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Westminster Hall

Tuesday 3 November 2015

[Graham Stringer in the Chair]

Corporate Economic Crime

9.30 am

Stephen Pound (Ealing North) (Lab): I beg to move,

That this House has considered the matter of prosecuting corporate economic crime.

It is hardly necessary for me to point out what a pleasure it is to serve under your auspices, Mr Stringer, and I am sure that I speak for every person in the room when I say that it is marvellous to be here on this crisp autumnal morning. As the fog lifts from our city, I intend to cut through some of the fog around Government policy on the prosecution of economic crime. I have every confidence that the Minister will be able to illuminate this dark part of the legislative process. I called this debate to focus on economic crime and on whether our law enforcement agencies and related prosecuting authorities have the necessary tools to prosecute such crimes.

All current indicators seem to show that economic crime, such as fraud, tax evasion or bribery, are on the rise. City traders, previously perceived as paragons of virtue, are being convicted of rigging key bank lending rates, and some of our biggest banks and institutions are under investigation, challenging the very fabric of our society. This debate is clearly timely and important and comes at a point when the Government are sending out, if I may say, extremely mixed signals about their approach to holding individuals and companies to account for wrongdoing. It gives me no pleasure to say that they appear to have U-turned on a key manifesto pledge. It is widely accepted that a major issue in corporate economic crime in this country is how we can hold companies to account for their actions, and in particular make corporate wrongdoing a criminal offence. The UK’s corporate criminal liability framework is widely considered to be inadequate and lags far behind that of the US.

The Government have made some promising signals about finally getting to grips with the matter, with the Attorney General promising in September 2014 to introduce a corporate liability offence, a promise repeated—may I say, carved in stone?—in the Conservative’s manifesto. Yet, having heard nothing since the election, we learned just over a month ago that the Government no longer see any need for such an offence, even claiming that no such economic crimes go unpunished, which is a slightly Panglossian perspective that I hope to challenge in the next few paragraphs of my speech. Given what we know about economic crime, the impact that it has on businesses and the difficulties that law enforcement agencies face in prosecuting individuals and companies for such crimes, the decision is extremely disappointing. I hope that when the Minister has listened to the many concerns raised in the debate, he will be able to reassure hon. Members that he will look again at the proposals.

It is always a good idea to define what one is talking about. In response to the fairly reasonable question, “What is economic crime?” I turn, as sadly do so

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many people in the Labour party nowadays, to PricewaterhouseCoopers. Its economic crime survey defines economic crime as

“the intentional use of deceit to deprive another of money, property or a legal right.”

That includes money laundering, bribery, tax evasion and fraud, and such acts can be committed by employees of companies. The financial services industry, according to a recent Treasury risk assessment, is seen as being at most risk of harbouring money-laundering activities. I will return later to how we can prosecute or deter such activities, but one way is to hold companies liable if they have not adequately prevented such activities, and to make it an offence to have not prevented economic crime. For those present who sat through the debates on the Bribery Act 2010, this will be familiar territory.

The Government announced in late September that they were no longer pursuing proposals to introduce a corporate liability offence, on the basis that such an offence is unnecessary. That came to light in a fairly roundabout way following a written question from the hon. Member for Gower (Byron Davies),who is a prominent member of the all-party parliamentary group on anti-corruption, requesting an update, to which the Under-Secretary of State for Justice, the hon. Member for South West Bedfordshire (Andrew Selous), replied:

“The UK has corporate criminal liability and commercial organisations can be, and are, prosecuted for wrongdoing. The UK Anti-Corruption Plan tasked the Ministry of Justice to examine the case for a new offence of a corporate failure to prevent economic crime and the rules on establishing corporate criminal liability more widely. Ministers have decided not to carry out further work at this stage as there have been no prosecutions under the model Bribery Act offence and there is little evidence of corporate economic wrongdoing going unpunished.”

That prompts the question whether there is any evidence of economic crime going unpunished, and how prevalent economic crime is. The figures speak for themselves. KPMG’s twice-yearly fraud barometer—riveting reading that I recommend to all Members—reports that fraudulent activity in the UK totalled £385 million in the first half of 2015, which is up 22% on last year. The Government’s National Fraud Authority—a marvellous title—has reported a £52 billion-a-year loss to the UK economy from fraud. Indeed, the Attorney General himself has identified the growing threat of economic crime in this country. In a 2014 speech announcing his intention of pursuing the case for a new corporate liability offence, he observed that

“in the modern global economy, economic crime is more pervasive than ever before…the evolving nature of economic crime means we need to continue to find and develop new ways to expose and combat it.”

More high-profile cases of economic crime are being alleged or prosecuted. This summer saw the first prosecution of a UBS City trader following the LIBOR scandal. Tom Hayes was found guilty of rigging global LIBOR interest rates and sentenced to 14 years in prison for conspiracy to defraud in a case brought by the Serious Fraud Office. Two more British traders are also standing trial in New York for their alleged role in a scheme to rig LIBOR. That followed the extraordinary revelations in February that the Swiss private banking arm of HSBC, which is headquartered in London, had helped over 100,000 wealthy individuals to evade and dodge tax all over the world. HSBC has admitted to that. In spite of all that, the number of defendants prosecuted by the

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SFO and City of London police—as I presume everybody knows, as well as investigating crime, it is often the lead agency in such matters—has fallen by a fifth since 2011, from 11,261 then to 9,343 last year. According to the

Financial Times

, the fall in prosecutions has been largely put down to both a lack of resources, given the significant spending cuts of the past five years, and the fact that agencies are ill-equipped to pursue and prosecute white-collar crimes.

How do we make sure our law enforcement agencies are properly equipped to ensure that those who commit economic crimes are held accountable, punished and ultimately deterred? The answer many turn to is some form of corporate liability offence, which essentially makes it a crime if a company fails to prevent acts of economic crime, such as fraud and bribery. However, with one exception, such an offence does not exist in the UK. Instead, current UK corporate liability law is based on the identification principle. Again, this will be familiar territory to those who remember the passage of the 2010 Act. To prove that a company is guilty of an economic crime, the prosecutor must show that a person who is the directing or controlling mind of the company intended to commit, or had knowledge of, the criminal act. That requires identifying somebody at the most senior level in a company as being responsible. In the modern, globalised world in which we live, where companies span numerous national borders and jurisdictions, that is no small task; it is virtually impossible. Many believe that it sets the bar far too high for prosecutors to prove corporate liability. There is one exception: bribery, in which that burden of proof is essentially reversed.

Thanks to section 7 of the 2010 Act, which the previous Labour Government introduced, commercial organisations can be held liable if they are found to have failed to prevent bribery by their employees; unsurprisingly, that is known as the “failure to prevent” principle. As such, companies are required by law to prove that they have carried out adequate procedures to prevent acts of bribery by their employees. That acts as their statutory defence. Many see section 7 as a model that could be used to hold corporates criminally liable for all kinds of economic crime, not just bribery. The director of the SFO, David Green, has made it clear on a number of occasions that he would support such a move. In 2013, he said:

“A more sensible and just approach might be that embodied in Section 1 of the Bribery Act 2010. This creates the offence of a commercial organisation ‘failing to prevent’ bribery by its employees, with a statutory ‘adequate procedures’ defence. Extending this approach, a Corporate, or certain types of Corporate (such as banks and companies listed on stock exchange) could be liable for failing to prevent certain types of criminal offence by their employees subject to a statutory defence.”

Until recently, that view was echoed by the Attorney General, who said a little more than a year ago, in his first major speech in the role:

“Government officials are considering proposals for the creation of an offence of a corporate failure to prevent economic crime, modelled on the Bribery Act section 7 offence.”

That promising start from the Attorney General did not last, and the Government have now decided that no such offence is required, despite the fact that the leading prosecuting authority for white-collar crime, the SFO, clearly favours such an offence.

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What people had to say about that decision can help us to understand how important many see a new corporate liability offence as being to strengthening the ability of law enforcement agencies to prosecute white-collar crime. Robert Amaee, a former head of anti-corruption at the SFO, said:

“This retraction by the government is unlikely to be welcomed by the prosecutors who have been calling for an extension of the law on corporate criminal liability. I expect that there will be renewed enthusiasm for revisiting this topic once the SFO has shown that it can bring successful prosecutions under the existing failing to prevent bribery offence.”

Alan Sheeley, head of civil fraud and asset recovery at Pinsent Masons, said:

“The new criminal offence of failure to prevent bribery might not have resulted in any dedicated prosecutions as yet, but its impact on the attitudes and policies of businesses of all sizes has been staggering. I would have expected the potential legislation of failing to prevent economic crime to have the same impact if and when implemented. Frankly, this seems like a wasted opportunity by the UK government to target economic crime and, at the same time, reinforce the role of the UK as a leader in tackling economic crime in global financial markets and businesses.”

The Conservative manifesto, a document that I study with great interest and care when I have difficulty getting to sleep at night, states:

“We are also making it a crime if companies fail to put in place measures to stop economic crime, such as tax evasion, in their organisations and making sure that the penalties are large enough to punish and deter.”

Without commenting on the rest of the Conservative manifesto, that was a sensible proposal that seemed to be supported universally. It is therefore disappointing that the Government have seemingly performed a screeching handbrake turn.

Only the month before last, the Treasury published its long-anticipated “UK national risk assessment of money laundering and terrorist financing activities”. We need only look at the report’s conclusions to understand the importance of equipping law enforcement agencies, and of ensuring that prosecuting authorities have the tools in the armoury to prevent and punish economic crime. The report stated:

“The size and complexity of the UK financial sector mean it is more exposed to criminality than financial sectors in many other countries, including abuse enabled by professional enablers in the legal and accountancy sector...The UK’s response is well developed, but more needs to be done to ensure it is commensurate with our status as a well regulated global financial centre.”

I speak as a London MP, and about 60% of the offences we are discussing take place in my city. More clearly needs to be done; that is the key.

A criminal offence of failing to prevent economic crime would enable agencies and authorities to do more; as we have heard from the director of the SFO, it would clearly help him and his teams to do more. In our increasingly interconnected, digital world, economic crime is arguably more prevalent than ever before, as the Attorney General has conceded. The tools at our disposal and the resources available to our agencies and authorities must evolve to keep pace with developments.

I hope that the Minister can today say proudly that the option of introducing a criminal offence for failing to prevent economic crime is still on the Government’s agenda and that they intend to propose one in due course. I hope the Minister will be able to provide that reassurance today, because given the events of 2007-08

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and everything that followed, the public have a right to expect that those who defraud, launder money or commit other white-collar crimes are brought to justice.

In common with many Members of Parliament, I have a fantasy. My fantasy—don’t worry, Minister—relates to the marvellous “The Comic Strip Presents” television series. “The Strike” showed how Hollywood would imagine the miners’ strike. Al Pacino played Arthur Scargill, and Jennifer Saunders played Meryl Streep. At one stage a young Arthur Scargill entered the Chamber of the House of Commons and made an impassioned speech in favour of the mineworkers, whereupon the Speaker, who was apparently Leader of the Opposition and Head of Government at the same time, said, “You have convinced me, Sir. We will throw out all our existing policies on pit closures and reverse everything. We will do precisely what you, young Scargill, have asked for.”

I would not put myself in the place of Al Pacino or Arthur Scargill, but how wonderful it would be if the Minister said, “Having considered the matter, I will break free from the shackles of this Government and from the rigid centralism that permeates the Conservative party. I accept that a point has been made and that we need to do something. We will act; we will overturn the previous policy U-turn, and we will revert to the noble words in the Conservative party manifesto. We will introduce that crime.” The nation would be happy; the City might not be utterly delighted in the first instance, but it would be delighted as our reputation improved; and, above all, the SFO and decent people who care for the probity of our financial services in these islands would look to the Minister and thank him, were he to make that statement today.

9.46 am

Christina Rees (Neath) (Lab): It is a pleasure to serve under your chairmanship, Mr Stringer.

I congratulate my hon. Friend the Member for Ealing North (Stephen Pound) on securing this important debate. As we heard from him, economic crime is on the increase and fraud very much remains a hidden crime. I, too, turned to the 2014 PricewaterhouseCoopers global economic crime survey, which found that 44% of UK organisations reported some type of fraud—the global average is 37%. The majority of respondents felt that the number of instances and the financial impact of economic crime had increased since 2013. The proportion of employees committing economic crime increased from 34% to 41%, and most crimes are committed by junior staff.

The Treasury’s money laundering and terrorist financing national risk assessment found:

“The size and complexity of the UK financial sector mean it is more exposed to criminality than financial sectors in many other countries”.

The risk assessment also stated that the banking sector is at highest risk of money laundering because London is home to 250 foreign banks and is the largest centre of cross-border bank funding. We clearly need laws to combat economic crime.

Existing UK corporate liability law is based on the identification principle, which requires prosecutors to show a person who is the “directing” or “controlling” mind of the company—that is, that someone sufficiently senior intended to commit the criminal act—to prove

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the company guilty. In the case of large multinational corporations, however, it is difficult to identify individuals who are the directing or controlling mind. In other words, they are getting away with it.

Indeed, in 2013 the director of the Serious Fraud Office, David Green, said that

“a corporation is only liable if the top personnel can be shown to be complicit, but this is very hard to prove—rarely does the email chain go above a certain level”.

Furthermore, the identification principle creates perverse incentives for board-level officers to distance themselves from knowledge of wrongdoing, so any decision to engage in wrongdoing is split between individuals with different knowledge, making it difficult to prove that one person had the intent.

What are the alternatives? The Labour Government introduced the Bribery Act 2010, but there have not been many prosecutions, and the first convictions did not take place until December 2014, when three men were jailed for a £23 million biofuel investment scam. Those men, who worked for Sustainable Agroenergy plc, preyed on people, conning them into investing their savings and pension funds.

The Bribery Act overhauled laws that dated back 122 years and gave prosecutors new powers to fight modern internet bribery. As we have heard, section 7 of the Act made it an offence for a commercial organisation to fail to prevent bribery by its employer; the defence is adequate procedures. No prosecutions have been pursued under that section, so it has not been tested in the courts, but Alan Sheeley, the head of civil fraud and asset recovery at Pinsent Masons, said that the Act’s

“impact on the attitudes and policies of businesses of all sizes has been staggering.”

The Labour party sees section 7 as a model that could be used to prosecute all economic crimes. A company would be liable for failing to prevent certain offences of economic crime unless it showed that it had put adequate procedures in place to prevent it. As we have heard, however, although the Attorney General made that proposal in September 2014 and included it in the 2014 anti-corruption plan—and even though it was in the Conservative party’s manifesto and it received widespread cross-party support—the Under-Secretary of State for Justice, the hon. Member for South West Bedfordshire (Andrew Selous) responded to a written question from the hon. Member for Gower (Byron Davies) to say that the proposal had been dropped.

The Government have received much criticism for reneging on that promise. Indeed, Elly Proudlock, a member of WilmerHale’s white-collar crime team, said:

“It is surprising that the Government has decided not to pursue law reform in this area, given the small number of corporate prosecutions to date and the repeated insistence by David Green…that the threshold for establishing corporate criminal liability must be lowered.”

The new offence of failure to prevent bribery has had a profound effect on the attitudes and policies of businesses of all sizes. The threat of prosecution has reduced offending, so we need to change the culture in companies on committing economic crime. It is concerning that the attitudes of those in senior positions in companies contributes to the prevalence of economic crime committed by their employees. To broaden section 7 to include all economic crime may well have a positive effect on those

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senior people and, in turn, that may change the culture of their employees. The threat of prosecution may well be persuasive in itself.

The alternatives include introducing a new vicarious liability regime similar to the US model, whereby companies are liable for the illegal acts of employers and agents when such acts are in the scope of their employment and benefit the company. However, vicarious liability is notoriously difficult to prove.

What about deferred prosecution agreements, another import from the US, where they are used extensively? DPAs were introduced to the UK in 2014 by the Crime and Courts Act 2013. They are a method by which an organisation can avoid prosecution by entering into a contract with certain conditions, which may include paying a financial penalty, paying compensation or co-operating with future prosecutions of individuals. They can be used for fraud, bribery and other economic crimes. The SFO says that a DPA would be appropriate when the public interest is not best served by mounting a prosecution. No DPAs have been signed yet, but there is speculation that two small private companies, Barclays and Tesco are involved in discussions. The SFO’s director, David Green, suggested that two will be signed by the end of 2015.

On one hand, many see DPAs as a proven method of compensating for economic crime. In the US they brought in more than $4.2 billion last year and more than $9 billion in 2012. That may be evidence of their effect in reducing economic crime. On the other hand, they are a way for companies to get out of jail, because no one goes to jail.

Of greatest concern is whether DPAs will work in the UK. Without the threat of criminal liability prosecutions and the likelihood of an organisation being prosecuted, what is the incentive to sign a DPA? Why pay a significant fine, pay compensation or co-operate in prosecutions if there is no chance of getting caught in the first place?

One of my concerns is the practical question of the lack of resources needed to pursue large, complicated cases against well-resourced multinational corporations. If the resources are not there, adding new offences to the statute book will not be effective. We need new methods to combat economic crime, but we also need resources.

9.55 am

Stephen Kinnock (Aberavon) (Lab): It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate my hon. Friend the Member for Ealing North (Stephen Pound) on his inspiring and passionate speech. The image he gave towards the end of his speech of Al Pacino playing Arthur Scargill will live with me for the rest of the day.

Before I start, I must declare two interests: I am the Parliamentary Private Secretary to the shadow Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Wallasey (Ms Eagle), and in a previous life, I worked for the World Economic Forum, many of whose members were FTSE 500 companies. In fact, my experience should reassure the City and our friends in the financial

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services sector that I am not here to attack them; on the contrary, I come here today with their best interests at heart.

We all remember the events that led up to the collapse of Lehman Brothers and the tumultuous events of the ensuing months and years—events that changed the course of history and caused many of the troubles that the world faces today: the sovereign debt crisis, chaos in the eurozone and the freezing of public and private sector investment. A sluggish economy with an uncertain future means that many who have been worst hit want to see “the bankers”, as they are characterised, punished. People feel that the law is broken and that those who broke it have been let off scot-free.

Cool heads have prevailed and blanket retribution has not been applied, which is a good thing, but the Government now seem to have swung far too far in the other direction, towards total and complete inaction, with the odd knighthood stripped but little more to show than that.

The City and the financial services sector need to be held accountable, for their own good as much as for the public’s, and our common interest should now be to rebuild trust. Right now, trust levels are at rock bottom. According to the Edelman Trust Barometer, financial services is the least trusted industry worldwide. Almost 60% of the British public rates the banking industry’s performance as poor or very poor. That is not sustainable if we want the City to carry on thriving. In fact, if we break the figures down, we see that the City’s trust score is artificially inflated by higher levels of trust in retail banks, while of those polled only 18% trust investment bankers and only 12% trust fund managers.

In the light of such a fundamental breakdown in confidence, hon. Members can imagine how pleased I was to read the following paragraph in the Conservative party’s 2015 manifesto:

“We are also making it a crime if companies fail to put in place measures to stop economic crime, such as tax evasion, in their organisations and making sure that the penalties are large enough to punish and deter.”

To Labour Members, that was music to our ears, so the Government’s recent decision to backtrack on corporate liability was all the more disappointing and puzzling. I am concerned that, in backtracking on that vital manifesto pledge, Ministers will have opened themselves up to suggestions—totally unfounded, of course—that they are acting on the demands of a number of those who donate large sums of money to the Conservative party. I urge the Minister to dispel those nasty rumours.

The Conservatives’ courageous and correct manifesto commitment had teeth and was a wholly proportionate response to the fact that fraudulent activity increased by 22% in the first half of 2015 compared with the first half of 2014. That is not good for our financial security or for the future of an industry that fundamentally requires public trust and backing more than ever before. Despite promises to the contrary, there have been no criminal sanctions for reckless management, nor have we seen any sign of the much touted rule that bars managers of failed banks from running other companies.

I want the City to succeed, because it is vital to our economy, but I am concerned that the Government are too short-sighted to see what real, long-term, sustainable

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success means. Success means rebuilding trust and changing how the City is perceived. In closing, therefore, I would like to make a number of recommendations on smart regulation.

First, the Government must act on their own manifesto and enforce corporate liability. Criminal sanctions for bad management are almost universally supported by the public and are key to establishing a new corporate culture based on transparency. Secondly, the Government must act on the Treasury’s “UK national risk assessment of money laundering and terrorist financing” by cracking down on professional enablers in the legal and accountancy sector. Thirdly, they must get serious about investing in the tools and technology necessary to keep pace with these criminals.

Labour Members want only to see a thriving financial services sector. For the sector to thrive and prosper, it must regain the trust of the British people and reclaim its licence to operate. That is why the measures in the Conservative party manifesto were so welcome, and why it is vital that they are urgently incorporated into law. It is absolutely right to be pro-business, but it is wrong to be pro-business as usual.

10.1 am

Kate Osamor (Edmonton) (Lab/Co-op): It is a pleasure to serve under your chairmanship, Mr Stringer. I thank my hon. Friend the Member for Ealing North (Stephen Pound) for securing the debate.

Like many of my hon. Friends here today, I was disappointed to learn that the Government appear to have dropped their plans to introduce a corporate liability offence. By going back on their manifesto pledge to prosecute economic crime, this Government are pandering to corporations. They are not following through on their promise to tackle tax evasion. They are not adequately holding corporate criminals to account, in the same manner as other criminals. After the crash of 2008, the public have a right to expect those who launder money, defraud or commit other white-collar crimes to be brought to justice. The bail-out cost UK taxpayers was £133 billion—more than £2,000 per person.

As the Attorney General identified in September 2014, in the modern economy, economic crime is more pervasive than ever. According to the Financial Conduct Authority, white-collar crime is estimated to cause the UK losses of more than £40 billion a year. The number of defendants prosecuted by the Serious Fraud Office and the City of London police has fallen by a fifth since 2011, despite an increase in tip-offs. Figures from June 2014 show that the number of leads reported to Action Fraud—a national crime reporting centre that is part of the City of London police force—had jumped 46% year on year. According to Pinsent Masons, the Serious Fraud Office received more than 2,000 reports of suspected white-collar crime from whistleblowers last year.

The clear disparity between the evidence of rising economic crime and rising tip-offs and the falling number of prosecutions highlights the fact that the mechanisms in place are not working. Current legislation is inadequate to prosecute economic crime. That point is acknowledged by the SFO’s director, David Green, who would support extending section 7 of the Bribery Act. The Government’s lack of political will to address this issue is acting against the public interest.

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Stephen Pound: My hon. Friend makes an important point when she talks about existing legislation but an absence of will. When deferred prosecution agreements were introduced, as part of the Crime and Courts Act 2013, we could have gone the way of the United States, which uses them with great skill and effectiveness, but for some reason not a single DPA has been signed off in this country. Does she agree that that is an example of where the legislation exists, but the will demonstrably does not?

Kate Osamor: That is a fantastic point, and I totally agree.

I end by urging the Government both to honour their manifesto pledge to tackle economic crime and to reassess their rejection of extending the Bribery Act to cover all kinds of economic crime.

10.4 am

Richard Arkless (Dumfries and Galloway) (SNP): It is a pleasure for me, too, to serve under your chairmanship, Mr Stringer. I thank the hon. Member for Ealing North (Stephen Pound) for introducing the debate. I also thank the hon. Members for Neath (Christina Rees), for Aberavon (Stephen Kinnock) and for Edmonton (Kate Osamor) for their thoughtful and insightful contributions.

The debate is predicated on the widely held public view that the bankers seem to have got away with it over the last five, six or seven years. Whether that is correct or not, it is certainly the widely held public perception. The urgings from the Opposition and the Conservatives’ manifesto pledge seemed to indicate that they were inclined to address that widely held view. I welcome that, and it is right that the issue is addressed. As we have heard from Opposition Members, corporate economic crime has increased over the last few years, and there is a question about whether both the means and the inclination and the will to tackle it exist.

I speak on behalf of the Scottish National party, of course, and section 7 of the Bribery Act applies only to England and Wales, not to Scotland. Most of the prosecutions that could be brought by the Serious Fraud Office or another entity relate to subjects—financial crime and financial regulation—that are reserved functions. However, Scotland has a long and well established criminal court system, which could bring charges for individual crimes to bear on individual directors, but as we have heard, those tools may not be up to the job. The SNP would be very interested, to say the least, in Government proposals on this point, but we recognise that there are difficulties. We, too, live in a jurisdiction where the prevalent public perception is that the bankers have got away with it. My constituents, like people across Scotland, are demanding that something be done.

I should declare a slight interest as a former practising lawyer, qualified on both sides of the border. Having come to this debate fairly recently, one difficulty I would point to is the difference between holding a company, as opposed to an individual, criminally liable. I am not saying that we could not get around that problem in law, but it strikes me, as a legally qualified person, that there are difficulties involved in bringing an entity into the realms of criminal liability. However, if the Government come up with proposals to get round that, I would certainly look at them.

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The message to the Government from the SNP and Scotland is that if they do consider giving Scotland more tools to address these reserved issues, they should carefully consider the provisions that already exist in Scots law and make sure that the principles of Scots law are not set aside. It is in that spirit of co-operation that I come to the debate, and I am very interested to hear what the Minister has to say. We welcome moves to tackle this issue, but we are cautious about how they can be achieved.

When it comes to how the bankers have apparently got away with it, the message I hear from my constituents and from people across Scotland is really about actions and consequences. Over the last five to eight years, many ordinary people have, they would argue, suffered enormous consequences as a result of the actions of others. The public’s view in Scotland—I suppose this is replicated across the rest of the UK—is that there are people in the financial services industry who are earning huge sums and have suffered no consequences as a result of their actions or the actions of the company they are employed by. On the face of it, that needs to be addressed. We in Scotland are very interested to hear what the Minister has to say about what seems to be a substantial tide of opinion. Of course, we recognise that there are difficulties, which need to be addressed in any proposals.

Stephen Pound: The hon. Gentleman brings a wealth of experience and knowledge to the matter, which is welcome. In the context of what he was saying about perceptions, is he aware that in the summer BIS consulted the business community about whether to water down Labour’s Bribery Act guidance to businesses? That surely sends completely the wrong signal to business. Does the hon. Gentleman agree that when there is consultation on whether even a measure as modest yet effective as the Bribery Act 2010 is potentially dilutable—if there is such a word—it sends an appalling signal?

Richard Arkless: Yes, wholeheartedly. The public perception is real and tangible, and in my view it is entirely based in fact. The Government’s reluctance to continue on the road, and the suggestion that the 2010 Act, which does not apply to Scotland, might even be watered down, sends entirely the wrong message. If we can convince the public that we are serious about the issue, the trust in financial services that has evaporated in the past five to 10 years can, I hope, be restored. The reason Parliament thought it right to bail out the banks was their intrinsic role in the economy, and that has not changed; however, the public need to have confidence in the financial services sector. For the time being, they do not have such confidence, and I will be interested to see what the Government will propose.

10.11 am

Catherine McKinnell (Newcastle upon Tyne North) (Lab): It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate my hon. Friend the Member for Ealing North (Stephen Pound) on securing this important debate on prosecuting corporate economic crime, and on his argument, which he put forward with his customary elegance. The debate is timely, in the light of recent announcements by Ministers. I congratulate

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all the hon. Members who have taken part in the debate, who made powerful contributions and set out strongly the arguments that the Government should listen to. Each of them made important points, to which I shall refer. I do not mean to diminish the Minister’s presence when I say that I am disappointed that neither of the Law Officers could attend the debate. I hope that is not a sign of Government obfuscation on these important issues.

Like my hon. Friend the Member for Aberavon (Stephen Kinnock), I am not here to bash bankers. The City of London is the world’s second-largest financial centre and a major contributor to the UK economy. Its success is clearly founded on the professionalism and integrity—for the most part—of those who work in the sector. That is why we cannot allow its reputation to be undermined by the actions of the minority who engage in fraud, corruption and market manipulation. Yet despite the events of 2007 and 2008, and all that has followed—parliamentary commissions, Select Committee inquiries and the setting up of new regulators—economic or white-collar crime remains a serious problem in the UK. We need only look at the horrifying spectre of LIBOR rate rigging to be reminded of why the Government cannot rest on their laurels in this matter; yet the ability of our law enforcement agencies and prosecutors to tackle such pernicious crimes remains limited.

As my hon. Friend the Member for Ealing North pointed out, the Government gave some promising signals. They announced the introduction of a senior managers regime to hold named executives to account for their actions, and they pledged to introduce a new corporate offence of failure to prevent economic crime. It is disappointing that that was not, as my hon. Friend pointed out, etched in stone, but it was in the manifesto for all to see. Both proposals were seen as vital to prevent the repetition of the failings of the past and bring the UK regime into the 21st century. However, in both cases, the Government have backtracked.

What do we know about the reasons for the Government’s change of heart about the corporate liability offence? According to a response to a written question to the Ministry of Justice,

“there is little evidence of corporate economic wrongdoing going unpunished”,

despite the fact that according to the Financial Conduct Authority banks have paid an estimated £1.8 billion in compensation for mis-selling financial products such as interest rate swaps and have already set aside an additional £27 billion to compensate for payment protection insurance mis-selling. That is not to mention the £4.4 billion lost each year to tax evasion, according to the latest estimates from Her Majesty’s Revenue and Customs, or the countless banks and financial institutions that are being investigated by the Serious Fraud Office for various types of misconduct, but have not yet been prosecuted. Why have the Government concluded that no action is required? I hope that the Minister can enlighten us.

Some recent disclosures are cause for concern. Last month, the Treasury published the national risk assessment, the first comprehensive assessment of the risks of money laundering and terrorist financing—both from within the UK and flowing through it. It is the first assessment of its kind and has been highly anticipated since the Government committed themselves to producing it, in

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their 2014 anti-corruption plan. The Government’s assessment of the risks posed by elements in the financial sector is clear:

“The size and complexity of the UK financial sector mean it is more exposed to criminality than financial sectors in many other countries, including abuse enabled by professional enablers in the legal and accountancy sector”.

Nevertheless, the report notes that the UK has “significant intelligence gaps” with respect to money laundering, despite what is judged to be a serious threat from, for example, the legal, banking and accountancy sectors. The conclusions are not encouraging:

“The UK’s response is well developed, but more needs to be done to ensure it is commensurate with our status as a well regulated global financial centre.”

The message is clear: far more needs to be done. I would therefore welcome reassurance from the Minister that something is being done. The aim must be to ensure that the appropriate measures are in place to deter behaviour that facilitates or contributes to the committing of economic crime. That would not only encourage good practice and the right corporate culture, but mean that wrongdoers were held accountable, which would be a deterrent. There is widespread concern that the UK’s current corporate liability regime is not up to the job. That is the view of the Law Commission and the OECD’s working group on bribery, both of which have produced seminal work on the subject. Both concluded that the current regime does not allow the UK to hold corporations and key persons within them to account effectively for their part in economic crimes.

In its extensive work on the UK’s corporate liability measures, the Law Commission described the present regime as

“an inappropriate and ineffective method of establishing criminal liability of corporations”.

It also noted the unfairness inherent in the identification doctrine, explained by my hon. Friend the Member for Ealing North, which makes it far easier to prosecute smaller companies, where the “directing mind” is more easily determined, than large corporations with much more diffuse chains of command.

Stephen Pound: My hon. Friend raises a point that has given me pause for thought. Does she agree that there is such a thing as a corporate culture in certain companies—I think that there is ample evidence of such behaviour—and that if, often, the culture is not in the interest of probity or the wider public, it is difficult to identify the person of whom an example should be made? If the culture is allowed to fester and permeate, inevitably it spreads. Does my hon. Friend agree that there is an issue of identifying an individual, pour encourager les autres at the very least?

Catherine McKinnell: My hon. Friend makes an important point that goes to the heart of the argument. My hon. Friend the Member for Aberavon argued cogently that, ultimately, we need a better way of establishing responsibility for the actions of a company and those who serve within it. It is not enough for those at the top to wash their hands of responsibility for the actions of the officers and employees who operate, act and work under the company’s name.

There needs to be much greater clarity about the legal framework. Many bodies, including the Law Commission, have called for that. What is even more key is that the

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Government seem to share that view. In a consultation undertaken in July 2015 on the introduction of a new corporate offence of failure to prevent tax evasion, the Government concluded:

“Under the existing law it can be extremely difficult to hold the corporations to account for the criminal actions of their agents”.

That observation has been made by the Government and Ministers on several occasions, as well as by my hon. Friends in their contributions today.

The Law Commission, the OECD working group and the director of the Serious Fraud Office point to section 7 of Labour’s Bribery Act as a potential solution. As my hon. Friend the Member for Ealing North set out in his speech, section 7 of the Bribery Act makes it an offence to fail to prevent bribery. It places the onus on companies to prove that they have put in place adequate procedures to prevent bribery and is widely seen as a far more effective way of holding companies and the individuals within them to account, which is why many want to see that model extended to other types of economic crime.

Stephen Kinnock: We have talked a lot about accountability and trust today, but another important word here is “risk”. We saw in the events leading up to 2008 and the collapse of Lehman Brothers a systemic failure to manage risk. It is in the interests of both Government and the private sector more broadly—the real economy and the financial services sector—to put systemic measures in place to manage risk in a way that ensures the appalling events in and following 2008 never happen again. Some regulation of the market is therefore, by definition, required as a risk management tool. Does my hon. Friend agree?

Catherine McKinnell: My hon. Friend makes an important point and anticipates my next point. First, I want to clarify exactly where the Government seem to be on this issue.

The Government’s recent announcement has caused much confusion among those who care about this issue, because it seems to be very much at odds with what they have been saying and the messages and signals they have been sending out. In his first speech as Attorney General over a year ago, the right hon. and learned Member for Kenilworth and Southam (Jeremy Wright) suggested that he was considering the section 7 proposal. We then discovered, in an answer to a written parliamentary question, that it had been dropped. We need clarity from the Minister today about exactly why that decision was made and what the Government will do to ensure that our concerns are addressed if they are not proceeding with that proposal.

The director of the Serious Fraud Office, David Green, has made clear his support for the expansion of section 7 of the Bribery Act. He has described how useful it would be to better facilitate the use of deferred prosecution agreements. My hon. Friend the Member for Neath (Christina Rees) set out eloquently how deferred prosecution agreements work and their potential importance in dealing with some of the issues that have been highlighted. It is no secret that the Serious Fraud Office director favours the use of DPAs, which are currently more widely used in the United States. To clarify, they provide for a corporation to avoid prosecution by entering into an agreement with a number of conditions attached,

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which may include paying a financial penalty, paying compensation or co-operating with future prosecutions of individuals. In doing so, they avoid prosecution. The aim is to hold key individuals to account, to secure significant financial penalties from companies that have committed wrongdoing and, ultimately, to prevent future wrongdoing by encouraging or mandating reforms within those companies.

Deferred prosecution agreements are not without their critics, but they have been widely used in the US for the past 20 years or so and brought in some $4.2 billion to the Department of Justice in 2014 alone. One key problem with importing the use of DPAs to the UK is that they are intended to be a carrot, while the stick is the prospect of prosecution for corporate economic offences.

Stephen Pound: My hon. Friend is giving us a masterclass, and it is greatly appreciated. I am sure that she, like me, felt her heart leap when the American authorities started to act against FIFA using their Foreign Corrupt Practices Act. Does she agree that we can learn much, for once, from the American example and the action they took against the appalling, utterly corrupt situation regarding FIFA? I am not remotely comparing any British business to FIFA—it would be hard to find anything outside the Augean stables or the seventh circle of hell that compared to that organisation. The Americans seem able to achieve things that we cannot. Is that because of the quality of the excellent US Attorney General and her staff, or should we be learning from the American legislation?

Catherine McKinnell: My hon. Friend makes an important point. We should not shy away from learning lessons from any jurisdiction that manages to control risk, as my hon. Friend the Member for Aberavon highlighted, and to hold companies to account where wrongdoing has occurred. Where there are lessons to be learned from the US, we should learn them and do what we can to implement them within our own system. We could then hold ourselves up as a beacon for other countries and hold our heads high as a well-regulated, world-leading financial centre. That has to be our aim in all of this.

As my hon. Friend the Member for Neath pointed out, without the fear of corporate economic crime being prosecuted, there is little incentive for companies to enter deferred prosecution agreements and no incentive for companies to co-operate with the SFO to change their practices as mandated under a DPA. Unlike in the US, which has far stronger vicarious liability laws, there are still far too few corporate prosecutions in the UK under the current identification principle. No matter how much we may wish to learn from the United States—if that is what we see as the right way forward—without a strengthened corporate liability regime, we will be hampered in our efforts to implement such changes.

Finally, I turn to another area that shows concerning signs of backtracking by the Government and in which we would otherwise have seen individuals in companies held accountable for their own and others’ actions. In its 2013 report on the banking sector and how to prevent the failings that led to the 2008 crash, the

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Parliamentary Commission on Banking Standards similarly recognised the difficulty in identifying individuals and holding them to account. One of its key recommendations was to introduce a senior managers regime to hold named executives personally responsible for key risks in the bank. That issue was raised by my hon. Friend the Member for Aberavon, who made a powerful speech about encouraging better and more responsible management within companies to change bad practice where it is found. The commission recommended that the regime place a burden of proof on those named executives, who would have to show the regulator that they had done all they reasonably could to prevent failings or misconduct if they were to avoid sanction.

Christina Rees: Does my hon. Friend agree that even though we have the legislation in place in section 7, there is no will to use it? That is the problem. There has not been a single prosecution.

Catherine McKinnell: My hon. Friend raises a concern relating to the Bribery Act, but there are two ways of looking at the Act’s implementation and the fact that no prosecutions have yet happened under it. There is evidence that it has already brought about significant changes in corporate culture and that the managers tasked with the responsibility of ensuring that they have taken all the steps they could reasonably be expected to have taken to prevent bribery in their organisations have taken those steps. Some positives can therefore certainly be derived from the situation, but I agree that a very close eye needs to be kept on prosecutions. I note that there are already murmurings from the Government about backtracking on the Bribery Act and trying to weaken that legislation, and we must stay vigilant about that.

On the senior managers regime, the commission recommended that the regime place a burden of proof on those named executives. The recommendation was accepted by the Government and enshrined in the Financial Services (Banking Reform) Act 2013. However, the Bank of England and Financial Services Bill, which is currently in the other place, is set to reverse that burden of proof, meaning that instead, the regulator—the Financial Conduct Authority—will be required to prove that senior managers have failed in their duty to prevent misconduct or prudential failings. The onus will be back on the regulator, and not on the named senior executives. Is that just more backtracking from the Government, who seem to be going soft on economic crime? I would be grateful if the Minister provided reassurance that that is not the case.

Ministers urgently need to look again at their approach to tackling economic crime, because without change, the prospect of ensuring that justice is served to those who have mis-sold financial products, evaded tax, laundered money and defrauded seems as remote as ever, and the risk of the scandals of recent years being repeated has far from disappeared.

Graham Stringer (in the Chair): I remind the Minister that although he has an unusually large amount of time in which to wind up, under the new procedure, there is time at the end for Stephen Pound, the proposer of the debate, to sum up.

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10.32 am

The Parliamentary Under-Secretary of State for Justice (Mr Dominic Raab): I am grateful for your advice, Mr Stringer, and it is a great pleasure to serve under your chairmanship. At the outset, I should say on behalf of the Solicitor General that he is caught up in the Immigration Bill Committee, and although I understand the chagrin about that of the shadow Justice Minister, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), my hon. and learned Friend is attending to important business there.

I pay tribute to the hon. Member for Ealing North (Stephen Pound) for securing the debate and for delivering a tenacious, eloquent speech in his usual fashion. He made some excellent points. I fear that he may have rather lost me at Arthur Scargill, even if other Opposition Members were rather more enthused, but none the less, he made some very important points. I also formally recognise the important contributions from the hon. Members for Neath (Christina Rees), for Aberavon (Stephen Kinnock), for Dumfries and Galloway (Richard Arkless), for Edmonton (Kate Osamor) and from the shadow Justice Minister.

I think that we all agree that the prosecution of corporate economic crime is vital and can be complex. We have heard about some of the challenges this morning and there are others, but there are opportunities, too, and we should be mindful of seizing them as best we can. One issue has been the identification principle, which applies in many instances of economic crime and sets a clear bar that must be met before a corporate can be found criminally liable. Technical challenges around the disclosure of material, for example, can also be very significant, not least given the huge volumes of material that need to be sifted and potentially disclosed in many of these cases.

Much has been made of section 7 of the Bribery Act, which makes it an offence for corporates to fail to prevent bribery in certain circumstances. As important as that provision and model is, I did rather feel that hon. Members have pinned a huge amount of confidence—I would not say blind faith—in a model and provision which has not yet secured any convictions, although I appreciate that it was authored under a previous Government. To be clear—I am not saying that the hon. Member for Neath was suggesting this—I do not think that anyone seriously blames the Government for failing to enforce that. Prosecutions in this country are rightly independent from Government interference and we want to see full use made of the measure. I just say—the hon. Member for Ealing North will perhaps want to address this point—that Opposition Members have pinned rather a lot on a measure that has not yet delivered a prosecution, much as we wish it will in the near future.

Stephen Pound: I entirely agree with the Minister’s point, but there has, in fact, been one self-referred case under section 7 of the Bribery Act. It took place in Scotland and I am not entirely sure how the jurisdiction applies, but it was a self-referred case using precisely that template.

Mr Raab: I am grateful for that intervention. I stand better informed than I was before, but obviously I cannot comment on individual prosecutions or cases until they are in a position to conclude.

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Much has been made of the Conservative manifesto commitment, rather caricaturing the nature of what was very clearly stated and ignoring the fact that we are specifically further considering legislation relating to tax evasion. As hon. Members will know, but this is an opportunity to remind them, the consultation on that closed on 8 October. I am sure that further announcements will be made in due course.

The shadow Justice Minister made some of her most powerful points on deferred prosecution agreements, which were introduced in the last Parliament and represent a significant opportunity for prosecutors to take action. I think that they rather refute the suggestion that this Government have been either lax or demonstrating inertia in trying to develop the tools we need to deliver convictions and accountability in this area.

It is also worth saying that, as a basic principle, we should try to exercise existing law enforcement powers to the full before we go back to Parliament and ask for more. I fear that it was rather the epitaph of the previous Labour Government to legislate hyperactively and leave the statute book littered with offences that were not really ever used in practice, so I make no apology for saying that we really ought to be crafting criminal legislation on the statute book that will deliver convictions in practice.

The hon. Member for Aberavon, who unfortunately is no longer in his place, made an interesting speech. He widened the debate to talk about systemic risk, which is an important point, and expressed some of the concerns about the 2007-08 financial crisis that are understandably still feeding calls for further action to be taken now. In that context, I highlight the action that has been taken on the banks by the coalition Government and this Conservative Government in relation to capital ratios, the bank levy and regulating to ensure proper separation between the investment and retail arms of banks. He was absolutely right to make that point, but the whole system of regulation on systemic risk looks fundamentally different today from when the Labour Government left office in 2010.

Going back to the identification principle, we have heard that the law on corporate and criminal liability has that very much at its heart. The identification principle means that a corporate is criminally liable only if a person who is its controlling mind and will is criminally liable. In most cases, there will be liability only if a director is criminally liable. Hon. Members made perfectly reasonable points about that and about the related difficulties and challenges. Many other assertions were made about the state of the current law, such as that the evidential threshold is too high and that it makes it easier to prosecute smaller businesses than larger corporates and particularly difficult to prosecute large and complex multinational corporations. Those are all valid points, rather inherent, though, in trying to regulate and enforce offences in this sector. We certainly do not want small businesses to be hammered while the big ones get off scot-free. That is absolutely the wrong approach and one that we are mindful of the need to avoid.

Other points made about the current state of the law are that it can result in corporates escaping prosecution where there is criminal wrongdoing on behalf of a corporate and the corporate benefits; it does not do enough to deter economic crime in the UK or to promote

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good corporate governance; and it puts UK prosecutors at a disadvantage compared with some law enforcement agencies overseas where the attribution of corporate criminal liability does not have such a high threshold. The hon. Member for Ealing North made the point about the United States very well. Some have called for a much broader vicarious liability for companies, closer to the US model.

I recognise the point that a different approach, combined with the DPAs introduced in 2013, could have a powerful impact. We need to consider the criminal legal basis along with the prosecutorial tools. That combination is the key to getting more convictions and plea bargains under the DPA arrangements. Notwithstanding the common desire for accountability and convictions, we need to take half a step back and acknowledge the need to be careful to guard the basic principles of justice that we all, at least notionally and rhetorically, hold dear—the presumption of innocence and the burden of proof—and ensure that we have a focused, targeted law enforcement system.

The Bribery Act 2010 contains the much-discussed new offence of failure to prevent bribery by a person associated with the company, which allows prosecutions of corporates for failure to prevent bribery in cases in which the identification principle threshold could not be reached. There have been suggestions for further change by extending the Bribery Act model to other areas. Under that legislation, a commercial organisation is guilty of an offence if a person associated with it bribes another person while intending either to obtain or retain business for the organisation, or to obtain or retain an advantage in the conduct of its business. The legislation sets out that it is a defence for the organisation to prove that it had in place adequate procedures designed to prevent people from undertaking such conduct. That is the balance struck.

The legislation relates specifically to bribery—a very serious economic crime—and is designed to encourage more responsible corporate behaviour. Extending section 7 as some have suggested could criminalise commercial organisations that fail to prevent other types of economic crime, including fraud and tax evasion; I am sure that hon. Members can think of other examples. Some people have urged the Government to go even further and advocated a more dramatic change, calling for legislation to create an offence of vicarious liability. That would be far more like the US model.

As I think was mentioned, the Government published last December the “UK Anti-Corruption Plan”, which included the commitment to consider the case for a new offence of a corporate failing to prevent economic crime. Much has been made of the statement made on 28 September by the Under-Secretary of State for Justice, my hon. Friend the Member for South West Bedfordshire (Andrew Selous), that we will not be carrying out further work on this specific point at least at this time. It is important to understand the reasons for that. Again, they have been rather caricatured, although not intentionally; I would not say that.

The reasons for not taking the work forward at this stage are as follows. First, the UK has corporate criminal liability and commercial organisations can be and are being prosecuted for wrongdoing. Secondly, as I have

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mentioned, there have been no prosecutions under the Bribery Act offence, so it is not as though we have a huge amount of concrete practice to learn from—in fairness, that point was also made by the hon. Member for Neath. Thirdly, as a result of that and the information and evidence that we get as we look at whether the case is made for new offences, there is little concrete and specific evidence of the wider corporate economic wrongdoing that we should now target that is currently not unlawful and could reasonably be caught by a proposed new offence. If hon. Members want to tell me about a specific area and tailored offence, I will be all ears.

Catherine McKinnell: It does not sound as though the Minister will go on to explain how he intends the Government to live up to their manifesto pledge. He indicated earlier that it was in relation to tax evasion only, but the Government did in their manifesto state:

“We are also making it a crime if companies fail to put in place measures to stop economic crime, such as tax evasion, in their organisations and making sure that the penalties are large enough to…deter.”

If the Minister explains how the Government will fulfil that manifesto pledge, that will give hon. Members reassurance today.

Mr Raab: I thank the shadow Minister for her intervention. She has not come up with a specific offence beyond tax evasion.

Catherine McKinnell rose

Mr Raab: I will not give way again at this point, but perhaps I will shortly.

The hon. Lady referred to the manifesto commitment, which specifically cites tax evasion. I will go on to say a little about that. I thought that one of the best points in her original speech was about the intelligence gap. That feeds the point that I have been making that we should not confuse the difficulties or challenges that we have in enforcing, which is what the intelligence gap is all about, with the breadth of the criminal base that we have on the statute books. That is a very important distinction, which she made rather well.

The bottom line is that there is no point in legislating for the sake of it. The hit and hope approach does not do any good; in fact, it feeds public mistrust. Frankly, we saw far too much of that under the Labour Government. I want to know that when we legislate we are putting in place a model, a criminal offence on the statute book, that will deliver prosecutions, convictions and the wider deterrent effect that we all want.

Richard Arkless: The Minister uses the vivid phrase “hit and hope” and has given three reasons why the Government will not pursue the position in their manifesto. I ask this very simple question: were those three reasons not prevalent before the manifesto was written?

Mr Raab: We are taking forward the manifesto commitment. We have an ongoing consultation on tax evasion and, if the hon. Gentleman bears with me, I will come on to it. The other point made in the manifesto commitment is about the need to punish and deter. That is not just about legislation; it is about the enforcement

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regime. Over the years, hon. Members have been far too willing just to nod legislation through without thinking properly about how it will be enforced in a targeted and effective way.

Having said all that, I can give examples of very good outcomes, including in the high-end serious and complex cases dealt with by the Serious Fraud Office, which emerge from within the existing legislation and even pre-Bribery Act in some instances. There are other outcomes aside from criminal prosecutions. Deferred prosecution agreements are a further and significant tool. Civil recovery orders are an option.

The SFO cases involving prosecution or substantial civil recovery orders for a corporate have included the cases of AMEC, BAE, Innospec and Macmillan. Fines and civil recovery orders for more than £40 million were issued in SFO cases between 2008 and 2012. Nearly £30 million was paid by BAE to the people of Tanzania, following a settlement with the SFO and the US Department of Justice. More recently, last year, the SFO completed the Innospec and Smith & Ouzman prosecutions, both of which resulted in the conviction of the corporate as well as senior officials in relation to foreign bribery. And the SFO had its first prosecutions under the Bribery Act—they were associated with a biofuel fraud—albeit not under section 7.

The director of the SFO has said that there are current cases that may prove suitable for prosecutions under section 7 of the Bribery Act. Hon. Members will appreciate that I cannot go into too much detail on things that are subject to either a pending prosecutorial decision or investigation. The Crown Prosecution Service and Her Majesty’s Revenue and Customs have had important successes, too, and some have also been very high-profile.

On tax avoidance, HMRC is responsible for policing the tax and excise laws. It has a range of tools and powers to secure compliance, including the power to conduct criminal investigations in appropriate cases in line with HMRC’s criminal investigation policy. Since 2010, HMRC has increased the number of criminal investigations leading to prosecution by 500%. That is a very clear example of where we have managed not only to have the legislation in place but to deliver a quantum leap in successful law enforcement. I am sure hon. Members from all parts of the House agree that that is what we should be aiming for.

Marketed tax evasion schemes have been one strand of priority work for HMRC during this period, and the CPS has brought a number of complex prosecutions against individuals. There are a number of high-profile examples, including Vantis and cases relating to the film industry. I have acknowledged the suggestions that have been made about extending the remit of section 7. Although Ministers have decided to halt that work for the time being, the criminal law is always monitored and if any clear and well evidenced difficulties come to light on which we can take targeted action, we will, of course, do so.

A proposed new offence of failing to prevent the facilitation of tax evasion, whether onshore or offshore, was the subject of public consultation by HMRC between July and October this year. The consultation closed on 8 October, and the Government are considering the responses. That clearly falls within the area of the manifesto commitment that Opposition Members have enjoyed citing. That work is ongoing.

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Deferred prosecution agreements, which became available on 24 February 2014, are one of the critical law enforcement tools that the Government have brought into being. To date, no DPAs have been concluded, but I am aware that a number of cases in the pipeline may yield DPAs. Under a DPA, a prosecutor charges a company with a criminal offence, but proceedings are automatically suspended. The regime has been designed carefully and we consulted on all its aspects. There are important safeguards in place, which is why we need to be a bit careful about the rather gung-ho suggestion that we should follow the American approach lock, stock and barrel. If we did so, concerns would be raised by Members on both sides of the House about the lack of safeguards in place.

Catherine McKinnell: I agree with the Minister that a gung-ho approach should never be taken to any of those matters, but does he acknowledge that significant concerns have been raised about the DPA tool not being as effective as it could be, while it remains so difficult to bring prosecutions against corporations, because the identification principle has set the bar for prosecution so high?

Mr Raab: The hon. Lady is absolutely right to say that the combination of the law enforcement tool—in this case, the DPA—and the criminal base will be the key to securing convictions. We will constantly look to fine tune and sharpen up that double act of legislation and law enforcement. If she has any suggestions about how that can be done in a sensible way, I will consider them. I am not sure that the extension of section 7 more broadly and exponentially will be the panacea that she is looking for, but if she can come up with specific, tailored and targeted areas in which that might be the case, I will consider them.

Catherine McKinnell: Will the Minister give way?

Mr Raab: I will give way shortly, but I want to make a little bit of progress, because I am mindful of your advice about timing, Mr Stringer. I want to talk briefly about the code of practice for DPAs that the director of the SFO and the DPP issued on 14 February 2014. That followed the consultation, and I am sure that the hon. Lady made her views known at the time. Prosecutors should have regard to the DPA code when they negotiate a DPA, when they apply to the court for approval of a DPA and when they oversee a DPA after it has been approved by the court. A DPA can be appropriate where the public interest would not be best served by entering into a prosecution. Entering into a DPA will be a transparent event, and the process will be supervised by a judge. That is important, because even if a DPA is in place, we want justice to be seen to be done as well as to be done.

I recognise that some organisations and others have raised concerns about the amount of information that will be available about DPAs as they are being negotiated. Letters of invitation to a company to enter into a DPA negotiation are confidential, for understandable reasons. The code of practice for prosecutors explicitly states that the letter of invitation to a company to enter into negotiations should make an undertaking in respect of confidentiality about the fact that DPA negotiations are taking place. Negotiations are, and need to be, confidential

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in the early stages to encourage co-operation on the part of the corporate. Any DPA that is agreed will be publicly announced, and that will provide transparency and accountability. As soon as a DPA is approved, the court must make a declaration to that effect, along with reasons, in open hearing. Unless it is prevented from doing so by an enactment or order of the court, the prosecutor will be expected to publish the DPA on its website.

I hope that hon. Members will agree that there is much to be positive about. Good results are being achieved in cases across the prosecuting authorities. We are giving active consideration to further changes where there is evidence that they are warranted, particularly in relation to tax evasion, but we remain open-minded if a case can be made broadly from a specific evidence base.

Outcomes other than prosecution should be acknowledged and welcomed. It may not always be in the public interest for a company to be prosecuted, and that is one of the considerations that led to the DPA regime. The director of the SFO, David Green CB QC, has said that he expects the first DPAs to conclude this year. I know that hon. Members will join me in looking forward to seeing the first successful outcomes. We are seeing a step change in the law enforcement model and the vigour with which it has been applied since 2010. The tax gap was reduced to record levels in 2014. The SFO’s asset recovery against serious criminals has been expanded; in 2014-15, 26.5 million financial orders were made. Since 2010, HMRC has increased the number of tax evasion criminal investigations leading to prosecution by 500%, as I have said, and we also have the DPAs. A huge amount of action is being taken. I am grateful for the contributions of hon. Members from across the House today.

10.56 am

Stephen Pound: Inevitably, this has been an interesting debate; it could not have been otherwise. I hope that the Minister will not consider me ungracious if I say that he has offered hon. Members thin gruel rather than a great Damascene conversion. To get the silly stuff out of the way first, I must just say that it was Peter Richardson playing Al Pacino playing Arthur Scargill, just as it was Dawn French playing Meryl Streep playing Mrs Scargill.

I think I know where the Government are coming from. On one hand, they are trying to create a thriving, vibrant business and economic sector, which continues to be as successful as it already is and becomes even more so. On the other hand, they do not want to over-legislate in any way that would restrict that sector. That goes back to what Adam Smith wrote about the

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actions of business people when they gather together. The 18th century has been characterised as oligarchy tempered by riot, which is the inevitable logic of a completely unregulated financial sector.

I say to the Minister that there is a real problem of perception. Everybody thought that the days written about in books such as Michael Lewis’s “Liar’s Poker”, which was written in the late ’80s about Salomon Brothers, “The Bonfire of the Vanities” and “Barbarians at the Gate” had gone. We thought that the macho, only-wimps-eat-lunch days of the City had gone. Particularly given the wise and thoughtful words of the Archbishop of Canterbury, Justin Welby, about his time as a City trader, many of us hoped that a different ethical standard was emerging from the City. Sadly, though, the evidence tends to suggest otherwise.

I entirely understand why any pro-business Government —to be honest, a Government that is not pro-business is not worthy of being called a Government—would want to provide succour and support to an incredibly successful sector, which is one of the most important in our economy. However, I gently say to the Minister that the public are not with him. They simply do not see it that way. They see an unregulated financial sector in which individuals go unpunished for wrongdoing. Individuals in the sector make vast, obscene, eye-watering amounts of money. Yes, the odd knighthood may be stripped away, but that is as nothing compared with the sort of punishment meted out to some poor woman who forgets to pay her TV licence and gets hauled up and banged in chokey. The problem of perception is that individuals in the financial sector seem to be getting away with it.

If only we could have an entirely ethical City, we would all be happy. We have not got one, however, so there has to be regulation. Should that be light touch and suggestive legislation in absentia of the sort that the Minister has referred to, or should it be the slightly more rigid and structured legislation that the country is ready for? When the Department for Business, Innovation and Skills tried to consult this summer on whether the Bribery Act should be watered down, it sent out a desperately wrong signal.

I do not count an enormous number of people in the City as my personal friends, but I know quite a few and I do not think that they want to exist in this wild west, free-booting, cowboy economy in which there are no rules and regulations, and anything goes. I think that they want the support of some sort of regulation, because it is good for image, good for business and good for the country. Ultimately, we have to have an ethical economic sector in this country. There is no alternative. I deeply regret that the Minister has not given us that pathway and that signpost.

Motion lapsed (Standing Order No. 10(6)).

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Sight Tests in Special Schools

11 am

Siobhain McDonagh (Mitcham and Morden) (Lab): I beg to move,

That this House has considered the provision of sight tests in special schools.

Every child has the right to a free NHS sight test. It is vital that all children have their sight assessed regularly and early on, as undetected problems can lead to deterioration or even permanent loss of vision. For a child with learning disabilities, it is an even more pressing issue. A relatively small number of students attend special schools, but they are the most in need when it comes to eye care. Those children also have a right to free eye tests, but often experience serious obstacles to getting the eye care they need. In fact, children with learning disabilities are 28 times more likely to have serious sight problems, and about half the children in special schools need glasses, but about 40% of children with learning disabilities have no history of sight tests. Many have to go to hospitals for specialist eye examinations, meaning more medical appointments and more time out of school. Those appointments are also more expensive than routine eye checks and, for those not under the care of a hospital, attending a high street optician can bring a whole new set of challenges.

In the very worst cases, children with learning difficulties who cannot access the eye care they need can eventually suffer from ultimately preventable sight loss. They are unable to make the most of their vision and are losing out, when a good pair of glasses could radically improve the quality of their lives. Therefore, I call on the Government, the NHS and the Department of Health to deliver eye examinations and dispense glasses to children in their special schools.

I draw the attention of hon. Members to the excellent work of the charity SeeAbility, which has worked extensively on this matter. The charity exists to support people with sight loss and multiple disabilities. Established in 1799 as the Royal School for the Blind, it now provides a range of services including residential care and supported living, and speech, language and rehabilitation services. Since 2005, it has run projects to address the health inequalities faced by adults and children with learning disabilities. Indeed, its “Children in Focus” campaign has attracted thousands of petition signatories and support from well-respected, professional bodies including the College of Optometrists, the Faculty of Public Health, and the National Association for Special Educational Needs. SeeAbility’s work is vital for so many reasons—most significantly because those children, who are most likely to suffer from the most serious sight problems, face the greatest challenge in accessing eye care.

Although the recommended guidelines for all children to be vision-screened at the school entry age of four to five need to be followed, the issue is significantly more pressing for children with special needs. When a child has a severe or profound disability, or multiple disabilities, they might not realise that they have a sight problem. They might not be able to tell a carer or a parent about it, or their sight problems might be overshadowed by other, more obvious needs. All of that means that parents, teachers, GPs and others might not realise that there is a problem.

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SeeAbility has piloted an excellent project to offer sight tests for children in six special schools in London. It has used its own charitable funds and specially trained optometrists and orthoptists to visit those schools, including Perseid school in my constituency of Mitcham and Morden, to test sight and dispense glasses. Children, parents and teachers are all seeing the benefit of that work. Perseid school is a community special educational needs school that is rated as “outstanding” by Ofsted. It offers an exceptional, supportive atmosphere for children aged three to 19 who have severe and complex learning difficulties, including learners with an additional diagnosis of autism, or physical or sensory disabilities.

SeeAbility went to Perseid school with its proposal in May 2013, after consulting the eye clinic at Epsom and St Helier NHS Trust. One of the aims was to pilot the provision of eye examinations in the school for those who the clinic felt it was not necessary to see in hospital. It was after I visited the project at Perseid lower school in September 2015 that I felt compelled to table this debate. The visit was eye-opening in so many ways. I discovered just how much eye health and vision information a skilled optometrist can get from a child who may not be able to respond verbally, or to read. It was a real education to see the techniques that Marek, the SeeAbility optometrist I met, used to judge whether a child needs a pair of glasses or whether their vision is in more serious need of treatment. He was absolutely fantastic with the children.

I also met a super little girl, named Ellie, and her mum, Alyson. In so many ways Ellie is just like any other nine-year-old girl. She is active and sociable, loves music and chocolate, and her favourite colour is pink. Ellie was one of the first appointments of the day. She cannot speak and relies on her eyes to communicate by using eye gaze technology. Because of her condition, she has been attending hospital eye clinic appointments to ensure her sight is regularly checked. Her vision is her primary means of communication, but it is vulnerable to deterioration, making check-ups absolutely crucial.

Ellie gets very stressed having to go to the hospital for her sight checks. Taking time out of the school routine, and having the pressure to arrange it alongside her many other medical appointments is a logistical nightmare. She also uses a wheelchair and is now tube-fed, which add to the practical barriers she faces to access the eye care she needs. I heard from Ellie’s mum, Alyson, who said that SeeAbility’s work at the school has removed all that stress, and she has the comfort of knowing that Ellie is getting good eye care in school. Ellie can get her eyes tested, and glasses dispensed and fitted at school by SeeAbility, in a much more familiar, comfortable and convenient environment.

After I met Ellie, a little boy who is autistic came in for his eye test. He is nine years old and suffered sight loss in one eye in early childhood. Despite very little co-operation from the boy—who spent most of the time walking around the room—Marek, the specialist optometrist, was able to assess that his one good eye was focusing well and that he did not need glasses.

It is clear that it would be very difficult indeed for a standard community optometrist to assess the sight of children with special needs, such as the children I saw. Community optometrists rarely see a child with profound disabilities and may not command the necessary experience and skills, or have access to the specialist equipment

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that is so important. Furthermore, a child may become distressed in an unfamiliar dark room with lots of lights and menacing-looking equipment. In stark contrast, SeeAbility’s regular visits to Perseid school provide the children with the safe environment they need to have their eye sight assessed. The team can introduce themselves and become familiar with children in the weeks preceding an appointment and during regular visits. Furthermore, a child can have parts of their sight test on different days, if necessary, in the event that they need more time to become familiar with the process. It is even possible, if a child is very anxious, to complete tests in the classroom or in a sensory room, where they often feel more comfortable.

Testing vision in the schools is not only more familiar and reassuring to the children. It also reveals so much to the teaching staff and parents about how the children see, which can really maximise the potential of children with special educational needs. The project is now well embedded in Perseid school and the visits fit in well with the school’s day. The school’s fabulous headteacher, Tina Harvey, said:

“It has been fantastic to work with SeeAbility and we fully support this initiative. Our pupils can’t necessarily tell us what they can or can’t see in the classroom and now we have that information. And parents aren’t having to worry about how to get their child to yet another medical appointment outside of school.”

As the Minister’s portfolio includes eye care, I sincerely hope that he accepts SeeAbility’s recent invitation to visit one of the special schools that it is working in and to discuss the detail of its proposals, as I have done. I assure him that such a visit would be a greatly inspiring experience.

The work at Perseid school strengthens the case for national reform of eye care for children with learning disabilities. Having provided 600 eye tests, SeeAbility’s pilot, with the help of Cardiff University’s school of optometry and vision sciences, provides the most comprehensive study of eyesight in children at special schools in England. The sight of vulnerable children is being failed again and again. The early vision screening programme should be available to all young children when they first start school, but present provision is subject to a postcode lottery.

Furthermore, suggesting the use of hospital examinations as an alternative for children with learning difficulties is not good enough. Hospital appointments mean more medical appointments, more potentially distressing locations and more expense for the NHS. For instance, the average reference cost of a paediatric ophthalmic appointment is £115, and SeeAbility has found that 75% of children who have been discharged from a hospital eye clinic have had no follow-up sight tests in the community, leaving those children lost to the system. The compromise is unacceptable. If children go without sight tests, the tragedy is that they can suffer unnecessary sight loss and live their lives with poor vision just for want of a decent pair of glasses.

Hon. Members may be surprised that the appropriate checks are not already happening in schools. A few health bodies fund local NHS services similar to the one provided by SeeAbility, but the vast majority do not, which means that appropriate care for such children is limited. I am sure the Minister will agree that it is not

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acceptable for those children, who are so much more likely to have serious sight problems, to be reaching their teenage years having never had a sight test or the opportunity to see clearly. We need a more preventive and beneficial method, and we need to commission a new national programme of eye examinations and direct dispensing of glasses for children and young people in special schools.

The Minister may highlight that it is for NHS England to decide its priorities on eye care commissioning. To their credit, NHS England officials have been engaged in SeeAbility’s work. However, the Department of Health plays a crucial role in shaping legislation and establishing a payment regime for sight tests. The Department does the latter under the general ophthalmic services—GOS—contract, but the associated contract fee rates for sight testing are compounding the inequalities in eye care that I have described, which does not sit well with the fact that addressing the health inequalities of people with learning disabilities is a shared priority for both the Government and NHS England. Indeed, it sits well within the Health Secretary’s legal remit.

In August 2015, SeeAbility was awarded a GOS contract to run NHS sight tests in the special schools in which it works, but the contract provides only a £21.31 payment per sight test. That is the amount paid for a routine test in a high street optician, but SeeAbility estimates the actual cost of its tests to be some £85, which means that the charity is having to fundraise to keep this important project going. The GOS contract provides only a quarter of the actual cost of delivering eye examinations for children with learning disabilities.

As I have described, the sight tests provided by SeeAbility and others are specially adapted to the needs of children with learning disabilities and require specialist expertise and equipment. Furthermore, skilled orthoptists who can assess unusual and uncommon abnormalities of eye movement, and specialist dispensing opticians who are experienced in fitting glasses for children with special facial characteristics, are often needed. Can we truly accept such an inadequate fee that represents only a quarter of the overall cost of providing such adapted tests? The overall costs include the cost of what is often a longer, specially adapted test and any repeat visits to a child in a special school.

The current status quo ill-advisedly applies a one-size-fits-all approach to a complex issue. The needs of children with learning disabilities are varied and often unique, and such children need eye care provision that reflects that. We all know there are funding pressures on our health and social care systems, but the eyesight of children with learning difficulties is not a sacrifice that should be made.

In a few instances, there is already some recognition that those adjusted and specialist sight tests need proper funding. That extra, local support sometimes comes from local commissioners paying optometrists an additional £60 towards supporting someone with a learning disability to get a sight test. Although that is a good step forward, it occurs in only a handful of areas. Furthermore, the Department of Health has set enhanced fee rates for disabled adults to receive a sight test at home if they cannot leave the house unaccompanied. Clearly, some officials already recognise that specially adapted tests cost more. I sincerely hope that the Minister will

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acknowledge that his Department has set an NHS payment of £21.31 that does not cover the cost of those tests.

I hope the Minister will agree to open a consultation, as is happening in Wales, on how to cover the shortfall between GOS contract payments and the cost of providing such a specialist service. The provision of a reliable long-term alternative is essential. The relatively small number of children in special schools should mean that a fully funded NHS programme to address their needs is wholly realistic. Indeed, the quality of vision, and quality of life, of those 100,000 children should not be left to a postcode lottery in our 209 clinical commissioning groups.

Children with learning disabilities need a one-stop shop for the input of optometrists, orthoptists and dispensing opticians, as needed, with glasses provided on site, breakages repaired quickly and good links to hospital eye clinics if necessary. In turn, a fully comprehensive and tailored system would help to reduce NHS costs from unnecessary hospital visits. The programme should also be wholeheartedly supported by the Department for Education, which purports to help children with special needs to achieve their full potential. Let us be clear that the target will not be met if children are not provided with the best possible eye care.

SeeAbility and I eagerly await the Minister’s indication of support for a nationally funded programme of sight tests in special schools and a commitment to meet us to discuss those plans further. I urge all hon. Members to consider signing early-day motion 629, which supports the provision of such sight tests. The eyesight of children with special needs has been let down for too long. We look forward to this vital issue being treated with the seriousness it truly deserves.

11.17 am

The Minister for Community and Social Care (Alistair Burt): It is a pleasure to serve under your chairmanship, Mr Stringer. I thank the hon. Member for Mitcham and Morden (Siobhain McDonagh) not only for securing this debate but for the usual thorough and highly competent way in which she has presented her case, which was full of facts, information and understanding, and informed in particular by her visits. It will be slightly easier to respond to one or two of her requests than to others, but I will come to that in my remarks.

Before anything else, I acknowledge what everyone recognises, which is that, although all our senses are precious, sight is probably the one that we value most. Sight is the key way in which children learn about the world. Ultimately, as the hon. Lady said, undetected sight problems can lead to a reduced quality of life and unnecessary damage to the eyes, which we all wish to prevent. The risk is that the vision of children with learning disabilities can be overlooked and assumed to be just part of their overall condition and behaviour. There is no doubt about the background to the campaign she mentioned.

We all share the desire that all children should be able to access sight tests, especially that group of children for whom we know that visual impairment is much more possible. There are more than 100,000 pupils in special schools in England. New arrangements have been introduced for children and young people with special educational needs or disabilities to develop more integrated

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approaches to meeting need. There is rather more variability than the hon. Lady suggests, and that variability is necessary to cope with the different conditions we are talking about.

A new framework was introduced in September 2014 that will see commissioners and local authorities working together to agree arrangements for meeting the needs of children with special educational needs. That includes publishing a local offer of services and ensuring that health and education professionals undertake a co-ordinated assessment of a child or young person’s needs that will inform an education, health and care plan. The plan has to consider the aims and aspirations of the young person and focus on the outcomes that will have the biggest impact. It has to include the needs of a child or young person with a visual impairment. That approach has tremendous potential for stimulating much more joined-up approaches in local care settings; meeting children’s needs; and helping health commissioners and local authorities to understand jointly how population needs can be supported by more flexible delivery methods.

The hon. Lady spoke about a postcode lottery, which is the term commonly used when anything that is provided in one area is not provided in another. I am slightly hesitant about using that term, because it suggests that nothing can be done and implies that it is an accident of fate, when in fact it is not. The difference in provision in different areas often depends on the ability of the leadership and management in an area to recognise a problem and the local determination to make a change. We get change around the country when somebody takes a lead and does things differently, often because they have been stimulated by changes at a national level and have taken the opportunity to do something differently. I recognise that, at its worst, the term “postcode lottery” implies that people get less of a service in one place than another. However, we lever up standards by pointing to what is done best. If we did not allow for some variation, we would not be able to learn. I take the hon. Lady’s point, but SeeAbility’s work in London demonstrates what can be done and shows others the way forward.

David Mowat (Warrington South) (Con): The Minister is right that the term “postcode lottery” can be pejorative. We need centres of excellence that can be spread out more widely. Warrington hospital is well-funded in that regard, and it considers itself a centre of excellence, at least in Cheshire. For that spreading out to happen more quickly, we need a national programme or some kind of national impetus, which is where the Minister might come in.

Alistair Burt: I am delighted to recognise the centre of excellence about which my hon. Friend speaks so powerfully. I will talk about the national side when I get to the conclusion of my remarks. I will illustrate how we are moving forward and what we are doing, which will address some of the concerns raised by the hon. Member for Mitcham and Morden and my hon. Friend.

Let me turn to the issue of children with learning disabilities and problems with vision. It is widely recognised that children with learning disabilities have a greater risk of a wide range of eye problems, including refractive errors that require correction with glasses, squints, cataracts and glaucoma. All children under 16 and those between 16 and 18 in full-time education, including children

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with learning disabilities, are entitled to free NHS-funded sight tests. Sight tests are an extremely valuable heath check of the eye that can pick up a need for glasses and early signs of eye conditions, many of which can be treated if they are found early enough.

As the hon. Lady said, NHS England is responsible for commissioning the NHS sight testing service. I will come on to the work that NHS England is doing with SeeAbility in a moment. The hon. Lady said that she is concerned that an optical practice is not necessarily the best environment for undertaking a sight test on a child with learning disabilities. I agree, which is why we want greater use to be made of different ways of providing sight tests for children with learning disabilities. The NHS can contract with providers for mobile, funded sight tests for children, which can take place at special schools. We appreciate that that provides a familiar environment for the test, as the hon. Lady said, which best serves the child. Any provider can apply for a contract with NHS England to provide those services, provided they meet the conditions for holding a general ophthalmic services contract. I will come on to the point about payments in a moment.

However, I am aware that, even with current provision, the concern remains that children with learning disabilities may find it more difficult than other children to access services. SeeAbility has been doing valuable work in that area to develop evidence and promote awareness of the specific needs of children with learning disabilities. I am pleased to accept the invitation to meet SeeAbility and visit one of the schools in which such work has been going on. It will not be my first visit. I visited it when it was the Royal School for the Blind when I was Minister with responsibility for disabled people 20 years ago, and it will be nice to renew the acquaintance.

I am also aware of SeeAbility’s “Children in Focus” campaign, which seeks a nationally commissioned service to provide sight tests and glasses for that important group of people in special schools. In addition, I understand that SeeAbility has recently been awarded a contract by NHS England to provide eye care services at a number of special schools in London.

Reducing health inequalities is a key part of the five-year forward view and NHS England’s 2015-16 business plan. In that context, I know that NHS England recognises a growing body of evidence that suggests that access to sight tests and glasses is an issue for some children and that regular eye tests and the wearing of appropriate glasses make a vital contribution to those children’s health, educational progress and general quality of life.

As the hon. Lady said, NHS England has been in dialogue with SeeAbility about sight test provision for those pupils, and it has met Dr David Geddes, the head of primary care commissioning. I welcome the engagement between the NHS and patient groups. As I said, SeeAbility has recently been awarded a contract by NHS England to provide eye care services at a number of special schools in London. NHS England is keen to see how that work is going, so that it can consider what can be built on it and see whether the model of care that is

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right for that cohort of parents can be rolled out elsewhere. Some good early work has been done, but it is early days. It is appropriate that NHS England carries out some longer term work with SeeAbility to assess how that contract is working and see what can be done. Although we would all like to see rapid progress, it is early in the contractual relationship, and NHS England needs to develop the evidence base further.

The hon. Lady rightly spoke about fees. SeeAbility has pointed to a structure that is considerably higher than the current fee of £21.31 per test. We all recognise that the current financial stresses in the NHS mean that a robust case has to be built before further funding is committed. NHS England is happy to work with SeeAbility to understand better what financial model best contributes to those patients’ needs. Its view is that SeeAbility has done some very good early work, but it is only two months into the contractual relationship. We therefore need to take a little longer to find out what is actually happening and what more can be done. NHS England expects to have concluded that work by next spring, and it will be in a position to consider the need for changing the current arrangements and possible service developments.

I hope that gives the hon. Lady a sense of where this is going. First, we all recognise the scale of the problem. Secondly, because there is now more variability in the NHS’s ability to meet this need, some things are being tried out to see how they work—particularly through the contract with SeeAbility. I am keen to see how it works in practice, which is why I am happy to accept the invitation to see some of the work it is doing in schools. I will work with NHS England on how it is assessing the work and on the next steps.

In closing, I reiterate that I recognise the importance of properly considering the needs of children with learning disabilities in service planning. If children are to be given the best chance in life, it is important that any vision problems that could affect or impair their development are identified and addressed. I am pleased that NHS England is closely looking at this issue and is already in discussion with SeeAbility. I look forward to hearing about the outcomes of NHS England’s work in this area and its proposed way forward.

The early day motion that the hon. Lady mentioned states that, as a start, it

“encourages the Government and the NHS to work together to create a comprehensive national programme and a properly-funded system to make sight tests available in all special schools in England”.

In the spirit of encouraging the Government and NHS England to work together to see what can be done, the hon. Lady can be sure that that is indeed happening.

I look forward to meeting SeeAbility and NHS England to pursue this matter further. I am sure the House will have a further opportunity to discuss it in the future. Once again, I thank the hon. Lady for securing the debate and conducting it in her normal thorough and effective manner.

Question put and agreed to.

11.29 am

Sitting suspended.

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Police and Fire Shared Services

[Mark Pritchard in the Chair]

2.30 pm

Amanda Milling (Cannock Chase) (Con): I beg to move,

That this House has considered the issue of police and fire shared services.

It is a real pleasure to serve under your chairmanship, Mr Pritchard. I thank the Minister and fellow Members for their time. I am grateful for this opportunity to raise the issue of shared police and fire services. The integration of blue-light and amber-light services is a topic that many hon. Friends and colleagues have raised over the past few years, for good reason. This afternoon I will focus on police and fire. I welcome the Government’s recent consultation on enabling closer working between emergency services, which closed last month. The consultation demonstrates the Government’s commitment to the concept of greater collaboration between blue-light services, as set out in the Conservative manifesto.

Before I discuss the matter in detail, I would like to express my sincere gratitude to all the blue-light services for the work that they do. Each makes a vital contribution by serving and protecting our communities and ensuring that we are safe and secure, often in the most difficult circumstances. Their members put their lives on the line for others. We were starkly reminded of the dangers of policing only recently with the tragic death of PC Dave Phillips, who was hit by a stolen car while on duty. I take this opportunity to offer my sincere condolences to his family. We cannot overestimate the sacrifices made by the blue-light services, and I place on record my thanks.

Why did I apply for this debate? Earlier this year, Staffordshire fire and rescue service conducted a consultation on the future of fire services across the county that considered several options for changes to the services’ operations, resources and activities. The purpose of the changes was twofold: to help make our communities safer and to deliver efficiencies and savings. Before a meeting with the fire authority in July, fellow Staffordshire MPs and I called on the authority to consider an alternative option to those already tabled. The alternative was to investigate the feasibility of a single integrated police and fire service. In our view, a fully integrated service would provide a more viable and cost-effective means of creating a long-term sustainable future for both services in Staffordshire and, all-importantly, of protecting the public’s safety.

Despite all our efforts, regrettably, that option was not pursued. The options progressed involved cuts to front-line services. In my constituency, fire engines have been removed from both Cannock and Rugeley fire stations, and other stations across Staffordshire have been similarly affected. Although I appreciate and welcome the fact that given prevention, protection and response activity, the number of accidents has fallen across Staffordshire—reflecting the national picture—I do not believe that front-line services should be cut ahead of a complete review of governance, leadership, estate and back-office functions.

Mr Jim Cunningham (Coventry South) (Lab): I agree that nothing should happen until the review is completed, but that said, I am sure that the hon. Lady is aware that

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certainly in the west midlands, fire and police service wages have been frozen at 1%, the value of pensions has been reduced and many redundancies have been made, as well as the fire station closures that she mentioned.

Amanda Milling: What I want to discuss in this debate is what we can do to ensure that we consider where savings should be made, to ensure that front-line services are protected and that jobs are supported.

Christopher Pincher (Tamworth) (Con): I congratulate my hon. Friend on securing this important debate. As a fellow Member of Parliament from Staffordshire, does she agree that given that Staffordshire police field some 2,000 calls a day while the fire service fields only 40, integrating back-office services could allow savings to be ploughed into the frontline? That is why the proposal is supported by many police officers who see that money going into their jobs and future.

Amanda Milling: I thank my fellow Staffordshire MP for that intervention. I totally agree, and I will come to the point about considering where savings can be made so that we can push resources into the frontline.

Rebecca Pow (Taunton Deane) (Con): I congratulate my hon. Friend enormously on securing this debate. Many of us have been discussing these issues with our police and crime commissioners, police forces and fire services. I certainly have been doing so in Somerset with my MP hat on. I would like to widen it even more. Avon and Somerset police already have a loose arrangement with Wiltshire, but there is certainly interest in sharing back-office IT and admin, which would allow our police officers to stay on the street doing their jobs.

Equally, I recently had a very successful meeting with Somerset fire and rescue service. I urge that we bring the ambulance service into the picture, because it is something of a model case, with the biggest fire service outside London. [Interruption.] Oh my goodness, that is my phone going off. I apologise, Mr Pritchard.

Mark Pritchard (in the Chair): Order. Interventions need to be short so that other colleagues and Members can speak later.

Rebecca Pow: Thank you, Mr Pritchard. The Somerset service is working so well that it has the largest number of retained firemen, who work closely with the ambulance service. It is working exceedingly well and saving a lot of money.

Mark Pritchard (in the Chair): I ask Members to check that their phones are on silent or mute.

Amanda Milling: I thank my hon. Friend for that point. There are a number of examples around the country of services that are collaborating. It is not just police and fire; it is fire and ambulance, police and ambulance and all three of the blue-light services. I will come to those points in a little more detail.

On collaboration, I am not alone in posing the question that my hon. Friend asked in her intervention. The concept of greater collaboration between the blue-light services, particularly police and fire, has been the subject of debate for some time, well before I was elected to this

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place. I read with interest the Knight report, published in May 2013. A number of its key findings relate to this discussion.

As I have said, the number of incidents has decreased by more than 40% in the past decade, while at the time when the report was published, expenditure and firefighting numbers had stayed broadly the same. That suggests scope for reform and efficiencies to better match risk and response. The report also found evidence of a disparity in the amount of money spent per person per year across the different fire authorities, with little to explain those differences and a limited relationship between expenditure and outcomes. There was clear widespread duplication among fire and rescue authorities across England: each had its own management structure, leaders and operational differences.

Jim Shannon (Strangford) (DUP): One thing that we intend to do in Northern Ireland, although we have not yet delivered on it, is to bring together police and fire training in one place, which will save on training across Northern Ireland. The Minister might be aware of this. Does the hon. Lady feel that it might be a way to save more money if we had regional training places for the police and fire service together?

Amanda Milling: I thank the hon. Gentleman for his intervention, and I agree that that is another area where there is the opportunity for further collaboration by bringing police and fire training together.

Kevin Foster (Torbay) (Con): I thank my hon. Friend for giving way. Does she agree that it is better when solutions and mergers come from the ground up, as was the case for example, when Devon and Somerset fire services merged, when the West Midlands and Staffordshire fire services agreed to share a control room, and when Devon and Cornwall police work together with Dorset police? All those examples were better than what we saw with the regional fire control projects, where top-down direction went totally wrong.

Amanda Milling: I thank my hon. Friend for his intervention, and he makes the valid point that there are many incredibly good examples of such collaboration across the country. Indeed, when I put pen to paper for this debate, I was able to write down several such examples, although I will not repeat them this afternoon; I have saved people from that. Nevertheless, as I say, there are many good examples out there.

Although there is evidence of progress in terms of fire services’ collaboration, co-responding and co-location with other blue light services, the Knight report highlighted that such collaboration was actually quite patchy, even though it could create real savings when it did happen. It gave some really good examples of collaboration, which were quite wide-ranging in nature, including the co-location of stations and headquarters, shared training, joint communication centres, joint operations and joint fleets. Those examples demonstrate that a clear appetite for collaboration, where there is the will to do it.

Sir Oliver Heald (North East Hertfordshire) (Con): Does my hon. Friend agree that in a county such as Hertfordshire, where there is a shortage of staff for the ambulance service and it is difficult to recruit them, it

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would be a good idea if firemen who already have some medical skills could be trained up to paramedic status and possibly deployed—by agreement—in accident situations or when required?

Amanda Milling: I thank my hon. and learned Friend for his intervention. He makes the very good point that where people have such skills, it is right that when they respond to situations they should use them, although we may have to be quite careful with that approach in the future.

As I said, the Knight report identified that collaboration was not universal; in fact, it was quite patchy across the country. It is for that reason that I welcome the Government’s commitment to greater collaboration, which was set out in the Conservative manifesto as a commitment

“to enable fire and police services to work more closely together”.

In September, a joint consultation was launched by the Home Secretary, the Secretary of State for Communities and Local Government and the Health Secretary, which invited views on proposals to improve joint working between services. I welcome those proposals, as I believe that legislating for greater collaboration will go some way to seeing more areas adopting shared initiatives, providing positive outcomes for the public, in terms of both their safety and their pockets. I will make a few points about this joint consultation, because my view is that the proposed moves should be the first step towards a more formal, mandatory integration, by which I mean the creation of police and fire commissioners.

Although I appreciate that it might be unrealistic and too complex to integrate the two services ahead of the police and crime commissioner elections in May 2016, the moves proposed in the consultation should provide the road map to achieving combined police and fire commissioners. This hybrid role could be created in the next term of the PCC, with full police and fire commissioner elections taking place in 2020.

I have been disappointed to read some press reports that cite some resistance to the proposals, the implication being that the police are taking over the fire service. Before I go any further, it is worth noting that I am by no means suggesting that the police go out and fight fires while firefighters go out and arrest criminals.

Nic Dakin (Scunthorpe) (Lab): I thank the hon. Lady for giving way and I congratulate her on securing this important debate. She is right to insist on the specificity—the different roles—of the police and fire services. One of the issues that is of concern in my community is that any changes do not lead to the loss of those different roles in the community, because both are very important.

Amanda Milling: The hon. Gentleman makes the very important point that the police and fire services perform different roles, but I will go on to discuss why there should be some integration and sharing of roles in the services that are not necessarily specialist.

Kevin Foster: I thank my hon. Friend for giving way to me again and for being so generous with her time. I have heard her comments about integration, with PCCs becoming police and fire commissioners. How would she deal with an area such as Torbay, where the PCC covers Devon and Cornwall while the fire service covers Devon and Somerset?

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Amanda Milling: My hon. Friend makes a good point and that is an example of some of the complexities in the landscapes covered by fire authorities and PCCs, which is why I am realistic about the fact that this process will take time.

I simply suggest that all common aspects—such as buildings, fleets, resources, and back-office functions—are integrated, so that resources can be better utilised on the frontline. As I see it, integration is a bit like running a business. There is a managing director or chief executive, who has the overall responsibility. Then there are functional heads; in this context, there is one for police and one for fire. Each of these functional heads has responsibility for their own budgets, but staff and resources are shared, not duplicated. Practically speaking, this cuts out waste and means that more funding can be protected for the frontline. It also means that operational excellence and specialism are retained, and can flourish.

There is a difference between integration and collaboration. In my view, integration is about the pooling of relevant functions, with an emphasis on the back office, while collaboration emphasises the frontline, where teams work together when they respond to incidents. I have read many interesting speeches and reports from hon. Friends who spoke about front-line collaboration in the last Parliament. It is that collaboration that is essential to the delivery and enhancement of public safety.

As I have said, I welcome the Government’s proposals, as set out in the consultation, although I would like to pick up on a few points, because—put simply—we should be moving from voluntary collaboration and integration to mandatory collaboration and integration.

The consultation proposes

“encouraging collaboration by introducing a new statutory duty on all three emergency services to look at opportunities to work with one another better to improve efficiency and effectiveness.”

However, I am concerned that “encouraging” such collaboration might not go far enough. After all, one of the issues that we have faced so far is that collaboration is far from universal. There is a danger that this voluntary integration will be inconsistently applied, and what will the statutory duty do to ensure consistent levels of consideration? Even the simplest things, such as the back-office staff, offices, human relations, payroll and even the stationery orders, are clearly areas where integration is just common sense.

Mr Jim Cunningham: I thank the hon. Lady for giving way to me again, and I also thank her for securing this Adjournment debate today; I should have thanked her earlier. Does she not think that mandatory collaboration could ultimately lead to a one-service situation, where the police and fire services are actually amalgamated under one management, which would lead to an elected part of an elected mayor process?

Amanda Milling: I thank the hon. Gentleman for his intervention and I will go on to discuss the points about leadership. There must be leadership, but it must be provided in such a way as to recognise the difference between the two services, especially on the frontline.

I welcome the proposal in the consultation to enable

“police and crime commissioners to take on the duties and responsibilities of fire and rescue authorities, where a local case is made”.

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I am concerned that a voluntary opt-in process adds to the complexity. I believe that it should be mandatory, although I accept that getting to that point might take time, given the complexities and details I referred to earlier.

I cannot understand why the integration of administrative and back-office functions would differ from location to location. Why would a local case need to be made? The aim, as I see it, is to streamline the common functions so that resources can be targeted at the frontline. When the bodies involved are responsible for public safety, variations in service risk lives and can make more people vulnerable to harm. We simply cannot have a postcode lottery on safety.

The proposal involving abolishing

“the London Fire and Emergency Planning Authority and giving the Mayor of London direct responsibility for the fire and rescue service in London, as will be the case for the new Mayor of Greater Manchester”

sets a precedent that the Government believe that one person is capable of being responsible and accountable for both police and fire. The Mayor of London is responsible for everything from transport to tourism, including policing and now, potentially, fire. Given that that portfolio is so broad, I cannot see why there would be barriers to rolling out a combined role throughout the country, to police and fire commissioners. It is absolutely the right time, now that the devolution agenda is being debated, to plan for the medium-term future of police and fire leadership.

Accountability is also important. Those making decisions where local taxation is concerned are all, but for fire, elected representatives, accountable to the public. The council’s share of the council tax bill, and any changes to it, is subject to decisions made by elected representatives—so too, with the police, since the introduction of police and crime commissioners. It is not, however, the case with fire and rescue services under the fire authorities. It is time for change. There should be no taxation without representation. Although some may argue that the fire authority is made up of appointed people, who in another guise are elected, that representation should not be confused with democratic accountability. The devolution agenda is increasing the question of accountability to the public and is another reason why it is time for reform of fire authorities and a move to police and fire commissioners.

Mr David Anderson (Blaydon) (Lab): The hon. Lady said that the fire authority was appointed; I suggest that the fire authority are people elected in their own constituencies and boroughs. If we take that analogy to its conclusion, surely we would have to elect the Minister. He was appointed by people elected to this House and the people from my constituency and hers cannot get rid of him. If that should apply to a police commissioner it should also apply to the Minister, although he is doing a good job—[Interruption.]

Amanda Milling: I am sure the Minister would be pleased to hear that. My point is that in local government all local taxation ultimately sits under the responsibility of elected representatives, whether it be councillors or police and crime commissioners.

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In conclusion, the Government want to see greater collaboration. I recently posed a question to the Home Office, and the Minister answered:

“It is common sense to break down silos and get the emergency services working together to secure more money for the front line.”—[Official Report, 12 October 2015; Vol. 600, c. 5.]

Edward Argar (Charnwood) (Con): My hon. Friend is typically generous in giving way as she concludes, and typically forceful in putting the interests of her constituents first. Does she agree that collaboration and the sharing of services amounts not to amalgamation but to an opportunity to improve services, save money and help protect the front-line services on which my constituents—all our constituents—rely?

Amanda Milling: My hon. Friend makes a good point. He succinctly summarises the benefits of sharing and integrating services, and of collaboration.

Chris Davies (Brecon and Radnorshire) (Con): I thank my hon. Friend for introducing the debate. I agree with all her wise words, but one of the greatest difficulties we face is public perception. When the public sees services amalgamating, buildings closing and a police station based in a fire station, they see a loss—they do not see the gain. Our job as MPs, and that of police and crime commissioners and others, is to deal with that perception and put a good case over, which says that they are gaining rather than losing.

Amanda Milling: My hon. Friend makes an important point. In Staffordshire, I had to face the public when fire engines were being removed from fire stations. There is a point in having the frontline. It is all about ensuring that we protect the frontline and enhance its services so that our communities are, and feel, safer and safer.

I was talking about the Minister’s response to a recent question. The Home Secretary supports the idea of greater collaboration—as does the Prime Minister. On 11 September, the Prime Minister outlined, in his “vision for a smarter state” speech, his support for collaboration, and he gave Hampshire as an example of where emergency services have brought functions together to save millions of pounds a year. In Staffordshire, there has been resistance to greater sharing, collaboration and integration, but I wholeheartedly welcome the Government’s proposals. All the evidence suggests that reform is required and this is an opportunity to create police and fire commissioners.

The proposals set out in the Government consultation could provide a platform and a road map for creating such commissioners over the next few years, ahead of full elections for them in 2020. I simply ask the Minister to consider, as part of his work in the cross-ministerial working group, to consider the mandatory introduction of police and fire commissioners by 2020.

2.56 pm

Ian Lavery (Wansbeck) (Lab): As ever, it is a pleasure to serve under your chairmanship, Mr Pritchard.

I congratulate the hon. Member for Cannock Chase (Amanda Milling) on bringing this debate on an extremely topical and important issue to the House. We might

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have some disagreements about it, but perhaps we will have agreements as well. I have to say at the outset that I do not share the view that taking fire engines away from a fire station means that people feel safer, as one speaker said. Quite often, taking fire engines away and dropping pumps off at local fire stations does not make people feel safer.

Jake Berry (Rossendale and Darwen) (Con): I certainly share the view that taking fire appliances or engines away from fire stations does not make anyone feel safer, but does the hon. Gentleman share my view that the people who are expecting firefighters to turn up on the frontline are probably pretty relaxed about who does the human resources for the fire service and whether that function is shared with the police force? It would not make them feel any safer, or any less safe, if HR were shared between the fire, the police and the ambulance services.

Ian Lavery: The hon. Gentleman makes a viable point, which can and should be discussed if we want a top-class blue-light service, whether it be the ambulance service, the fire service or the police service. That can, and will be I am sure, the topic of much discussion in the future.

The Minister for Policing, Crime and Criminal Justice (Mike Penning): It is unusual for me to intervene, but there are four emergency services in this country. We must not forget Her Majesty’s Coastguard. It would be inappropriate for me, as a former Shipping Minister, not to raise that point.

Ian Lavery: I thank the Minister. There is actually a fifth emergency service—the Mines Rescue Service.

Mike Penning: We could carry on.

Ian Lavery: Of course we can. The only problem is that we have only one mine left—but anyway, I am sure we will discuss that. The coastguard is an important service as well.

The issue that has been brought to the House is the greater collaboration and work between the police and the fire service. I think we all agree that we want a top-class service, across all four blue-light services. We want to have the best possible and the safest service we can have—top class, with the best technology and everything that the communities that we represent need. The real cause for concern is that this is not just about having a top-class service or enhancing the blue-light services; it is being approached as a cost-cutting exercise. That is what the general public are concerned about.

Since 2010, there has been a huge reduction in the police service and the fire service and we cannot get enough people in the ambulance service. People are rightly concerned about the cuts in the services, whether front-line or back-office staff.

Sir Oliver Heald: Suppose that the fire service had someone who wanted to train as a paramedic and also someone who was capable of filling out the accident book, as the police do at a straightforward road accident. Why should that multi-tasking not take place? If it saves money, what is wrong with that?

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Ian Lavery: It is not as easy as that. I wish it was. To multitask between being a crime officer and being a fireman or woman in the fire and rescue service is difficult. To be a paramedic takes a three-year university course. It is not as simple as transferring basic skills; the individual needs to be properly skilled, with a university degree. Unlike in other parts of the blue-light services—in the NHS, for example—there are no bursaries for people to train to be paramedics; they have to pay their own way. The issue might seem simple, but it is not as simple as many people believe.

Mr Jim Cunningham: No matter which way the argument is put by Government Members, the fact remains that there will be rationalisation, which means saving money that will not be ploughed back into the service. As I said earlier, West Midlands police has lost about 2,500 policemen. In Kent, the private sector is being employed to do the police’s job. It is surely all leading to privatisation.

Ian Lavery: There is obviously a whiff of privatisation in the air in relation to all the blue-light services. The people involved in the services fear that themselves. It is not just me or my hon. Friend as Members of Parliament who are suggesting that; people working in the services are worried. That is why we have to consult with people and listen to those who are delivering the services.

Amanda Milling: Are we not also accountable to the public? If the public see us purchasing or procuring two things that are exactly the same, are they not going to say, “That is waste and there are savings to be made.”? We can get rid of the duplication.

Ian Lavery: I totally agree with that. I will come on to this, but if there is duplication in procurement, of course it would be sensible for that procurement to be done jointly. There is no argument about that.

Kevin Foster: Is the hon. Gentleman interested to hear that my police force in Devon and Cornwall is involved in the project in Hayle that has produced the UK’s first tri-service responder? A gentleman called Andrew Hitchens is an on-call firefighter and an ambulance service emergency first responder, and he has been trained in specific crime and disorder duties, too.

Ian Lavery: Well, that is interesting. That could be put on the table in the consultation with other people up and down the country who work in the services. We need consultation and discussion with those delivering services, such as the gentleman that the hon. Gentleman just mentioned.

There is a huge difference between a firefighter and a police officer. They have completely and utterly different remits. The police are law enforcers—it is as simple as that. The fire and rescue service is basically a humanitarian service. The two services have totally different remits. For example, firefighters need to be neutral in their communities and politically neutral. They cannot be seen as law enforcers or even to be connected in any way to law enforcement. In many areas, they have built up trust that the police probably do not have.