pension scheme—

(a) to have a policy as to the factors to be used to determine what proportion of the amount available for the provision of any collective benefits by the scheme is to be available for the provision of a particular collective benefit, and

(b) to follow that policy in calculating any collective benefit.

(2) The regulations may, in particular—

(a) require the trustees or managers to consult about the policy;

(b) make provision about the content of the policy;

(c) set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy;

(d) make provision about reviewing and revising the policy.”—

(Steve Webb.)

This amendment allows regulations to require trustees or managers to have a policy on the factors used to calculate members’ benefits and to follow it. The amendment also provides that regulations may make various provisions about the policy such as content and matters or principles that should be followed.

Brought up, and read the First time.

3.26 pm

The Minister for Pensions (Steve Webb): I beg to move, That the clause be read a Second time.

Madam Deputy Speaker (Mrs Eleanor Laing): With this it will be convenient to discuss the following:

Government new clause 2—Power to impose requirements about factors used to determine each benefit.

Government new clause 3—Power to impose requirements about dealing with a deficit or surplus.

Government new clause 4—Requirement to wind up scheme in specified circumstances.

Government new clause 5—Policies about winding up.

Government new clause 6—Working out which assets are available for the provision of which benefits.

Government amendments 2, 3, 5 to 23, 25, 31, 32, 38, 43, 47, 51 to 55.

Steve Webb: It is good to see a packed House for this vital pensions Bill. The amendments are in two groups that correspond broadly with the Bill’s two main themes—the new definitions of pension schemes and pension scheme benefits, and budget pensions flexibilities.

Mr Andrew Love (Edmonton) (Lab/Co-op): May I invite the Minister to apologise to the Chamber? I estimate that on Report there are 33 new clauses, 62 amendments, and one new schedule. Does he think that is rather a lot for us to cope with?

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Steve Webb: I am encouraged by the fact that the hon. Gentleman and his friends in opposition have not tabled a single amendment to the Bill. I am pleased that the Opposition thought the Bill was flawless, but the Government did not. In Committee I tried to flag up that additional amendments would be tabled on Report, and I wrote to all members of the Committee setting out what those would be. I will not speculate, but if we use all the time available this afternoon I will be surprised. I hope we have time to properly consider the amendments.

Let us consider the first group of amendments. There are quite a few—the hon. Gentleman makes a fair point—and I hope the House will bear with me while I put on the record what the purpose of them is. I am happy to provide any clarification that may be sought. The majority of the amendments and new clauses change parts 1 and 2 of the Bill in respect of the new pension categories and collective benefits. New clause 1 is minor and technical and relates to provisions on judicial pensions—I will return later to that point.

Changes to parts 1 and 2 of the Bill have been made following debates in the House and in response to points raised by one of the hon. Gentleman’s colleagues on Second Reading. We have continued to talk to what are known in the trade as “stakeholders”—people who care about this stuff—and they have provided us with further feedback. It therefore makes sense to try to amend the Bill while it is going through the House, rather than at a later stage. The changes are in two broad categories: the addition of two regulation-making powers relating to the new pension scheme category definitions in part 1, which will offer more clarity; and to provide more detail and additional regulation-making powers on certain aspects of collective benefits in part 2. They are designed to bolster member safeguards in relation to key activities in the scheme.

Part 1 of the Bill contains provisions for a new framework for categories of pension scheme. The categories are based on the experience of the member about what certainty they have, while they are saving, about their retirement benefit. The intention is to create recognition and to encourage innovation in the shared risk, or defined ambition, category. The three mutually exclusive categories are: defined benefits; shared risk, sometimes known as defined ambition; and defined contribution. The definitions describe certain features of schemes that determine which category they fall into. This framework operates at a scheme level, and as such does not affect the requirements on pension schemes in relation to matters such as scheme funding, which operate at a benefit level. It should be clear from the definitions where existing schemes fit within this framework. The definitions also allow for new scheme designs.

3.30 pm

The amendments do not change any of this, but they provide for two regulation-making powers in response to technical feedback. I will explain those in more detail shortly, but I just flag to the House that one clarifies what

“at a time before the benefit comes into payment”

means in respect of certain schemes, a point raised on Second Reading. The second is to be able to ensure that, going forward, the definition of defined benefits scheme retains its intended meaning as explained in the House,

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and in various policy publications, namely that the member is not sharing risks, such as investment risk, in a defined benefits scheme.

Part 2 of the Bill introduces a new definition of collective benefits. This definition operates at a benefit level and does not have the same meaning as a shared risk scheme. Collective benefits do not create any additional liabilities for an employer above any pre-agreed level of contributions, and can provide for more stable outcomes for members compared to individual defined contributions schemes. To enable a new collective benefits pension design, part 2 defines the meaning of collective benefit and provides a number of regulation-making powers about key aspects of managing those schemes.

The amendments that I am moving today include powers to improve governance and transparency for members. They add to the powers in the Bill in relation to: enabling regulations to be made in respect of the matters to be taken into account, and the principles trustees and managers must include in the scheme policy, and follow, on key areas where policies are required; enabling regulations to require trustees or managers to act in a specific way in certain circumstances, for example, in relation to dealing with a deficit or surplus in respect of any collective benefits in particular circumstances; and making provision for regulations in respect of identifying collective assets in a scheme, winding up a scheme with collective benefits, calculating collective benefits and applying transfers calculation methods to pensions sharing on divorce. I hope that that high-level overview helps the House to understand the purpose of this group of new clauses and amendments. I will deal with them in turn.

New clauses 1 and 2 help to provide the necessary transparency about how members’ benefits will be calculated. They introduce a requirement for schemes to have a policy, which they will follow, about the factors used to determine each collective benefit. Regulations made under powers in new clause 1 may set out certain requirements about the policy, including in relation to content and matters that the trustees or managers must take into account when drawing up the policy. Regulations made under new clause 2 may impose requirements about factors used to determine each collective benefit.

New clause 3 and amendments 5, 6, 23 and 25 will ensure that schemes act appropriately to keep the scheme on target. In general, trustees and managers will have discretion about how they will respond to a deficit or surplus and will explain in their policy the actions they will take. Amendment 5 allows regulations to specify certain matters that trustees or managers must take into account when formulating that policy. However, there may be particular circumstances in which it would be appropriate for regulations to require that a deficit or surplus is dealt with in a particular way. New clause 3 provides a regulation-making power that will allow us to specify circumstances in which schemes must respond in a particular way to deviations from the required range, and amendment 6 is consequential to that. Amendments 23 and 25 simply insert definitions of “deficit” and “surplus” into the interpretation clause in part 2, and give them the same meanings as the definitions included in clause 19. The word “deficit” in clause 20 has its own, separate, definition.

On Government amendments 7 to 13, trustees and managers of schemes providing collective benefits need to have a policy on calculating cash equivalents, which

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should cover all circumstances where a cash equivalent might be required. Amendments 7 to 12 simply ensure that the policy deals with calculation of cash equivalents for the purpose of pension sharing on divorce and transfer of pension credit benefits arising from a pension share, as well as revising a cross-reference to the Pension Schemes Act 1993. The amendments also include a power to add, through regulations, further circumstances where a cash equivalent might be required. Amendment 13 allows regulations to set out matters to be taken into account, or principles to be followed in formulating that policy.

Mr Brian H. Donohoe (Central Ayrshire) (Lab): I am beginning to see why my hon. Friend the Member for Edmonton (Mr Love) raised the question of the number of amendments and what they entail. I worry about how that will be interpreted by whoever happens to be a trustee of a pension fund. It will cost an inordinate amount of money, will it not?

Steve Webb: I am not sure that I follow the hon. Gentleman’s reasoning. The thing that would cost money would be poorly drafted, ambiguous legislation. What we are doing at the moment is listening and talking to people as the Bill goes through the House. We talk a lot to trustees, pensioners’ lawyers and pensions professionals, as well as to representative bodies of scheme members and so on, to ensure that we pick these things up in real time. I think the hon. Gentleman can take heart from the fact that, rather than stubbornly insisting that the first version of the Bill we published was immaculate, we are saying that we are creating new categories of pension scheme. There have to be rules on wind-ups, divorce and so on. Let us get them right now by further amendment, rather than by stubbornly insisting on our Bill and later discovering that we have a problem. I hope he will be reassured that that is what we are doing this afternoon.

Amendment 22 ensures that trustees or managers of schemes providing collective benefits can be required to seek actuarial advice before making any specified decisions or taking any other specified steps.

Government new clauses 4, 5 and 6, and amendments 14 to 21, all relate to the issue of winding-up schemes with collective benefits. This group of amendments is the result of continuing development of policy on creating the right legal framework for collective benefits. Winding up a pension scheme can be a difficult and complex process, and we need to ensure we have the necessary legislative framework in place. Collective benefits are different, so we need broad regulation-making powers to allow us to work with the pensions industry and others to get the detail right and to respond to developments.

This group of amendments covers: new clause 4, which provides for regulations to set out circumstances where a scheme, or part of a scheme, providing collective benefits must be wound up; and new clause 5, which requires trustees or managers to have and follow a policy about winding up a scheme that provides collective benefits. New clause 6, which is also part of this group, provides a power to make regulations setting out how to work out which assets are available for which benefits. This is not specific to winding up, as it may be used for other purposes as well. There are also a number of

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amendments that will ensure we can make regulations to ensure schemes providing collective benefits wind up effectively.

Amendments 14 to 17 provide for additional powers to enable regulations to make provision about the winding up of a pension scheme containing collective benefits and to make it clear how collective benefits will be treated when a scheme winds up. Amendments 18 and 19 ensure we can amend existing legislation that might need to change to cater for winding-up schemes providing collective benefits. Amendments 20 and 21 remove the limitation that changes to existing legislation relating to wind-up are only in relation to collective benefits.

Amendment 2 provides for regulations to specify additional requirements which must be met in order for a scheme to fall within the defined benefits scheme definition. Part 1 of the Bill contains provisions for three mutually exclusive categories of pension scheme, as I have mentioned. Government amendment 2 provides for regulations to specify additional requirements which must be met in order for a scheme to fall within the defined benefits scheme definition. It is appropriate for this to be dealt with by regulations and in consultation with the industry rather than on the face of the Bill, because this is about being able to respond to future scheme design and a theoretical risk. The regulations enable additional clarification to ensure policy intent is delivered in respect of future scheme design.

Amendment 2 has been made in response to discussions with industry and testing of the definitions, specifically in relation to theoretical and potential avoidance risks in new scheme designs, which would undermine the delivery of the policy intent for part 1. For example, we would not want a scheme that shared investment risk with the member to be categorised as a defined benefits scheme. Therefore, this regulation-making power provides that regulations can ensure that, as we intended, only schemes that provide members with certainty throughout the accumulation phase about the level of retirement income to be provided will fall within the defined benefits scheme definition.

We are confident that all existing scheme shapes we know about are covered by the definition of a defined benefits scheme in the Bill as it stands, but this does not preclude the possibility that a scheme might be designed in the future satisfying the requirements but also including an element of risk that could be passed on to members. We would not want such a scheme to be included in the defined benefits category. The power is therefore intended as a belt and braces measure to ensure that the policy intent behind the categorisation is not undermined. This is only about which category schemes will fall into; it is not to disallow or prevent forms of scheme design and has no effect on scheme funding commitments or member rights within a given scheme design.

Continuing my canter through this group, amendment 3 addresses the meaning of

“at a time before the benefit comes into payment”,

where a defined contributions scheme might find itself mis-categorised as a shared risk scheme. Clause 5 explains what is meant by the term “pensions promise”, including that it must be made at a time before the benefit comes into payment. Amendment 3, which amends clause 5, is in response to a point raised by the Chair of the Work and Pensions Committee, the hon. Member for Aberdeen

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South (Dame Anne Begg), when referring on Second Reading to a document from the Law Society of Scotland. The query was about the precise meaning of references to “at a time” and the intended application and effect. Amendment 3 addresses that point by excluding certain promises from the definition of pensions promise—if they are made at a particular point in time and conditional on coming into payment by a particular date—and enables the Secretary of State to make regulations on this matter.

We want to capture promises made in relation to income or saving while the member is saving—that is broadly what clause 5 already does—but the amendment caters for defined contributions schemes that also provide an income stream in retirement. Technically, such schemes will need to discuss and make a commitment to the member about that retirement income before the first payment is made. The schemes will usually only make the promise in relation to income that may be derived from the final pot and only in the immediate run-up to the retirement date. This means, in effect, that it provides no more certainty to the member than other defined contributions schemes and so should fall within the defined contributions scheme definition. However, the phrase

“at a time before the benefit comes into payment”,

in the meaning of “pensions promise”, might mean that it would be defined as a shared risk scheme. The amendment and the regulation-making power therefore make an exception in relation to this type of promise and ensure that this type of scheme falls within the defined contributions scheme definition.

We are on the home straight, Madam Deputy Speaker. Clause 49 makes amendments to bring the Bill within the scope of existing references to “pensions legislation” in the Pensions Act 2004 for specific purposes. The purpose behind amendments 32 and 51 to 55 is to move the text of clause 49 into schedule 3. This is sensible because of structural changes made to the Bill as amended in Committee. Having made several structural changes to the Bill in Committee, it makes sense to move what are essentially consequential amendments out of part 6 and into schedule 3. We believe that these changes sit better in schedule 3, which deals with amendments to existing legislation related to parts 1 and 2.

Finally, on judicial pensions, we have a minor amendment required to ensure that fee-paid judges who are subsequently appointed to the salaried judiciary are extended the same transitional protection rights as members moving between existing public service pension schemes. The clause provides that service as a fee-paid judge prior to 1 April 2012 has the transitional protections derived from the Public Service Pensions Act 2013 and the Public Service Pensions Act (Northern Ireland) 2014 applied to it, if that judge subsequently moves to salaried office. Following the O’Brien and Miller judgments in respect of fee-paid pension entitlement, the Lord Chancellor is required to establish a fee-paid judicial pension scheme. In order to ensure no less favourable treatment in the provision of pensions for fee-paid judges, the intention is to provide for transitional protection to apply to members of the fee-paid scheme. Transitional protections are a feature of both the 2013 Act and the 2014 Act. Regulations establishing new public service pension schemes

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may provide for transitional protection, extending the availability of pension benefits for certain members under existing schemes beyond 31 March 2015.

Sir Greg Knight (East Yorkshire) (Con): Before the Minister sits down, will he tell the House whether steps are being taken within his Department to reduce the number of Government amendments introduced during the passage of future Bills?

Steve Webb: I am grateful to my right hon. Friend. The Bill was originally much shorter and obtaining the approval of, originally, the Government to bring it forward took place before the Budget. Therefore, the Budget measures, which both sides of the House welcomed, required substantial additional legislation. The entire second group of amendments relates to measures that were not envisaged when the Bill was published but which implement Budget measures. In other circumstances, there would have been a separate Bill but as we are in the final Session of a Parliament, everything has been on an accelerated timetable.

I can reassure my right hon. Friend that although these amendments have been tabled at a relatively late stage, they reflect extensive consultation over a period of years. The world that will have to deliver these things, as it were, has been extensively involved. In most cases, they are not new policies but are simply technical changes to implement a policy intent that has been well known for some time. But I entirely accept my right hon. Friend’s point; it would be better if these things were brought forward earlier. That is absolutely my view.

I commend to the House the new clauses and amendments. Throughout the Bill we have sought to try to alert members of the Public Bill Committee ahead of time when we knew that we had to table amendments on Report. I hope that the House will agree that the Bill is made much better by these new clauses and amendments, which I commend to the House.

3.45 pm

Stephen Timms (East Ham) (Lab): Given the current cost of living crisis, it is certainly the case that people struggling to set aside money for the future need access to pension schemes that they can trust to give good value for money and to provide them with a decent income in retirement. We welcome the improved opportunities that we hope the Bill will provide, as we have throughout the debates on the Bill.

A lot of important detail is still to come; this is an enabling Bill. However, as interventions from my hon. Friends the Members for Edmonton (Mr. Love) and for Central Ayrshire (Mr Donohoe) and from the right hon. Member for East Yorkshire (Sir Greg Knight) have pointed out, it is pretty extraordinary and very unsatisfactory that in an important Bill, which has in total 55 clauses, we should at this very late stage be debating 33 Government new clauses and 72 new Government amendments.

The Minister knows very well that this is not a field in which haste is fruitful. He attempted in his response to one intervention to make a virtue of the fact that he was “picking these things up in real time.” What he actually means is “making it up on the hoof.” I do not think that

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is a good way to legislate on pensions. The scope for mistakes in drafting very technical measures such as these is too great.

The point of having proper parliamentary scrutiny is to spot problems early and to allow for them to be corrected. As it is, there will, of course, be many mistakes in the 70 pages, or whatever, of new material in front of the House for our brief debate this afternoon. We can only hope that Members in the other place will spot them and be able to put them right, but things are bound to go wrong. Having said that, I think that the risks are significantly less in this group of amendments than they are in the next, on which I will have more to say. However, it is troubling that there is so much new and technical material here.

I wanted to ask about one particular point. As the Minister has said, the new clauses are imposing new obligations on scheme trustees. As I understand it—I may be mistaken; if I am, I know that the Minister will correct me—the Government have not provided an estimate of the cost of meeting those obligations for scheme trustees. I wonder why not; normally, I would have expected there to be an impact assessment with an estimate. Will the Minister comment, first, on whether I am right—that there is no estimate or at least none has been published so far—and, if so, the reason for that?

Will the Minister set out his intentions over the numerous sets of regulations that are envisaged? Is he able to tell us at this stage which of those sets of regulations are going to be subject to the affirmative as opposed to the negative procedure, so that we can be assured of future debate about those more detailed provisions when they become available?

Crispin Blunt (Reigate) (Con): I have listened to the right hon. Gentleman’s critique of all the new clauses coming forward at this time, but he will have had them at least for some time and the resources of the Opposition have been available to him. I have tabled the only non-Government amendment this afternoon. The right hon. Gentleman is a replacement—a senior one—for the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont). Is he able to say whether the Opposition are going to table further amendments in the other place?

Stephen Timms: As the hon. Gentleman is well aware, we have not tabled amendments on Report. Of course, we debated in Committee three Opposition amendments, but we were sadly unsuccessful. I am delighted that the hon. Gentleman has tabled an amendment, which will provide us with a little relief when we get to the second group; at least it will not be entirely Government material on the amendment paper. I commend the hon. Gentleman for his amendment, and he is right that the Opposition have not tabled amendments today.

Steve Webb: I shall not detain the House for long, but the right hon. Member for East Ham (Stephen Timms) asked a couple of specific questions. The impact of regulations brought in under the primary Bill in front of us would depend on what they can contain. We cannot do an impact assessment because we have not yet written the regulations. Generally when we produce regulations and they have a cost on business, there is an impact assessment to go with them. I hope that explains why we have not published an assessment at this stage.

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On the timing, our broad goal is to have all this in place by April 2016. The right hon. Gentleman will know that a very significant change in April 2016 will be the end of contracting out, so defined benefit pension schemes will be considering what they do in response to that. In particular, if a shared risk scheme or something of that sort is envisaged, there clearly needs to be a legislative framework by around that time—not right on the day, but about that time. That is our goal and the rough timetable that applies.

The right hon. Gentleman asked about the negative and affirmative resolutions. The collective and shared risk regulations are generally subject to the negative procedure. He will see that clause 41 deals more generally with regulation-making powers and considers when they should be negative and when affirmative. In general, as I say, most of these are relatively technical regulations, so the negative procedure applies. I hope that is helpful. I commend the new clause to the House.

Question put and agreed to.

New clause 1 accordingly read a Second time, and added to the Bill.

New Clause 2

Power to impose requirements about factors used to determine each benefit

Regulations may make provision as to the factors to be used to determine what proportion of the amount available for the provision of any collective benefits by a pension scheme is to be available for the provision of a particular collective benefit.—(Steve Webb.)

This amendment allows regulations to set out the factors that must be used to calculate members’ benefits.

Brought up, read the First and Second time, and added to the Bill.

New Clause 3

Power to impose requirements about dealing with a deficit or surplus

(1) Regulations may specify circumstances in which a deficit or surplus in respect of any collective benefits that may be provided by a pension scheme must be dealt with in a particular way.

(2) The regulations may, in particular, specify steps that must be taken by the trustees or managers and the period or periods within which any steps must be taken.—(Steve Webb.)

The amendment allows regulations to set out how a deficit or surplus must be dealt with in specific circumstances, the steps trustees or managers may be required to take and the time period within which those steps must be taken.

Brought up, read the First and Second time, and added to the Bill.

New Clause 4

Requirement to wind up scheme in specified circumstances

(1) Regulations may require the trustees or managers of a pension scheme underwhich collective benefits may be provided to wind up the whole or part of thescheme in specified circumstances.

(2) The regulations may, in particular—

(a)provide for the winding up of the scheme or part to be as effective in lawas if it had been made under powers conferred by or under the scheme;

(b) require the scheme or part to be wound up in spite of any legislativeprovision or rule of law, or any scheme rule, which would otherwiseoperate to prevent the winding up;

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(c) require the scheme or part to be wound up without regard to anylegislative provision, rule of law or scheme rule that would otherwiserequire, or might otherwise be taken to require, the implementation ofany procedure or the obtaining of any consent with a view to the windingup.”—(Steve Webb.)

This allows regulations to require the trustees or managers of a pension scheme under whichcollective benefits may be provided to wind up the scheme or part of it in circumstances specifiedin the regulations.

Brought up, read the First and Second time, and added to the Bill.

New Clause 5

Policies about winding up

(1) Regulations may require the trustees or managers of a pension scheme underwhich collective benefits may be provided—

(a) to have a policy about the winding up of the scheme or part of it;

(b) to follow that policy.

(2) The regulations may, in particular—

(a) require the trustees or managers to consult about the policy;

(b) make provision about the content of the policy;

(c) set out matters that the trustees or managers must take into account, orprinciples they must follow, in formulating the policy;

(d) make provision about reviewing and revising the policy.

(3) The regulations may, in particular, require the policy—

(a) to contain an explanation of the circumstances in which the trustees ormanagers are permitted or required to wind up the scheme or part and anyrequirements about the distribution of assets (including any order ofpriority);

(b) to contain an explanation of how the trustees or managers intend to useany powers to wind up the scheme or part and how they intend to use anypowers in relation to the distribution of assets (including any order ofpriority);

(c) to contain an explanation of how the costs of winding up are required tobe met or how the trustees or managers will use any powers to decide howthose costs are to be met.—(Steve Webb.)

This allows regulations to be made requiring the trustees or managers of a pension scheme underwhich collective benefits may be provided to have a policy about winding up.

Brought up, read the First and Second time, and added to the Bill.

New Clause 6

Working out which assets are available for the provision of which benefits