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House of Commons

Tuesday 3 July 2012

The House met at half-past Two o’clock

Prayers

[Mr Speaker in the Chair]


Business before Questions

London Local Authorities and Transport for London (No. 2) Bill [Lords]

Motion made,

That the promoters of the London Local Authorities and Transport for London (No. 2) Bill [Lords], which was originally introduced in the House of Lords in Session 2007-08 on 22 January 2008, may have leave to proceed with the Bill in the current Session according to the provisions of Standing Order 188B (Revival of bills).—(The Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Wednesday 11 July at 4 o’clock.

Canterbury City Council Bill

Motion made,

That so much of the Lords Message [21 May] as relates to the Canterbury City Council Bill be now considered.—(The Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Wednesday 11 July at 4 o’clock.

Leeds City Council Bill

Motion made,

That so much of the Lords Message [21 May] as relates to the Leeds City Council Bill be now considered.—(The Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Wednesday 11 July at 4 o’clock.

Nottingham City Council Bill

Motion made,

That so much of the Lords Message [21 May] as relates to the Nottingham City Council Bill be now considered.—(The Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Wednesday 11 July at 4 o’clock.

Reading Borough Council Bill

Motion made,

That so much of the Lords Message [21 May] as relates to the Reading Borough Council Bill be now considered.—(The Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Wednesday 11 July at 4 o’clock.

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City of London (Various Powers) Bill [Lords]

Lords message (21 May) relating to the Bill considered.

Resolved,

That this House concurs with the Lords in their Resolution.—(The Chairman of Ways and Means.)

Transport for London Bill [Lords]

Motion made,

That so much of the Lords Message [21 May] as relates to the Transport for London Bill [Lords] be now considered.—(The Chairman of Ways and Means.)

Hon. Members: Object.

To be considered on Wednesday 11 July at 4 o’clock.

Oral Answers to Questions

Justice

The Secretary of State was asked—

Prisoners (Training and Education)

1. Peter Aldous (Waveney) (Con): What discussions he has had with the Secretary of State for Business, Innovation and Skills on improving training and skills of adult prisoners to improve their employment chances after the end of their sentence and reduce the risk of reoffending. [114716]

18. Paul Maynard (Blackpool North and Cleveleys) (Con): What discussions he has had with the Secretary of State for Business, Innovation and Skills on improving training and skills of adult prisoners to improve their employment chances after the end of their sentence and reduce the risk of reoffending. [114734]

The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt): I worked closely with the Minister for Further Education, Skills and Lifelong Learning during the preparation of the new offender learning strategy published last year, and officials from both Departments have worked closely on implementation. I fully recognise the importance of learning and training in making prisoners more employable, and my officials and I are working with the Department for Work and Pensions to provide enhanced employment support via the Work programme.

Peter Aldous: I am grateful to the Minister for that answer. HMP Blundeston in my constituency is doing excellent work to provide prisoners with employment skills. It is seeking to bring in work, but faces a dilemma in that it does not wish to take contracts away from local employers. Will the Minister visit Blundeston to see that work and to discuss with the governor and staff what can be done to meet that particular challenge?

Mr Blunt: I wish to visit Blundeston to see a number of examples of good practice, not just those to do with work in prisons. We have developed a code of practice to demonstrate how we will work fairly to address concerns about unfair competition and protecting local jobs. It is vital that the growth in prison work add to the UK supply chain and increase rather than reduce employment opportunities for law-abiding citizens while aiding the rehabilitation of offenders.

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Paul Maynard: Many education providers these days use online platforms and tools to provide education in prison and would like to do so more often using both better internet connections and better wi-fi internet connection. Obviously, there are security concerns about making such connections available. Will the Minister explain a little further what he could do to encourage such provision to enhance rehabilitation opportunities?

Mr Blunt: I am grateful to my hon. Friend because, as he says, it is essential to maintain security while enabling learning and skills to be relevant in prisons. Prisoners’ educational internet access will now be via the virtual campus that is being installed where it is technically possible to do so in all adult prisons in England. It offers very secure access to online tools and resources that have been through thorough quality assurance and rigorous security checks, and has the potential to be developed so that prisoners’ in-cell time as well as their out-of-cell time could be much more productive than it is today.

Lindsay Roy (Glenrothes) (Lab): Is it not the case that despite good intentions, the Government are no closer to making work in prisons the norm than they were two years ago?

Mr Blunt: That is complete nonsense. There has been a culture change across the whole of the prison system, and prison governors are stepping up to the plate and driving the agenda forward. At the same time, we have taken an enormous amount of trouble to put in place a code of practice and the necessary policy underpinnings so that we can take work in prisons to the maximum level that we can achieve. There is a profound change under way involving substantial and substantive work and I hope that the hon. Gentleman will support us in that endeavour.

Tony Lloyd (Manchester Central) (Lab): The Minister will also recognise that issues such as drug and alcohol abuse, as well as mental health, have a huge impact on employability. How far is the Ministry of Justice prepared to work with—perhaps I should declare an interest, or at least a potential interest—the future police and crime commissioners to make sure that there is proper co-ordination of all the services necessary to get people back into work?

Mr Blunt: The hon. Gentleman will be aware of the integrated offender management that already happens in the case of prolific offenders, who tend to be drug addicted. Their support or treatment will be related, to a degree, to how they engage with their offender managers and their drug treatment providers in the community, which involves police, probation, health and local authority services all working together. That rather obvious, sensible example of integrated offender management is getting much wider traction across the whole offender management system. The hon. Gentleman is quite right: it is the way forward when all those agencies operate together. That is the purpose of all the work that we are doing with other Government Departments to advance that agenda.

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European Court of Human Rights

2. Mr David Ruffley (Bury St Edmunds) (Con): What recent representations he has received on the implementation of decisions of the European Court of Human Rights. [114718]

The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke): None.

Mr Ruffley: I am very grateful to my right hon. and learned Friend for that detailed reply. He will know that there is concern, certainly on the Government Benches, that the European Court of Human Rights gives insufficient weight to the decisions of national courts, and that in addition, given the backlog of more than 150,000 cases, the Court is not devoting its entire time and attention to truly serious abuses of human rights. In that context, what are the Government doing to ensure that votes of national Parliaments and decisions by national courts are better taken into account by the European Court?

Mr Clarke: I agree entirely with my hon. Friend. We addressed that during our chairmanship of the Council of Europe. We had a conference at Brighton of all 47 member states and produced the Brighton declaration. Our considerable achievement there was not very widely reported because, not surprisingly, the media regarded it as a footnote to the Abu Qatada case which was in the newspapers at the time. Forty-seven countries agreed that we should have a greater margin of appreciation, to use the jargon, and that more regard should be paid to those decisions of the courts of nation states which had obviously addressed their obligations under the convention. That will have a considerable impact on future cases.

Dr William McCrea (South Antrim) (DUP): Is it not long overdue that the Government move to ensure that the courts of the United Kingdom, rather than the European Court, have supremacy in the area of human rights, including protection of Christian liberties and freedoms?

Mr Clarke: We are taken to the Court much less than other members and we lose only about 2%. Sometimes that 2% includes cases where there is widespread support here for the decision, such as the holding of DNA and other information belonging to people who have never been convicted of a criminal offence, which was a recent judgment. The convention still has a very important role to play across Europe. It is hugely significant in the 47 member states and it enables standards to be applied in places all the way from Russia, Turkey and Azerbaijan across to us and Iceland. We have always been subject to the rule of law. We have always bound ourselves under the convention to accept the judgments. These are the standards that we all agreed upon after the second world war, which were not challenged in this country till 10 or 15 years ago, when some judgments here began to annoy sections of the media.

Mr Christopher Chope (Christchurch) (Con): Will my right hon. and learned Friend take this opportunity to congratulate Mr Paul Mahoney on his election as the UK judge to the European Court of Human Rights, and does he share my satisfaction that the new judge is committed to ensuring that the principles of subsidiarity

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are held high in the Court—for example, in relation to the right of individual countries to decide issues relating to national religion?

Mr Clarke: I personally disapprove of a parliamentary vote on the appointment of judges, but that is the system that has prevailed there since 1947. Fortunately, the British put forward three excellently qualified candidates for the judgeship, so I congratulate Mr Mahoney on his election and I am sure he will make a very considerable contribution.

Sadiq Khan (Tooting) (Lab): I am sure the Justice Secretary will agree that it would be inappropriate for him as a member of the Executive or me as a Member of the legislature to interfere with the appointment of judges in the UK. In the light of that and of his last answer, what are his views not on the vote but on the political interference that appears to have taken place with the appointment of the UK representative to the European Court of Human Rights?

Mr Clarke: The Council of Europe works on the basis that the Parliamentary Assembly votes from a shortlist of three people provided by the member state, and now steps are taken to ensure that all three come up to certain standards, which I am glad to say the British nominees quite easily did. It sounds as though the right hon. Gentleman and I would not start from here, and I agree that normally politicians should not vote on which judge ought to be appointed to any judicial post, but they did and Mr Mahoney, I am sure, will prove an excellent choice.

Intelligence Services (Court Proceedings)

3. Rebecca Harris (Castle Point) (Con): What recent assessment he has made of arrangements for handling sensitive information from the intelligence services in court proceedings. [114719]

The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke): The Government have introduced the Justice and Security Bill to introduce a process by which such material may be considered by the courts in civil cases in future. The Bill is currently being considered and scrutinised in the House of Lords.

Rebecca Harris: I thank the Secretary of State for his reply. Does he agree that if we do not make reforms in this area we run the risk of allowing a substantial industry to develop in expensive legal claims, which we are forced to pay out of court because the Government are unable to defend themselves in open court?

Mr Clarke: The Bill stems from our recent experience in the so-called Guantanamo Bay cases, when a very large sum of money was paid out to satisfy claims and legal costs when the security and intelligence services insisted that they had an adequate defence. An increasing number of those cases are coming along, and it is not for me to pre-judge any of them, but I should like the judge to be able to hear all the evidence in the circumstances that are possible—closed material proceedings—so that we as citizens obtain some judgment in the end about the merits or otherwise of the complaint. We certainly must not encourage people to go along for both the

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political publicity and the potential funds that might flow from bringing a claim that they know cannot be defended.

Paul Goggins (Wythenshawe and Sale East) (Lab): On what basis has the Justice Secretary decided not to allow closed material proceedings at inquests? Surely if there is a highly sensitive piece of intelligence that would help to explain the cause of someone’s death, the coroner should be able to see that information, albeit on a protected basis.

Mr Clarke: We canvassed that proposal in the consultation, and I have considerable sympathy with the right hon. Gentleman’s view, but we have responded to the consultation, in which there were strong feelings against the procedure being applied to inquests—despite the support that we had from coroners’ associations.

The argument is that the coroner cannot consider such material in closed material proceedings because it means that the family, the press and other interested parties will not be able to hear what the spies have to say, and that is the basis on which we have introduced the Bill—we are a listening Government. But I did canvass the measure that the right hon. Gentleman proposes.

Police and Crime Commissioners (Women’s Services)

4. Bridget Phillipson (Houghton and Sunderland South) (Lab): What discussions he has had with the Secretary of State for the Home Department on providing high-quality services for women within the criminal justice system following the election of police and crime commissioners. [114720]

The Minister for Policing and Criminal Justice (Nick Herbert): The Ministry of Justice has been working with the Home Office to ensure that local areas are prepared for the introduction of police and crime commissioners, who will have duties to work with local criminal justice bodies, including in relation to the provision of women’s services.

Bridget Phillipson: I am grateful to the Minister for that answer, but the proposal to devolve some victims’ services to police and crime commissioners is not without risk. What will he do to ensure a minimum standard of provision throughout the country, regardless of the area in which the victim lives?

Nick Herbert: First, it is important to point out that some specialist services, such as the homicide service, rape crisis centres and so on, will continue to be commissioned nationally, but we think it right in principle that elected police and crime commissioners should commission victims’ services locally. It will mean that there is a champion for victims in every single area; it will ensure the greater integration of such services with the police, who have a very important duty in relation to victims; and it will be for elected police and crime commissioners, accountable to the public, to ensure that they provide a high-quality service to victims.

Tom Brake (Carshalton and Wallington) (LD): In March, in recognition of the specific problems that women experience in prison, the Government committed

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to deliver a document setting out the strategic priorities for women in the criminal justice system. When will it be published, and how will it link with the work that Louise Casey is doing on troubled families and, of course, the work of elected police and crime commissioners?

Nick Herbert: The stock answer to all such questions is “in due course”, but my right hon. Friend is right that we need to ensure that such services are integrated. There is important work going on in the local criminal justice system in relation to women’s offending. Police and crime commissioners will have a role, in liaison with the local criminal justice agencies. The troubled families work being led by Louise Casey is very important in efforts to prevent crime. I believe that police and crime commissioners will be in a strong position to ensure local coherence in work to divert people from the criminal justice system and from crime.

Jenny Chapman (Darlington) (Lab): In his answer to my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), who has considerable experience in providing victims services, the Minister confirmed that there will be no minimum standards for victims. To give just one example, two thirds of victims of stalking said that the police and the Crown Prosecution Service did not take their complaint seriously, and offenders are not charged in almost nine in every 10 cases. There is a risk of specialist services falling between the cracks—looking after the detail makes a difference—and such services are not likely to win PCC votes. Will the Minister consider intervening if the loss of specialist services for women continues after the election of PCCs?

Nick Herbert: But the whole point of the change is to ensure that there will be accountability for the provision of victims services, which will lie at local level with people who are already responsible for the police and who will be champions for victims. The cross-party Association of Police and Crime Commissioners has already welcomed the proposal, and the youth charity Catch22 says it believes that police and crime commissioners generally have the potential to bring real coherence at the local level to the planning and commissioning of services designed to reduce and prevent crime and support victims. I am sorry that Opposition Front Benchers do not support what I believe is a very good idea that will strength victims services at the local level.

Mrs Helen Grant (Maidstone and The Weald) (Con): Does my right hon. Friend agree that community women offender facilities, in which this Government have invested substantially, provide a real alternative to custody for many women in the criminal justice system?

Nick Herbert: I agree with my hon. Friend. The number of women in custody has been declining, in contrast with the number of men. We have been developing intensive treatment-based alternatives to custody for offenders with drug or mental health problems, including four women-only services in Wirral, Bristol, Birmingham and Tyneside. They are an important part of our strategy to ensure that offending by women is dealt with as effectively and appropriately as possible.

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Imprisonment for Public Protection

5. Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): What assessment he has made of the potential effect on public safety of the abolition of sentences of imprisonment for public protection. [114721]

The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt): As the published impact assessment for the Legal Aid, Sentencing and Punishment of Offenders Act 2012 makes clear, the continuing regime of life sentences and a new mandatory life sentence for a second very serious offence, as well as longer custodial periods and extended licence periods, all supported by compulsory sentence plans and multi-agency public protection arrangements—MAPPA—supervision, will ensure that there are sufficient measures to manage risk and uphold public protection.

Tom Blenkinsop: I thank the Minister for his response, but the Justice Secretary is on record saying that the number of those currently in prison who have served beyond their minimum tariff on an IPP sentence is a scandal. What proposals does the Minister of State intend to make on the release test for those on IPP sentences?

Mr Blunt: There are no immediate proposals to change the release test. In March, there were 3,500 IPP prisoners serving beyond their tariff, a result of the administrative chaos that followed the unwise introduction of the sentence, with wholly unforeseen numbers being given such a sentence. I draw the hon. Gentleman’s attention to the fact that, in addition to the measures I have outlined, violent offender orders and sex offending prevention orders will be available to the courts to use for public protection.

Sir Alan Beith (Berwick-upon-Tweed) (LD): Does my hon. Friend agree that the use of indeterminate sentences for prisoners who would otherwise have received relatively short sentences, far from enhancing public safety consumes resources in the prison system that are desperately needed for effective rehabilitation and stopping reoffending?

Mr Blunt: My right hon. Friend is absolutely right: such sentences consume substantial resources, not just in the offender management system but in the Parole Board and elsewhere. The prison system was having to manage a potential future disaster in the ever-increasing number of indeterminate sentence prisoners. We have finally got a grip on the problem and are now addressing it.

Mr Andy Slaughter (Hammersmith) (Lab): In trying to save money, the Minister misses the point. Without indeterminate sentences, some of the most violent and dangerous criminals—rapists, armed robbers and those who prey on the weakest and most vulnerable—will be released from custody against the professional advice of the probation service and others. Will that make the public more or less safe?

Mr Blunt: The shadow Minister is wrong because indeterminate sentences remain—they are called life sentences. There will be mandatory life sentences for the kind of offender that he described.

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Andrew Bridgen (North West Leicestershire) (Con): In 2010, 1,019 individuals were given indeterminate sentences. Will the Minister assess the rehabilitation strategies for those currently serving indeterminate sentences?

Mr Blunt: My hon. Friend is right. We inherited a serious administrative problem in that the capacity of the offender management system was being overwhelmed by the number of people with indeterminate sentences—[Interruption.] It is absolutely not the judge’s fault; it is the fault of the previous Administration, who failed to put in place the resources to deal with the sentences that they then passed in the House. That is one of the many problems that we are having to address. IPPs are a classic example of the shambles that we have—

Mr Speaker: Order. The Minister should calm himself. The shadow Justice Secretary is a man of very great distinction. He would not behave like that in court; he would probably be turfed out or struck off. I cannot imagine it—very out of character.

Mr Blunt: The sense of my outrage on behalf of the system and the officials at the mess that we have had to clear up is perfectly clear to the House, Mr Speaker.

Probation System

6. Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): What progress he has made on his proposals to reform the probation system. [114722]

The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke): On 27 March, in the consultation document “Punishment and Reform: Effective Probation Services”, the Government published proposals to deliver more effective and efficient probation services. Alongside that, we published proposals to deliver more credible and effective community sentences. We are currently considering the responses to the consultation, which closed on 22 June. We intend to publish the Government response later in the year.

Luciana Berger: I thank the Secretary of State for his response. Under a marketisation of the probation service, how can he assure the House that fragmentation of the service will not put the public at risk? What safeguards are in place to ensure that cherry-picking by private sector providers of individuals on probation does not occur?

Mr Clarke: I am somewhat astonished by the reaction of some Opposition Members. We are following the policy first laid out in the Offender Management Act 2007. The probation trusts have now all been set up and we are introducing principles to bring some competition and diversity of provider. There are very good people who can provide some aspects of the probation service. We believe that that will both enhance the quality of the service and achieve better value for money and better outcomes. Plenty of people in the probation service welcome our proposals; indeed, some are surprised by their modesty.

Philip Davies (Shipley) (Con): At a recent multi-agency public protection arrangements, or MAPPA, meeting that I sat in on, a probation officer reported that his

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client was having problems meeting a curfew of 7 o’clock at night. When the officer was asked what he was doing to deal with the curfew’s being breached, he said that he had changed the curfew to 9 o’clock to aid compliance. Will the Secretary of State tell me what he is going to do to stop such outrages, which make a complete mockery of the probation system and the criminal justice system?

Mr Clarke: I cannot comment on an individual case, although I am sure that my hon. Friend did when he had the pleasure of listening to that exchange. We are seeking to make both the probation service and community sentences more effective, by which I mean more punitive when necessary but also more effective in controlling the behaviour of the offender.

We have taken powers to extend the hours of curfew. We intend to make more use of tagging to enforce curfews, among other things. We are testing more effective equipment and consulting on how best to use tags and modern technology effectively.

Mr Speaker: I am now looking for stunning succinctness. I call Mr Elfyn Llwyd.

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): I shall try to stun you, Mr Speaker.

The Secretary of State knows that the relationship between probation officer and offender is crucial to the rehabilitation process. How will he assure the House that opening up to the private sector will not undermine that crucial relationship?

Mr Clarke: In all these things, I take the view that the status of the person involved—whether they are classified as public sector or private sector, or who exactly they work for or which union they belong to—is a slightly subordinate issue. This is a rather sterile debate of a few decades ago about whether there should be private sector or public sector provision. What matters is the quality of what is done, the quality of the person, the relationships they develop, and what is available to them to make a community sentence more effective.

Fines (Collection)

7. Tristram Hunt (Stoke-on-Trent Central) (Lab): What recent assessment he has made of the effectiveness of the system for recovery of criminal fines. [114723]

The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly): In the financial year 2011-12, Her Majesty’s Courts and Tribunals Service collected £279 million in respect of criminal fines, further reducing the cost of enforcement and achieving the best ever performance against the payment rate measure. But now we want to do better, so we have developed better-quality performance indicators for publication and are exploring the potential for creating a partnership with a commercial company to build on the improvements we have already made in fines collection.

Tristram Hunt: What the Minister did not reveal is that over £600 million in outstanding fines is owed by criminals, of which £10 million relates to Staffordshire, and a further £5.5 million of unrecovered debts have already been written off. When faced with falling living

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standards and the effects of ill-planned spending cuts, my constituents want to know why this Government are allowing criminals to think that crime does pay.

Mr Djanogly: The hon. Gentleman mentions the collection backlog, and thereby raises the collection inadequacies of the previous Administration which we are now having to sort out. In 2011-12, the payment rate was 106%, and last year, for the first time since 2003-04, the outstanding balance was reduced by £16 million—that is, 3%.

Mr David Burrowes (Enfield, Southgate) (Con): Given the new statutory presumption that victims of crime will be compensated, can we ensure that whatever the means of offenders, they will all have to make amends to their victims?

Mr Djanogly: Absolutely, and if that is by way of a fine, we intend to collect it.

Young Offenders

9. Steve Brine (Winchester) (Con): What recent steps he has taken to reduce reoffending by young offenders. [114725]

14. Eric Ollerenshaw (Lancaster and Fleetwood) (Con): What recent steps he has taken to reduce reoffending by young offenders. [114730]

19. Stephen Mosley (City of Chester) (Con): What recent steps he has taken to reduce reoffending by young offenders. [114735]

The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt): Reducing reoffending is a key priority for this Government, and the challenge is most acute with young offenders. Recent steps that will specifically apply to under-18s include youth custody pathfinders, the troubled families programme, the programme on gangs and youth violence, restorative justice, new out-of-court disposals, increased curfews, more severe breach penalties, minimum mandatory custodial sentences for aggravated knife crime, and integrated resettlement support. These measures complement the already very substantial number of further measures and programmes that are aimed at dealing with all age groups who reoffend, not least young adults.

Steve Brine: I thank the Minister for his breathless list. He will know of the charity User Voice, which engages those who have experience of the criminal justice system in bringing about reform and reducing reoffending. A group of young people from the organisation recently came to give evidence to the Justice Committee for its youth justice inquiry. It was striking to hear them say that having respect for the status and position of a youth offending team worker is not the same thing as connecting with them and having them make a reasonable difference to their lives. Does the Minister agree that there has to be a much greater role for offenders and ex-offenders in steering young people away from the spiral of offending and constant reoffending?

Mr Blunt: I have met people from User Voice several times, and I agree with my hon. Friend about the value of their work. I also agree that ex-offenders are uniquely

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placed to offer support to offenders, along with other professional services, and can connect with them in a way that many other agencies cannot. Peer-mentoring services using ex-offenders are being developed at Ashfield and Cookham Wood young offenders institutions, working with the Prince’s Trust.

Eric Ollerenshaw: What particular support will there be for young offenders institutions such as Lancaster Farms in my constituency, particularly in dealing with young offenders on short-term sentences?

Mr Blunt: I am grateful for my hon. Friend’s support for the work of Lancashire Farms, which is a young offenders institute for young adults. There are a range of initiatives. The piloting of drug recovery wings will apply to those with short sentences. We are reforming the way in which education and training are delivered and linking them directly to the demands of the labour market on release. Prisoners who are assessed for jobseeker’s allowance before their release will be mandated to the Work programme on the first day of their release, and that will be an important way of joining up Government and involving the Department for Work and Pensions.

Stephen Mosley (City of Chester) (Con): The lack of work opportunities is one reason young offenders go on to reoffend. Has my hon. Friend made an assessment of the link between youth unemployment and reoffending, and what steps is he taking to help young offenders find work?

Mr Blunt: We know that it is important to tackle youth unemployment. The £1 billion youth contract will encourage employers to give young jobless people a chance, the Youth Justice Board has developed an employing ex-offenders action plan, and resettlement consortia have achieved success in helping many young people to find employment on release from custody.

John Healey (Wentworth and Dearne) (Lab): Does the Minister agree that the best efforts to reduce reoffending are often based on local courts with good local knowledge, working closely with local agencies? We have a very good magistrates court in Rotherham for Rotherham, and a very good one in Barnsley for Barnsley. Will he rule out any further magistrates court closures, which might put local justice in jeopardy?

Mr Blunt: The right hon. Gentleman knows perfectly well that I cannot do that. We have to deliver the whole justice system as efficiently as possible. Because of the financial catastrophe that overtook the country under the last Administration, in which he played a prominent part in the Treasury, the provision of all court and prison infrastructure has to be examined so that we can deliver offender management considerably more effectively than the last Administration.

Keith Vaz (Leicester East) (Lab): I welcome the new drug-free wing at Pentonville prison, which aims to cut reoffending. May I put to the Minister what I put to the Lord Chancellor when he gave evidence to the Home Affairs Committee this morning? The key to ending reoffending is to help prisoners once they leave prison. That support is vital.

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Mr Blunt: The right hon. Gentleman is absolutely right. We are examining how we can make the transition from custody into the community much more effective for drug-addicted offenders. We want drug workers in the community to reach into prisons and link in the—

Mr Speaker: Order. We are grateful to the Minister. I do not wish to be unkind, but the answers are simply too long. Progress is too slow and it needs to be speeded up.

Bill Esterson (Sefton Central) (Lab): The double-dip recession created by the Government has made it much harder for young people in general and young offenders in particular to find work. What conversations is the Minister having with his colleagues to encourage growth in the economy and to solve the problem of youth unemployment in general and young offenders in particular?

Mr Blunt: The last time I looked, Spain’s interest rates were about 4% higher than ours. If we had those interest rates, it would cost the country £40 billion a year to borrow the amount of money necessary, which would certainly put paid to all the employment programmes that the hon. Gentleman is suggesting.

Magistracy

10. Jesse Norman (Hereford and South Herefordshire) (Con): What plans he has to protect and enhance the powers of the magistracy. [114726]

The Minister for Policing and Criminal Justice (Nick Herbert): The Government will shortly publish plans on improving the criminal justice system, including by reinforcing the important role of magistrates.

Jesse Norman: The magistracy is one of the great glories of the English legal system, and Hereford magistrates court is a case in point. Will the Minister give some reassurance that there are no plans to change the services at Hereford magistrates court or to close it?

Nick Herbert: I agree with my hon. Friend about the value of magistrates. They are lay people who give of their time, and the community justice that they dispense is an important feature of our criminal justice system. That is too little acknowledged. As the Under-Secretary of State for Justice, my hon. Friend the Member for Reigate (Mr Blunt) said, we continually review the estate to ensure that it is well utilised, but we have no current plans to close Hereford magistrates court.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Is the Minister aware that over many years and under many Governments the magistracy has been run down? It has been run down because so many local courts have been closed. Once the link between being a magistrate and the local community is broken, it no longer works. What is he going to do about that?

Nick Herbert: The hon. Gentleman should reflect on the fact that one of the issues that magistrates are most concerned about is the growth of out-of-court disposals, which soared under the last Government in response to the target culture. We continue to have concerns about

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the inappropriate use of such disposals. He should reflect on the role of the previous Government in undermining the magistracy.

Bailiff Services

11. Mr Nick Raynsford (Greenwich and Woolwich) (Lab): What progress he has made with his proposals on regulation of bailiff services. [114727]

The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly): Following the publication of updated national standards for enforcement agents in January, the Government launched a full public consultation on transforming bailiff action in February. The consultation closed on 14 May, and we are now carefully considering the 250 responses with a view to publishing our response in the autumn.

Mr Raynsford: I am not sure whether any of those responses referred to the Government’s proposed cut of £500 million in council tax benefits next April, which is widely expected to prompt a surge in cases being referred to bailiffs for the recovery of council tax debts. What are the Government doing to prevent an escalation of intrusive, expensive interventions against low-income households?

Mr Djanogly: If there are debts to be collected, bailiffs have to go and collect them; otherwise, the system would break down. However, the Government are clear that aggressive bailiff activity is unacceptable, and we are committed to introducing effective proposals that protect the public and ensure that bailiff action is proportionate.

Duncan Hames (Chippenham) (LD): I hear the Minister’s answer, but does he not agree that when public bodies such as councils procure bailiff services, they should take some responsibility for the methods they sanction?

Mr Djanogly: They should indeed, and they do. The new guidelines are there to ensure that minimum standards of behaviour are adhered to. We have introduced the guidelines before legislating.

Robert Flello (Stoke-on-Trent South) (Lab): The Tribunals, Courts and Enforcement Act 2007 contains detailed provisions on the regulation of bailiffs, and in May 2010 the coalition agreement stated that action would be taken. Here we are in summer 2012, and no Government response to the consultation is expected until the end of the year and the Government are hitting households from every side, forcing them into more and more debt every day. With a catalogue of appalling behaviour by bad bailiffs, and even reputable bailiffs saying that they need regulation urgently, when will the Government finally stop delaying and get on with it?

Mr Djanogly: Any delay arises from the non-implementation of part 3 of the 2007 Act, and the cause of our delay is the same reason why the Labour Government delayed—their legislation does not work. We have acted in the interim by putting guidelines in place, and we are

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now consulting on upgrading legislation in a measured and balanced way. We will consider the many interests that exist and the balance that we have to achieve.

Legal Advice/Welfare Reform

12. Stephen Timms (East Ham) (Lab): What assessment he has made of the availability of legal advice to people on low incomes who will be affected by the Government’s proposed welfare reforms. [114728]

The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly): During the development of the legal aid reforms, the Ministry of Justice conducted detailed assessments of the availability of legal advice funded by legal aid or provided by the not-for-profit advice sector. With regard to welfare reform, the Department for Work and Pensions is developing a strategy for working with the voluntary sector, including welfare advice services, to ensure that people on low incomes have access to the support that they need to understand their rights and entitlements following the move to universal credit.

Stephen Timms: During ping-pong on the Legal Aid, Sentencing and Punishment of Offenders Bill, Ministers accepted that legal aid should still be available for an appeal to the first-tier tribunal if a point of law is at stake. How will someone establish whether a point of law is at stake, and when will the provision take effect?

Mr Djanogly: I confirm that we are giving serious thought to the issue and considering the exact scope of the concession, as well as how such work will be delivered in future, because the operational aspects are just as important. Once we have considered that in full, we will make an announcement.

Office of the Information Commissioner

13. Robert Halfon (Harlow) (Con): What recent assessment he has made of the value for money and effectiveness of the Office of the Information Commissioner. [114729]

The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly): The Ministry of Justice and the Information Commissioner’s Office meet regularly to ensure that the office operates effectively and secures the best possible value from the resources available to it. The ICO’s next annual report is due out on Thursday.

Robert Halfon: As I told the Minister when I wrote to him a few weeks ago, it took a long campaign in Parliament in 2010 before the Information Commissioner was prepared to admit that Google Street View had broken the Data Protection Act on an industrial scale. It has now taken an investigation by TheSunday Times and action in America for the ICO to actually act and pursue Google further. Surely the ICO should be accountable to Ministers, and therefore to the British people, so that when there are such problems someone can take charge.

Mr Djanogly: The Information Commissioner is of course accountable to the public via Parliament. His annual reports are laid before Parliament, and he could

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be questioned on his reports by, for instance, the Justice Committee. It would be wrong for me to comment on the ICO’s handling of any particular case. That said, I understand that the ICO has reopened its investigation into Google Street View because it has received some new information about Google’s capture of data from wi-fi networks in the USA. The investigation is ongoing.

Community Payback

15. Mark Pawsey (Rugby) (Con): What recent assessment he has made of the operation of community payback; and if he will make a statement. [114731]

The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt): The Green Paper “Breaking the Cycle” contained proposals relating to community payback that have been confirmed by the Government. Plans are in place to implement these changes, and the results of the first competition to administer community payback in London will be announced shortly. My assessment is that this competition and the preparation for competitions in all other trusts have substantially improved all elements of operational delivery.

Mark Pawsey: In Warwickshire, more than 63,000 hours of community payback are completed each year by offenders on a community sentence. They carry out projects such as litter removal, clearing undergrowth and removing graffiti—labour worth about £360,000. Does the Minister agree that in certain cases this is a worthwhile way for offenders to make a contribution to the society that they have harmed?

Mr Blunt: I agree with my hon. Friend. I understand that 179 organisations in Warwickshire benefited from community payback last year. Not only is there an opportunity to link with members of the public through the ability to nominate community payback schemes, but these nominations are now running at more than 1,000 a month.

Mr Speaker: Whether we have time or not, we will hear from Mr Simon Hughes.

Riots Communities and Victims Panel

16. Simon Hughes (Bermondsey and Old Southwark) (LD): What steps his Department is taking to implement the recommendations of the final report of the riots communities and victims panel. [114732]

The Minister for Policing and Criminal Justice (Nick Herbert): The Government welcome the final report from the independent riots communities and victims panel and will publish a formal response in due course.

Simon Hughes: This very good report made some very good recommendations to the Ministry of Justice, including for more effective community sentencing—specifically, that communities should choose the projects and that the results, including reoffending rates, should be published. Will Ministers be positive about those recommendations? I am sure it would be appreciated.

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Nick Herbert: I think we will be positive about exactly that kind of proposal—we have already published formal consultation proposals to strengthen community sentences, which was one of the recommendations in the report. That is important, because the report itself drew attention to the fact that those who were brought before the courts in relation to the riots had 11 previous convictions, which showed that the justice system had not been effective in dealing with such problem offending.

Topical Questions

T1. [114740] Mr David Ruffley (Bury St Edmunds) (Con): If he will make a statement on his departmental responsibilities.

The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke): Yesterday, the Government published their response to the consultation entitled “Getting it Right for Victims and Witnesses”. For too long, many victims have felt themselves to be an afterthought for the criminal justice system. Our reforms will ensure that victims and witnesses get the support they need when they need it. Our proposals include an aim to raise an additional £50 million from offenders to be spent on victims’ services. Responsibility for commissioning most victims’ services will eventually go to democratically accountable police and crime commissioners, ensuring that decisions about service provision respond to local need. We will reform criminal injuries compensation so that it is focused on victims of serious crime and is sustainable, and there will be a new victims code making it clear what victims can expect from the criminal justice system and ensuring that they are treated with dignity and respect.

Mr Ruffley: A UK prisoner is litigating in the European Court of Human Rights asserting his right to vote. When does the Secretary of State expect that decision to be handed down by the Court, and does he expect the House of Commons to be able to vote on the issue of votes for prisoners?

Mr Clarke: There has been repeated litigation involving several member states that do not allow prisoners to vote, as we have never done. The most recent litigation was Scoppola v. the Italian Government, in which our Attorney-General intervened on behalf of the British Government to argue that Parliament was more responsible for this issue than the Court. The Government will respond to that judgment, which went against a blanket ban, in due course.

Sadiq Khan (Tooting) (Lab): There are 6,500 prisoners who have been ordered by trial judges to serve indeterminate sentences for public protection. It is important for public safety that they be released only after a proper risk assessment, but more than 3,500 are waiting for appropriate programmes and a risk assessment. Does the Justice Secretary have any plans to increase the number of programmes and assessments to address this issue?

Mr Clarke: This system, which we are getting rid of, as the Under-Secretary of State for Justice, my hon. Friend the Member for Reigate (Mr Blunt) reminded us earlier, has put a tremendous load on the prison service in terms of programme design, availability of suitable places and the Parole Board system. We are addressing

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that and trying to reduce the delays, but it will take us some time to get through the system. Of course, some will remain indeterminately imprisoned, but we want as many as possible to finish their proper sentence, to get them out and to put behind us this rather shameful chapter in the history of sentencing in this country.

Sadiq Khan: As is normal, the Justice Secretary did not answer the question I asked. Let me try another. His ministerial colleague said that there were no immediate plans to change the release test. Yesterday, Lord McNally said that the Government may use Executive action to release those serving IPPs, and would also change the balance of judgment to be made by the Parole Board to free up prison places. Those two actions could lead to prisoners who are currently serving IPPs being released without due regard to public safety. Which Minister should we believe, and is it really worth taking a risk with public safety to reduce prison numbers?

Mr Clarke: I will check what Lord McNally actually said. We are not contemplating either of those steps at the moment. We are putting extra resources into programmes and into addressing the problems that the Parole Board is faced with. We are quite determined not to take risks with public safety, but indeterminate sentences really were one of the worst ways of trying to do that, as they left a grave sense of injustice and difficulty coping with the proper assessment of people, for open-ended release.

T2. [114741] Andrew Jones (Harrogate and Knaresborough) (Con): My right hon. and learned Friend recently announced extra financial support of £50 million to be provided for victims of crime, with offenders being forced to make the financial contribution. I strongly welcome that, but could see no information on the Department’s website about when the scheme will start. Can he help with that?

The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt): Subject to parliamentary approval of the orders that have been laid before the House, the changes to the victim surcharge should be implemented in October. We would expect to see the revenue starting to come in six months thereafter. The money—up to £50 million—will come from offenders and go to victims, which is a move away from the taxpayer being responsible. The Government’s policies will also mean courts ordering offenders to pay more in compensation to victims—indeed, that will be the first duty on sentencers to consider.

T4. [114743] Dan Jarvis (Barnsley Central) (Lab): According to the Legal Services Consumer Panel, 180,000 wills are written each year by unregulated services. Both the national press and the Barnsley Law Society have reported that thousands of people are being ripped off by unregulated will-writing services. What does the Justice Secretary think is the solution to the problem?

The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly): The Government recognise this as a serious issue. We are in discussion with the Legal Services Board, which has just done a consultation, and we will be making an announcement in due course.

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T8. [114748] Mr Philip Hollobone (Kettering) (Con): In thanking my right hon. Friend the Minister for Policing and Criminal Justice for visiting a community payback scheme in Kettering on 18 June, may I ask whether he agrees that the work we saw being undertaken was both worth while and sufficiently arduous to prevent future reoffending?

The Minister for Policing and Criminal Justice (Nick Herbert): Yes. I am grateful to my hon. Friend for inviting me to Kettering to see that scheme. The offenders were wearing fluorescent jackets to identify them as people doing work on behalf of the community. They were working hard constructing a path alongside a river, which will be of huge value to the community and would not have been constructed but for that work. That shows that we can make community payback an effective and meaningful punishment on behalf of the community.

T5. [114745] Sheila Gilmore (Edinburgh East) (Lab): Professor Harrington, the independent reviewer of the work capability assessment, has highlighted the fact that Department for Work and Pensions officials are not routinely given feedback when appellants’ appeals have been successful, which means that they cannot improve practice. Why not?

Mr Djanogly: There are costs involved in feedback, but that does not mean that the DWP cannot ask for feedback if it wants it. The efficiency of the tribunal processes is being looked at carefully, with Ministry of Justice officials and Ministers working closely with DWP equivalents.

T9. [114749] Bob Blackman (Harrow East) (Con): Many countries outside the UK have legal systems that are based on ours, and this is particularly true in the Commonwealth. What has my right hon. and learned Friend done to market the legal services in the UK to those countries?

Mr Kenneth Clarke: We are making a considerable effort to market British legal services, both within the Commonwealth and across the wider world, in many important emerging markets and elsewhere. I am glad to say that we are working closely with the Bar Council and the Law Society in doing so. Legal services in this country are held in the highest regard in the world—our judges are more trusted and our system is more effective than most others—and they contribute 1.3% to the GDP of this country. Legal services are second only to financial services in the City of London, and are something we should promote and support.

T6. [114746] Shabana Mahmood (Birmingham, Ladywood) (Lab): Is the Minister able to put a figure on how much the repeated failure of Applied Language Solutions to provide interpreters in court proceedings has cost the taxpayer through delayed proceedings?

Mr Blunt: We have published assessments of ALS’s performance, and we will continue to do so, but it is impossible to arrive at the numbers the hon. Lady is seeking. Her question seems to imply that the previous system for booking interpreters was a model of exactitude and correctitude; it was not. ALS’s performance is now reaching the required contract level.

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David Mowat (Warrington South) (Con): In this country, we now have 1,200 whiplash claims a day, which is about 30 times more than in France or Germany. The industry costs to the rest of us are £2 billion a year, resulting in many young people being unable to afford to insure their cars. What discussions has the Minister had with the relevant regulatory body of the Law Society that drives this industry?

Mr Djanogly: The Government are committed to reducing the number of whiplash claims, and we have had discussions with all parties involved in these claims. We will consult over the summer on reducing the number of whiplash claims, including through looking at the medical certificates that are handed out, as well as at small claims levels.

T7. [114747] Caroline Lucas (Brighton, Pavilion) (Green): My constituent Sam Taylor has been subjected to, and still lives in fear of, the most terrible harassment from her ex-partner. The new offences relating to stalking represent real progress, but Sam’s case shows that serious work still needs to be done on the ground to ensure that she and her family can be properly protected. Will the Minister meet Sam, along with the chief superintendent of Sussex police and me, to hear why she remains concerned?

Nick Herbert: I would be very happy to meet the hon. Lady to discuss that issue.

Mr David Davis (Haltemprice and Howden) (Con): On 4 September, the European Court of Human Rights will hear the case of Nadia Eweida v. the United Kingdom Government. I understand that the Government are resisting the case. Miss Eweida is the lady who effectively lost her job with British Airways for wearing a cross, a symbol of her religion, at work. Is it any part of the British Government’s policy to support the denial of people’s religious rights at work? If not, will we reconsider our position on that case?

Mr Kenneth Clarke: I will consult the Attorney-General, who is no doubt preparing the Government’s defence in this case. This is obviously a hugely difficult issue; the case has gone through the courts here and is now going to be heard in Strasbourg. Whatever one’s feelings about the narrow facts of the individual case, there are wider issues about the enforcement of religious rights in employment, and I have no doubt that they will be properly canvassed. I will consult my right hon. and learned Friend the Attorney-General.

Yasmin Qureshi (Bolton South East) (Lab): Will the Justice Secretary confirm that, despite Ministers’ claims to the contrary, judges will be left with no option under the proposals in the Justice and Security Bill but to grant closed material proceedings?

Mr Clarke: I disagree. It is certainly my intention—this is the way in which the Bill is drafted—that there will be closed material proceedings only when the judge is satisfied that there would be a risk to national security if the evidence were to be given in open court. We are not taking into secrecy or excluding from the court any evidence that is heard in court at the moment. For the first time, we are creating an opportunity for the judge

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to consider intelligence evidence, but that will happen only in those cases in which the judge is satisfied that national security is involved.

Greg Mulholland (Leeds North West) (LD): I am sure that Ministers would agree that causing death by dangerous driving is a serious offence, particularly when drivers are under the influence of alcohol or drugs, yet it is not regarded as serious by the Criminal Injuries Compensation Authority. I have had two constituency cases in which the families have suffered not only the appalling loss of a family member but huge financial loss. Unlike the families of manslaughter and murder victims, they are not eligible for any compensation.

Mr Clarke: Compensation is for criminal offences, and it depends on the severity of the injury. We are concentrating on the most severe injuries that can be suffered. It would be very nice to extend it to all road traffic cases, particularly those that cause outrage or particular damage, but it would be impossible to ask the taxpayer to pay compensation in such cases.

Hazel Blears (Salford and Eccles) (Lab): Last week, I had the opportunity to have an excellent meeting with the courageous and very impressive chief crown prosecutor of Greater Manchester, Mr Nazir Afzal. He has given his full personal backing to the pilot of Clare’s law, which will identify serial perpetrators of domestic violence and is due to be launched in Greater Manchester in the next few weeks. Will the Minister ensure that criminal justice systems across the country support those pilots so that we can protect people from domestic violence?

Mr Blunt: Yes.

Mr Robert Buckland (South Swindon) (Con): The failure to bring criminal prosecutions against those who have wrought such havoc to our banking system continues to cause huge public concern. Has my right hon. and learned Friend had any discussions with ministerial colleagues about how the proposed fresh investigations will be properly supported and resourced?

Mr Kenneth Clarke: On reading what I have of these cases, it seems to me quite plain that possible crimes are involved in what has been described. I am glad to say that the Serious Fraud Office is, I am assured, investigating. It is properly a matter for it and not in the end a matter for Ministers whether anybody is prosecuted for anything. I think we are all reassured to know that this is being inquired into, as anybody guilty of crime must be brought to justice.

Alison Seabeck (Plymouth, Moor View) (Lab): There is evidence in the south-west of companies setting up internal companies to pursue debt—in effect, two companies pursue the same debt. The Office of Fair Trading describes this as an unfair practice and the direction guidance says that such practice constitutes harassment when two bailiffs chase the same debt. There are clearly Chinese walls in this practice; is it going to be looked at as part of the regulation review?

Mr Djanogly: If bailiffs are involved, it does fall within the terms of the consultation. I will come back to the hon. Lady on the specific point.

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Anna Soubry (Broxtowe) (Con): The Secretary of State could be forgiven for not knowing that 72 years ago yesterday, he was born in the same ward of the same Nottingham hospital as my constituent Mr Roy Plumb. Unfortunately, Mr Plumb had to retire as a magistrate on his 70th birthday. I do not expect the Secretary of State to refer to his own age and I would not want him to retire, but does he agree that the time has come to allow magistrates to serve beyond their 70th birthday?

Mr Speaker: Let us hear about the case of Mr Plumb.

Mr Kenneth Clarke: I congratulate my hon. Friend’s constituent on his birthday yesterday. The argument for retaining a retirement age of 70 for judges of all kinds—I agree that this is a mere stripling for most occupations—is that, unlike me and most other people in their 70s, they cannot be removed from office: they are there for life, and can be removed only for quite serious bad behaviour. If we let everybody go on until whatever age, we will get into difficulties and politicians or somebody else will have to start appraising their performance, as they cannot be dismissed peremptorily. That is what has made us hold back from raising the compulsory retirement age for magistrates and judges at every level.

Ann Coffey (Stockport) (Lab): On 15 May, I asked the Minister when he was going to respond to the recommendations of the Justice Select Committee on the presumption of death in guardianship, which were published on 22 February. He responded, “Shortly”. May I please ask the question again?

Mr Djanogly: The answer is now “Very shortly”.

Tessa Munt (Wells) (LD): A couple of weeks ago, the Under-Secretary of State for Justice, the hon. Member for Reigate (Mr Blunt) visited the high-performing Shepton Mallet prison in my constituency. It has a great team of staff. Will the Under-Secretary or the Secretary of State comment on the fairness of recognising the high numbers of years of service of prison officers with jubilee medals, but not honouring the support staff, who are equally important in the smooth running of this prison, in the same way? Would it not be churlish not to produce some more medals so that they can be given to the support staff as well?

Mr Speaker: It might be churlish to interrupt the hon. Lady, so on this occasion I did not, but a blue pencil would be of benefit.

Mr Blunt: I am grateful to the hon. Lady for her kind remarks about my visit to Shepton Mallet prison, and I would agree about the quality of the performance of all the staff in that prison. I have to say, however, that medals are probably above my pay grade.

Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): The Secretary of State will know that his Department will face tribunal costs of almost £50 million, largely arising from appeals to the work capability

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assessment. Given that 40% of those appeals are successful, is it not now time that his Department and the Tribunal Service discussed with Atos Healthcare how to get some of the money back—otherwise, the public are paying twice for wrong decisions?

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Mr Djanogly: The hon. Gentleman makes an important point. Better decisions need to be made by Departments in the first place so that fewer are appealed, and the Ministry of Justice is working with other Departments to that end.

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Business of the House

3.34 pm

The Leader of the House of Commons (Sir George Young): Mr Speaker, I should like to make a short business statement. The business for this Thursday will now be proceedings on the Supply and Appropriation (Main Estimates) Bill, followed by a debate on two motions relating to professional standards in the banking industry. I shall make my usual business statement on Thursday.

Ms Angela Eagle (Wallasey) (Lab): I welcome that statement from the Leader of the House. Can he tell us how long he expects the debates to last?

Sir George Young: I am grateful to the hon. Lady for her welcome for the statement. The plan is to table a business motion today which will appear on the Order Paper tomorrow. The debate will be the main business on Thursday, and we plan to bring it to a conclusion at 5.15 pm to allow time for debate before 6 pm.

Several hon. Members rose

Mr Speaker: Order. I remind the House that questions on the statement must relate to the statement itself, and thus only to the implications of the change in business. They must not extend to the arrangement of business more widely, and certainly not to the issues of substance that will be the subject of the debate on Thursday. I hope that that is helpful to the House.

Mr John Redwood (Wokingham) (Con): Will the Leader of the House ensure that on Thursday it will be in order to debate banking competition and the structure of the state banks, so that we can have a proper debate on banking?

Sir George Young: The question of whether a speech would be in order would be a matter for you in the Chair, Mr Speaker. My right hon. Friend will be able to see the two motions which we hope to table today and which, in that event, will be on the Order Paper tomorrow. I am sure that, if he catches your eye on Thursday, he will be able to couch his speech in such a way as to remain in order.

I said that there will be debates at 5.15 pm; I meant votes.

Hugh Bayley (York Central) (Lab): As a direct result of the announcement made by the Leader of the House, we will lose the opportunity on Thursday to debate a motion selected by the Backbench Business Committee about VAT and ambulance services. Can the Leader of the House tell me when time will be made available for that debate? Has he a date in mind, and how much time will be provided?

Sir George Young: I very much regret the inconvenience to the House and to Members who were planning to take part in Thursday’s debate on the two motions proposed by the Backbench Business Committee. I intend to find time for one of those two debates between now and the summer recess if possible. I hope to be able to say more on Thursday.

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Mr Bernard Jenkin (Harwich and North Essex) (Con): The other motion tabled for that day is in the name of members of the Public Administration Committee, and invites the House to give its opinion of our recommendation that the adviser on ministerial interests should be able to instigate his own inquiries instead of having to wait for a referral from the Prime Minister. Given that this is a very topical issue and that the Government have yet to respond to our latest report, may I ask my right hon. Friend to find time for that debate, not least because I am sure he would not want the impression to be given that the Government were reluctant to debate the issue?

Sir George Young: The subject that my hon. Friend has raised is indeed important, but my own view—without any disrespect—is that the crisis in the banking industry is even more important, and that it is entirely right for the House to find time to debate it. I can tell my hon. Friend that we plan to honour our commitment to the Backbench Business Committee to find at least 27 days for debate on the Floor of the House in each Session. I hope to say a little more about the time available, but the Committee already has half a day next Wednesday, and I hope that it will also have the last day before the House rises, so it is not the case that it has been totally starved of time.

Natascha Engel (North East Derbyshire) (Lab): The debate on banking is of course very important, and the House understands that. It is only regrettable that it happens to be a Back-Bench day that it is replacing. Will the Leader of the House not only undertake to look into that, but guarantee that both the important debates that have had to be postponed will be held before the House rises for the summer recess?

Sir George Young: I am grateful to the hon. Lady for her comments. At the meeting of the Backbench Business Committee this morning, representations were made to her for a debate on the banking industry, so there is an appetite for that. In response to her request to make good the two half days, as I have said the Committee already has a half day earmarked for sittings motions next Wednesday, and I hope it will also have the last day before we rise for the recess. I will use my best endeavours to find another half day between now and the time the House rises. I cannot go further than that at this time.

Mr Peter Bone (Wellingborough) (Con): This is an outrage, Mr Speaker. This is the Executive imposing their will on Back-Bench time. I invite the Leader of the House to change his decision, as there is some irrelevant business on Monday and we could hold this debate in Executive time then.

Sir George Young: Far from there being irrelevant business on Monday, it is business that I think is so important that it warrants two days of debate. The issue we will be debating on Thursday is also very important. It arose since the last business questions, and there is a debate in the country about the banking industry. I think it is important that this House should also be part of that debate, which is why we have rearranged the business.

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Chris Bryant (Rhondda) (Lab): Will the motions on Thursday require that the Joint Committee operate according to the rules of the primary Chamber, namely the House of Commons, as opposed to the House of Lords, and will there be an opportunity for a free vote on who gets to chair the Committee?

Sir George Young: The issue of who will chair a Joint Committee, if it is set up, would be a matter for that Committee. The hon. Gentleman will be able to see the motions when they appear on the Order Paper, and they will include the two alternatives: the inquiry that has been proposed by the Opposition, and the Joint Committee that has been proposed by the Government. They will both be put before the House.

John Healey (Wentworth and Dearne) (Lab): The Leader of the House’s statement makes it clear that the Government are going to ever greater lengths to avoid a full judge-led inquiry. By the time this House votes at 5.15 pm on Thursday, the Treasury Committee will have held three sessions on the LIBOR scandal, and it is also halfway through an inquiry into governance in the banking industry. If the Leader of the House wants Parliament to do the job, why not let the Select Committee do it, instead of involving the Lords?

Sir George Young: The right hon. Gentleman has begun to engage in a debate that might take place on Thursday, but it goes slightly beyond the scope of the business statement. I hope that in the debate members of the Treasury Committee—including, perhaps, the Chair of the Committee—might express their views on the proposition we will have put before the House.

Kelvin Hopkins (Luton North) (Lab): I want to add my support to the Chairman of the Public Administration Committee, the hon. Member for Harwich and North Essex (Mr Jenkin), and to emphasise that there is support for his view on both sides of the House and the Select Committee. This issue is about devolving powers from the Prime Minister, which would be a significant constitutional change, and it deserves the House’s full attention.

Sir George Young: It is indeed an important matter, and I think I am right in saying that the Chairs of all the Select Committees have added their names to the proposal, so it does have all-party support. I gently say to the hon. Gentleman, however, that in the 13 years before the last

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election, the Labour party consistently failed to give the Prime Minister’s adviser the freedom which is now advocated.

John McDonnell (Hayes and Harlington) (Lab): Presenting just these two options does not necessarily represent the views of all Members. Many will want to have an immediate inquiry by the Treasury Committee, to enable a longer-term inquiry to take place. If that were to happen, we could address the immediate issues and have recommendations about the immediate legislative changes needed to address, in particular, confidence in the City, but then also have a longer-term inquiry that could report back in due course.

Sir George Young: The motions we put down tomorrow for debate on Thursday will be amendable, although whether any amendment is chosen is a matter for the Speaker.

Wayne David (Caerphilly) (Lab): I am glad the Leader of the House remembered to inform us that there will be votes on Thursday. Will the Government parties be whipping on the issue, given its importance and the need for consensus?

Sir George Young: Issues of whipping are a matter for my right hon. Friend the Patronage Secretary. I do not know whether the hon. Gentleman was in the House yesterday, but the Government made their views on this issue known then.

Mark Durkan (Foyle) (SDLP): I thank the Leader of the House for his statement. Yesterday, we were promised one motion, but today we are being told that there will be two, which apparently, given what he has just said, will be rival motions. As has been mentioned, many people see a case for a parliamentary inquiry that will inform amendments to the Financial Services Bill and also see the need for a wider judicial inquiry to get to the bottom of this problem. This “strokery” of good key business being made a casualty of today’s announcement and of rival motions will frustrate Parliament in doing the job it needs to do in response to this crisis.

Sir George Young: I say to the hon. Gentleman that there is a disagreement between the two sides of the House as to the best way forward. The right way to resolve that disagreement is to have a debate and then have a vote on the two alternative propositions. That is how this House makes a decision.

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Honours (Equality of Titles for Partners)

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

3.45 pm

Oliver Colvile (Plymouth, Sutton and Devonport) (Con): I beg to move,

That leave be given to bring in a Bill to make provision for husbands and civil partners of those receiving honours to be allowed to use equivalent honorary titles to those available to women; and for connected purposes.

The aim of this Bill is to ensure that husbands and civil partners of dames and baronesses should be allowed to use a title of some sort if they wish to do so. I feel that the position regarding honours should and needs to be reviewed. I became aware of this anomaly in 1992 when, as a Conservative party agent in Mitcham and Morden, I was working for Angela Rumbold. After a long and distinguished ministerial career, and on ceasing to be the Minister of State at the Home Office, Angela became the deputy chairman of the Conservative party, was in charge of candidates and was created a dame by the then Prime Minister and hon. Member for Huntingdon, the right hon. John Major. I remember that being an enormous honour for my friend, whom I had served for nearly 10 years at that time, but I felt some sorrow for her husband John, who received no recognition for his support—and his finance—throughout her time as a councillor in the royal borough of Kingston upon Thames and her 10 years as the Member of Parliament for Mitcham and Morden.

At the time, I felt that that was unjust, and I vowed to try to correct the anomaly should I ever have the opportunity to do so. Just recently, my hon. Friend the Member for Banbury (Sir Tony Baldry) became a knight bachelor in Her Majesty’s birthday honours list, and I am delighted that his work in this House has been recognised. Although his wife is rightly allowed use the term “Lady” as a prefix to her name, the late John Rumbold received no acknowledgment on his wife becoming a dame of the British empire. Similarly, my hon. Friend the Member for Worthing West (Sir Peter Bottomley) was not recognised while his wife sat in the other place as the Baroness Bottomley of Nettlestone, until he was made a knight bachelor.

I am not going to argue that wives of peers or knights should be forced to give up their ladyship titles. I fear to do so would get me into a great deal of hot water, not only with the readers of The Daily Telegraph, but with my dear Aunt Juliet. Although I have concentrated on Members of this House and the other place, this issue is replicated in other walks of life. My solution to sorting out this anomaly is that the husbands of dames and baronesses should be allowed to call themselves “honourables”—this is similar to the arrangements for children of peers—should they want to do so.

The honours system has evolved over the years. Although the Anglo-Saxon monarchs are known to have rewarded their loyal subjects with rings and other symbols of favour, it was the Normans who introduced knighthoods as part of their feudal government. The first English order of chivalry, the Order of the Garter, was created in 1348 by Edward III. Since then, the system has evolved to address the changing need to recognise other forms of service to the United Kingdom. Interestingly,

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until the l7th century wives of knights were called dames, but that was replaced with the “Lady” prefix, which I suspect was introduced to avoid confusion. Until 2004, the adopted children of peers had no right to any courtesy title. Pursuant to a royal warrant dated 30 April 2004, adopted children are now automatically entitled to the same styles and courtesy titles as their siblings. However, like biological children, they cannot inherit peerages from an adopting parent and so, as they cannot be heirs apparent, adopted sons may only use the styles of younger sons.

I understand that although in the 19th century Scottish judges were allowed to use the honorary title “Lord” and would often take the name of their estates, their wives had to remain “Mrs” and would not be allowed to use the prefix “Lady”. On one occasion, a Scottish judge booked himself and his wife a double room in a Paris hotel and, when he signed in as “Lord and Mrs” whatever, the general manager of the hotel refused to take their booking because he thought that the judge was there with his mistress. He said he did not mind what happened in Britain, but such shenanigans were not going to be allowed in France. Very annoyed, the Scottish judge wrote to Queen Victoria, who pronounced that in future wives of Scottish judges should be allowed to call themselves “Lady”, thereby stopping any confusion.

I ask this: if wives, children and adopted children of knights and peers are allowed to use their titles, why should dames’ and baronesses’ husbands be subject to such overt sexual discrimination? Similarly, surely we need to update the honours system for those who are in a civil partnership. That is why I commend the Bill to the House.

3.50 pm

Chris Bryant (Rhondda) (Lab): The hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) is such a nice chap that it is awfully difficult to disagree with him on most things—[Interruption.] Unfortunately for the hon. Member for Daventry (Chris Heaton-Harris), who is not quite such a pleasant Member of the House, I do disagree on this point. Are there not too many titles already in this country for us to want to dole out a whole load more? We have more than 800 peers, plus the countless hereditaries—the Scottish hereditaries, the Irish ones who still have rights in this country and the English hereditaries. On top of that, we have all their heirs, as the hon. Member for Plymouth, Sutton and Devonport mentioned, who have subsidiary titles and are referred to as “Lord This that and the next thing”, “Viscount This that and the next thing”, “Earl Something” or whatever else.

I checked this earlier and it is even possible to buy a plot of land that gives a person the right to be called a laird, lord or lady from www.highlandtitles.com. I see the hon. Member for Epping Forest (Mrs Laing) nodding; she has obviously done it already. The website states:

“Many of our customers choose to update their driving licence, credit cards and such like to reflect their new status.”

What a delight! I do not want to praise just one company; there is also www.lordtitles.co.uk. For £18.95, or for an additional £6.95 for a premium title, a person can get their own title. The website effectively guarantees that they will be

“offered the best seats in restaurants”

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and get

“airline upgrades and top-notch service.”

We know all that is true because the editor of GQ, Dylan Jones, who wrote an ironic, I hope, biography of the Prime Minister, which I am about to read now, wrote:

“At last my chance to lord it over you. Ladies and gentlemen, please grab your forelocks and give them a good old tug. Because I have just become a Lord of the Manor…the title I have was purchased from a website called lordtitles.co.uk…and I intend to lord it over everyone I know…I look forward to…flashing my credit card at impressionable waiters in New York and Los Angeles.”

This is all, of course, a pile of nonsense. The hon. Gentleman mentioned the fact that in 2004 the Earl Marshal finally caught up with the fact that some peers had adopted children and allowed by warrant that they could use their courtesy titles but not inherit. That seems more scandalously unfair than anything else mentioned by him. It means that Andrew Tottenham, the adopted son of the Marquess of Ely, has to be called Lord Andrew Tottenham, not Viscount Loftus.

I note that Debrett’s, which is where the hon. Gentleman’s speech seems to have come from, states:

“It is very important that anyone corresponding with a member of the peerage is aware of the rank and precedence of the person he or she is in contact with, so that the correct form of address may be used.”

To be honest, it is not important to my constituents in the Rhondda. We have only one person with a title that I am aware of living in the Rhondda, Baroness Gale of Blaenrhondda. She is from Blaenrhondda, and the people of Blaenrhondda love her, but she does not own Blaenrhondda as the titles were originally intended to denote.

There is no need for legislation to change the courtesy titles—no need at all. These courtesy titles are no different from the fact that we call one another Mr, Mrs, Esquire, the Reverend or the Honourable. They are merely courtesy titles, and all we need to do, if we want to, is change our custom and practice. There is no need for legislation. The courtesy titles that have applied to the wives of people who have peerages, knighthoods or baronetcies have made sense only when those wives have chosen to take the name of their husband, so that, for instance, Mrs Prescott becomes Lady Prescott and Mrs Meale becomes Lady Meale.

If I were ever to marry a woman—I know that is unlikely, but I very nearly got there a long, long time ago—I certainly would not be marrying the kind of woman who would want to take my name. Many women

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today choose to keep their own name. Consequently, there is an additional layer of prejudice that the hon. Gentleman’s Bill would introduce against people who choose not to take their partner’s name. That applies to those who enter into civil partnerships as well.

What the hon. Gentleman is suggesting would devalue those who get honours in their own right. For instance, take Lady Bottomley of Nettlestone. I have no idea why she is “of Nettlestone” because she was born in Dunoon, and Nettlestone is a place in the Isle of Wight, which is nowhere near the place where she was formerly a Member of Parliament. Her husband—the hon. Member for Worthing West (Sir Peter Bottomley)—was knighted in 2011. I am delighted that he is a knight of the realm but I think it is unfair that his knighthood should be eclipsed by his wife’s peerage and, therefore, the title that he would get as a courtesy title under the proposed Bill.

Similarly, I am delighted that my right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock) is now a dame, but I hope very much that her husband, who is the hon. Member for Aberdeen North (Mr Doran), will also at some point get a knighthood in his own right and not have to rely on a courtesy title.

The custom is a relic of a bygone age when women were merely adjuncts. In effect, they were referred to as the chattels, along with the household chattels, of a peer or a knight of the realm. I know that the hon. Member for Plymouth, Sutton and Devonport thinks his Bill will bring greater equality and that, for instance, for lesbian couples and gay couples it will mean that they will suddenly be able to provide a courtesy title for their partner, but think of the complications likely to occur when Lord Alli’s partner is suddenly able to acquire a title which bears no relation to his own title. If the hon. Gentleman were going to do something for the LGBT community that would increase equality, he would be far better off supporting marriage equality than introducing this rather futile piece of legislation.

Finally, if Conservative MPs have to rely on introducing ten-minute rule Bills of this kind, it seems to me that they are a party increasingly out of touch with the modern world.

Question put and agreed to.

Ordered,

That Oliver Colvile, Mrs Eleanor Laing, Sheryll Murray, Dan Byles, Mr Marcus Jones, Mr Lee Scott, Jack Lopresti, Ian Paisley, Caroline Dinenage, Keith Vaz, Sarah Newton and Stephen Gilbert present the Bill.

Oliver Colvile accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 9 November 2012, and to be printed (Bill 55).

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Finance Bill

[2nd Allocated Day]

Consideration of Bill, as amended in the Public Bill Committee

New Clause 4

Face-value vouchers

‘(1) In Schedule 10A to VATA 1994 (face-value vouchers), after paragraph 7 insert—

“Exclusion of single purpose vouchers

7A Paragraphs 2 to 4, 6 and 7 do not apply in relation to the issue, or any subsequent supply, of a face-value voucher that represents a right to receive goods or services of one type which are subject to a single rate of VAT.”

(2) The amendment made by subsection (1) has effect in relation to supplies of face-value vouchers issued on or after 10 May 2012.

(3) Subsection (4) applies where—

(a) a face-value voucher issued before 10 May 2012 is used on or after that date to obtain goods or services,

(b) paragraphs 2 to 4, 6 and 7 of Schedule 10A to VATA 1994 would not have applied in relation to the issue, or any subsequent supply, of the voucher because of paragraph 7A of that Schedule if the voucher had been issued on or after 10 May 2012, and

(c) VAT is not payable under the law of another member State on the supply of the voucher to the user.

(4) The use of the voucher is to be treated for the purposes of VATA 1994 as a supply of the goods or services by the person from whom they are obtained to the user of the voucher.’.—(Mr Gauke.)

Brought up, and read the First time.

3.59 pm

The Exchequer Secretary to the Treasury (Mr David Gauke): I beg to move, That the clause be read a Second time.

Mr Speaker: With this it will be convenient to discuss the following:

New clause 3—Sixth form colleges (exemption from VAT)

‘In Schedule 9 to the Value Added Tax Act 1994 (Exemptions), in Group 6 (Education), the following shall be added at the end of Note (1) (description of eligible body)—

“(g) a sixth form college”.’.

New clause 10—VAT: review

‘No new Order shall be made under section 30(4) or 31(2) of the Value Added Tax Act 1994 unless the Chancellor of the Exchequer has fully reviewed the impact of any such Order on jobs, living standards and businesses, making reference to the HMRC Consultation “VAT: Addressing Borderline Anomalies”, and placed a copy of the review in the Library of the House of Commons.’.

New clause 12—Rate of VAT—

‘(1) In section 2(1) of the Value Added Tax Act 1994 (Rate of VAT) for “20 per cent.” substitute “17.5 per cent.”.

(2) Subsection (1) shall have effect from Royal Assent and shall expire at such time as the Government presents to Parliament a report stating that the UK economy has returned to strong growth.’.

Government amendment 17.

Government new schedule 1—‘Categorisation of supplies.

Government amendments 18 to 20.

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Mr Gauke: A number of VAT measures are to be debated today. To help the House, let me outline how I intend to deal with them. I will first address new clause 4, which relates to VAT on face-value vouchers, before turning to Government amendment 17 and new schedule 1, which address VAT anomalies. I am also conscious that a number of new clauses have been tabled by other right hon. and hon. Members, which I will respond to more fully later in the debate. I will also address amendments 18 to 20, which are consequential amendments dealing with VAT anomalies.

New clause 4 is a Government change to protect revenue. It guards against the possibility of widespread VAT avoidance by the use of so-called single-purpose face-value vouchers. Because of the seriousness of the threat, I announced the change by way of a written ministerial statement on 10 May. Following a decision by the European Court of Justice in May, we need to amend our legislation as it relates to single-purpose face-value vouchers, such as phone cards, so that VAT is due when such vouchers are issued.

We need to act with immediate effect to prevent a loophole due to the mismatch between the ECJ decision and current UK legislation. This could occur because individuals could argue that VAT cannot be collected on redemption by virtue of the Court’s decision, and it cannot be collected on issue by virtue of UK legislation. Therefore, the new clause protects around £200 million of revenue a year and guards against avoidance that could otherwise run into hundreds of millions of pounds.

The changes made by new clause 4 will remove single-purpose face-value vouchers from the UK’s VAT regime. For face-value vouchers more generally, normal VAT rules will apply and they will be taxed when they are first sold. There is also a transitional rule to ensure the taxation of vouchers that were issued before 10 May but used to pay for goods and services after that date, other than where that would lead to double taxation.

It might be helpful to hon. Members if I provide a little background to the new clause. As I have said, the issue arose in connection with a recent decision of the European Court of Justice concerning the VAT treatment of cross-border supplies of single-purpose vouchers, in this case phone cards supplied by a business in the UK to customers in other member states. Most member states tax single-purpose vouchers when they are issued, but in the UK the issue is disregarded and VAT becomes due only when the vouchers are used to obtain the underlying goods or services. This treatment is welcomed by UK businesses, because it delays the point at which they have to account for VAT, so creating a cash-flow advantage and an absolute saving on those vouchers that are issued but never redeemed.

However, in the case before the European Court of Justice, the business concerned complained that the difference in treatment between the UK and some other member states caused double taxation, because VAT was due in the member state where the card was sold to the final consumer and again in the UK when it was used to pay for telephone calls. The Court found against the UK’s approach in such a way that, until UK law was changed, suppliers of single-purpose face-value vouchers could have escaped VAT altogether. In the current market, that would have led to a tax loss of £200 million a year.

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In addition, if UK law had not been changed there would have been the risk of widespread avoidance involving the use of single-purpose vouchers, which could have led to a significant loss of tax.

To give an example, a car manufacturer could have issued a face-value voucher for a new car of £15,000, which the customer could then redeem at his local dealership. UK law said that there was no tax on the issue of the voucher, and the Court of Justice of the European Union said that there was no supply at redemption and, therefore, no tax. That may be an extreme example, but it illustrates the problem that could arise in a variety of retail scenarios.

The changes that new clause 4 make would remove single-purpose face-value vouchers from the UK’s VAT regime. For face-value vouchers more generally, this means that normal VAT rules will apply, and such vouchers will be taxed when first sold. There is also a transitional rule to ensure the taxation of vouchers that were issued before 10 May but used to pay for goods or services after that date, other than when that would lead to double taxation, but the Court’s definition of what constitutes a single-purpose voucher allowed us to retain the UK’s treatment for most vouchers.

The Court took the view that a single-purpose voucher is one that can be used to obtain goods or services of only one type, and which are subject to a single rate. Single-purpose face-value vouchers that are for one type of good or service form only a small proportion of the overall market for face-value vouchers, because most face-value vouchers can be exchanged for a range of goods or services. For example, a cinema voucher may be exchanged for tickets as well as for confectionary. Both the entry to see the film and the confectionary make suppliers liable to standard-rate VAT, but as they cannot be said to be of the same type the voucher is not caught by the judgment. We therefore expect the change to affect a relatively small number of businesses, and I hope that that explanation is helpful to the House.

In conclusion on face-value vouchers, the new clause is a proportionate response to the significant risk of tax loss arising from the use of single-purpose vouchers. It is carefully targeted against the risks and retains the VAT treatment for the great majority of vouchers sold in this country, and I commend it to the House.

Amendment 17 and new schedule 1 relate to the categorisation of suppliers for the purposes of value added tax. New schedule 1 would implement the changes announced at the Budget, which have been refined in the light of consultation, to address anomalies and loopholes in the area of VAT liability. The VAT system contains a number of anomalies along the borderlines of VAT exemptions and VAT zero rates, and addressing some of those anomalies and loopholes is precisely what the Chancellor announced at the Budget.

The Government announced at the Budget that they were introducing a number of measures to address some of those VAT anomalies, reducing uncertainty, costs for business and for HMRC, and raising revenue. On Budget day, we proposed a number of measures and launched a consultation to engage stakeholders and to listen to their ideas. The measures that we announced proposed to clarify the treatment of catering to ensure

3 July 2012 : Column 772

that all hot takeaway food is taxed, and to clarify the meaning of “premises” in the context of whether food is consumed on or off a supplier’s premises.

We proposed also to tax sports nutrition drinks to ensure that all sports drinks receive the same tax treatment, and to remove self-storage from exemption in order to ensure that all suppliers of storage receive the same tax treatment and to counter avoidance.

Nigel Mills (Amber Valley) (Con): Will my hon. Friend give way?

Mr Gauke: I certainly will, although at this point I am just setting out what we set out at the Budget. I will turn to each individual measure in more detail in a moment and happily give way to my hon. Friend at that point.

We propose to remove the anomaly whereby approved alterations to certain listed buildings are zero-rated while alterations to other buildings and repairs to and maintenance on all buildings are standard-rated. We included transitional arrangements for alteration works to listed buildings which had been contracted before the Budget, and we wanted to put beyond doubt the fact that VAT applies to the rental of hairdressers’ chairs.

Finally, we proposed to ensure that holiday caravans are taxed consistently at the standard rate of VAT. The proposal, as set out in the consultation document, was that all the changes would take effect from 1 October via secondary legislation, supported by anti-forestalling provisions in this Bill. The consultation was opened on 21 March, and overall HMRC received some 1,500 responses. Owing to the volume of interest in the consultation, we decided to extend it, and since it has closed we have reflected fully on the points made during the process.

As the House will be aware, in two areas—hot food that is cooling down naturally and static holiday caravans—the Budget proposals created a high degree of business uncertainty, so the Government wanted to let people know our preferred course of action as soon as possible; we did that on 28 May. Last Thursday, we published a consultation response document and tabled the new schedule setting out our approach to all the measures on which we consulted. We stand by the rationale for removing anomalies, but have made several refinements, including those we announced on 28 May. They are intended to improve the policy and reflect the practical concerns raised in the consultation.

Diana Johnson (Kingston upon Hull North) (Lab): HMRC produced a document on the impact of the caravan tax, but can the Minister provide enlightenment on the impact of the 5% VAT imposition? There are no figures now on how many jobs will be lost and by how much demand for static caravans will decrease, and I was hoping that the Treasury had worked that out.

Mr Gauke: Clearly there is a substantial difference between 20% VAT and 5% VAT. We set out our estimates in relation to the 20% rate, and some of the concerns that people took from what HMRC set out were, I think, somewhat greater than the reality warranted, because the impact set out and the assumption regarding the reduction in demand related solely to that element to which the change from zero-rated to standard-rated

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applied. On many caravans that are sold, the VAT is recovered—VAT already applies to an element of the price of a static caravan: that of the fixtures and fittings.

We do not think the impact of the 5% rate is likely to be substantial. In the usual course of business there are tax changes—national insurance contributions and rates are the subject of regular fluctuations—and in many cases the VAT change may well be absorbed. In addition, we have given industry much more time by deciding not to implement the change until April next year. Caravan manufacturers will have the opportunity to sell more caravans in advance of next year’s summer season—the information we have is that spring tends to be the busiest period. The overall impact on the industry is therefore unlikely to be significant.

Before discussing each of the anomalies and saying more about static caravans, I would like to give the House a little bit of history about the VAT system. As I am sure all hon. Members know, the VAT system was introduced in 1973 and amendments and adjustments were being made as early as 1974. The then Labour Government added confectionary, soft drinks, ice cream, potato crisps and certain other savoury snacks—

Mr Speaker: Order. My ears pricked up when the Minister suggested he might furnish the House with what he gently described as “a little bit” of information about VAT. In offering to the House—in a public-spirited fashion, I am sure—a potted history of the value added tax system, I am sure that he will have regard to the new clause that he is presenting.

Mr Gauke: I certainly will, Mr Speaker. I did say I would give a little history and, following your guidance, I will focus on the little.

I hope it helps the House if I explain that, in the almost 40 years in which we have had VAT, there have been changes from time to time. There were changes in the VAT on building alterations in 1982 and 1984, on hot takeaway food in 1984 and on newspaper and magazine advertising in 1985—I could go on, Mr Speaker, but let me move on.

4.15 pm

I am sure that hon. Members are conscious of the ongoing debates on whether a Jaffa cake is a cake or a biscuit. It is a regular pub quiz question, Mr Speaker; I am almost tempted to try it on you this afternoon. There was a question on a Radio 4 quiz about the amount of potato in a Pringle. I highlight those points because there are complexities and anomalies in the tax system and addressing that is the purpose behind the new schedule and the policy behind the announcements in the Budget, not the least of which related to hot food. It is fair to say that the current rules on the VAT liability of hot takeaway food have been made complex and unfair by a patchwork of different legal decisions over the decades, which is very much what we are debating today.

VAT has always applied to food consumed on the supplier’s premises, notably in restaurants and cafés, and it was extended to hot takeaway food in 1984. The definition of “hot takeaway food” in the 1984 legislation is that the food

“has been heated for the purposes of enabling it to be consumed at a temperature above ambient air temperature; and…is above that temperature at the time it is provided to the customer.”

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There have been repeated efforts since the 1980s to chip away at that boundary. A number of businesses have argued in litigation that although the food that they provide to their customers is hot and is taken away, it should not be taxed as hot takeaway food but should be zero-rated.

Some have successfully argued that the purpose in heating the food was not to provide their customers with food to be eaten hot and that they heated their food for other purposes—for example, for hygiene reasons, to finish the cooking process, to provide evidence of freshness, to create an aroma or to improve appearance, crispiness or texture. Those arguments have not always been successful, but when they have been they have allowed some businesses to secure zero rating for a range of hot food products such as hot rotisserie chickens, meat pies, pasties and panini.

However, other businesses have continued to apply VAT to the similar hot food products that they sell. They have accepted, or the courts have ruled, that their purpose in heating hot food products is so that the customers can eat them hot. Under the current rules, a small independent fish and chip shop will have to charge VAT on its hot chicken and hot pies, but a major supermarket will argue that its rotisserie chickens or heated pies are zero-rated.

The current rules mean that many customers simply do not know whether they are being charged VAT on their hot food, because the treatment currently depends on a particular supplier’s purpose in heating the food, and identical products can have different VAT treatment. The new rules that we are introducing in new schedule 1 will ensure a level playing field. The taxation of hot food will be the same whether the supplier has used a hot cabinet to keep food hot so that it can be eaten hot or to ensure enticing aromas.

During the consultation, many concerns were expressed about bakery products such as Cornish pasties, which are not kept hot after being cooked but are left to cool down naturally. As those products are sold while they are cooling down naturally, under the changes as originally announced their VAT liability would change when they reached ambient temperature and were no longer hot. As has been previously announced, we accepted that the implied requirement to test the temperature of such products at the point of sale could cause practical difficulties, so the revised legislation takes a slightly different approach to creating the level playing field.

The new definition of “hot food” retains the condition that the food is hot when provided to the customer. It also retains the current criterion of the supplier’s purpose in heating the food, but adds a number of other criteria to define other circumstances in which hot food will be standard-rated. Those additional criteria are that the food is either heated to order, kept hot after being heated, sold in special heat-retaining packaging or other packaging specifically designed for hot food, or advertised or marketed as hot.

Nigel Mills: My hon. Friend refers to the marketing of such things as sold hot. Will he confirm that a baker who markets something as freshly baked would not fall foul of this provision, given that presumably when something is freshly baked it is hot? I think that the intention is that, say, a freshly baked sausage roll that is

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cooling down would not be subject to VAT, but if that marketing term were used it could perhaps be caught by the provision.

Mr Gauke: The final details as to what exactly will or will not constitute marketing something as hot will be set out in the HMRC guidance. However, I take on board my hon. Friend’s perfectly reasonable point that something that is presented essentially as fresh, but cooling, is different from something that is clearly presented as hot at the point at which one purchases it.

Stephen Gilbert (St Austell and Newquay) (LD): I am tempted to ask my hon. Friend whether he knows how many different chocolate eyes a gingerbread man must have to go from being zero-rated to standard-rated. The answer is on HMRC’s website.

On packaging, new schedule 1 uses the wording:

“whether or not the packaging was primarily designed for that purpose”.

There is some ambiguity as to whether a simple paper bag might be caught by that definition. Can the Minister assure us that people will be able to get their pies and pasties in a paper bag from the bakery without their being standard-rated?

Mr Gauke: The purpose of that wording relates to packaging that is specifically designed for the retention of heat. For example, hon. Members will all have experience of a paper bag with a foil interior that is used for such purposes. I do not think that a simple paper bag would fall into that category. In most people’s experience, pasties and suchlike are generally left on shelves rather than contained within bags while in the shop. I hope that that provides some clarification.

Catherine McKinnell (Newcastle upon Tyne North) (Lab): We have arrived at this change after 20-odd years in which, through various legal challenges, we have come to our current conclusions on this aspect of VAT. Can the Minister assure us that we are not facing another 20 years of litigation in order to get these finer details clarified?

Mr Gauke: One can never rule out the fact that some people will be litigious and try to take a creative view of any particular guidance. However, we believe that we have reached the right position after much consultation and discussion with the industry and with hon. Members, many of whom have been very engaged in the matter. I look around the House and see at least two Members who have been in my office to make representations on this point. We believe that we have reached a position that is sustainable and fair, and that is what we are putting to the House in the new schedule. The additional criteria will ensure that hot food will generally be taxed at the standard rate of VAT, but if food that would be zero-rated when cold is bought when it happens to be cooling down, but is not yet cold, it will still be zero-rated provided that it does not meet any of the criteria that I set out. These changes will add further tests to make the relief less open to abuse and provide a level playing field for all businesses supplying their customers with hot food.

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Turning to the issue of holiday caravans, which we have touched on briefly, the VAT zero rate was originally intended to apply to the sale of caravans used only for residential purposes. To achieve that objective, the rules drawn up in the 1970s applied tax only to the sale of smaller caravans that could legally be towed on UK roads by a typical family car. However, over the years, an increasing number of large caravans have been used for holiday purposes. Those caravans inadvertently benefit from the VAT zero rate that was intended for residential caravans. That has led to widespread inconsistency in the VAT treatment of the sale of holiday caravans.

Under the current legislation, any caravan wider than 2.55 metres or longer than 7 metres is zero-rated as a residential caravan. The Government propose to replace the definition of a zero-rated caravan based on size with a new definition based on whether the caravan has been designed for residential use. To achieve that, we propose a new test that links the zero-rating with British Standard 3632, which indicates that the caravan has been designed and manufactured for continuous, all-year-round occupation and is therefore suitable for residential accommodation.

We consulted on whether the additional criteria should be added to ensure that the zero rate applies only to caravans intended for residential use. Given the reaction to the proposal, we decided that rather than having a single dividing line between a zero rate of VAT on residential caravans and a rate of 20% on static holiday caravans, static holiday caravans should be subject to VAT at the reduced rate of 5%. Static residential caravans—those that meet BS 3632, or early equivalents in the case of second-hand sales of older caravans—will remain zero-rated, as per the Budget proposal. We do not intend to restrict the zero rate further by adding additional criteria.

Diana Johnson: Will the Minister give way on that point?

Mr Gauke: There is a little more that I was going to say that may be helpful to the hon. Lady, but I will give way at this point.

Diana Johnson: I wonder whether it is sensible to make decisions on tax policy based on manufacturing standards. Manufacturing standards will change and no doubt get better, so is that a sensible way of operating tax policy?

Mr Gauke: In this particular circumstance, the manufacturing standard provides a better definition or borderline than the size criteria that I set out. It was put to us in the consultation that it would be very easy for manufacturers to do a bit more here and there, and that a static caravan that was once not BS 3632-compliant suddenly would be. When we investigated that, we concluded that it was quite expensive and difficult to meet BS 3632. Genuine residential caravans meet that standard, but non-residential, holiday vans do not. It seems to be an effective borderline. Of course these matters will be kept under review, but we think that this is a sensible conclusion and one that the industry recognises. The evidence that the industry has put to us is that BS 3632 adequately distinguishes between residential caravans and static caravans.

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It is worth pointing out that BS 3632 caravans tend to be more expensive and are built to a higher specification. For those reasons, they tend to be used more in the residential market than in the holiday market. It is worth coming back to the intention of the 1970s definition for zero-rated caravans.

We recognise that static holiday caravans fall in a grey area between residential property and temporary holiday accommodation, which have different tax regimes. We have therefore produced the fair compromise of a 5% VAT rate. The argument was sometimes made to us that static holiday caravans should be treated like a second home, on which VAT is not paid. However, council tax is paid on a second home, which is not the case with static holiday caravans. Imposing the council tax regime on static caravan homes would have placed a significant burden on their owners and holiday parks, so we believe that we have made a fair compromise. As I said earlier, to give the industry more time to adjust, the measure will be delayed until 6 April 2013. All the other measures that we are discussing today will proceed as planned on 1 October this year.

4.30 pm

Catherine McKinnell: My hon. Friend the Member for Kingston upon Hull North (Diana Johnson) asked about the impact that the current proposals will have on the industry. Will the Minister confirm that the Treasury has not yet calculated that impact?

Mr Gauke: We assessed what the impact would be if VAT was at 20%, and obviously 5% is a quarter of that, so one can draw correlations. Most industries supply VAT-inclusive durable goods at a profit, so it is reasonable to apply VAT in this case. The impact that we originally set out in the tax information and impact note at the time of the Budget will be significantly lessened by the change to the 5% rate, particularly bearing in mind that there is already a full 20% rate on a fair proportion of static caravans because of the durable goods contained within them.

Andrew Percy (Brigg and Goole) (Con): We can partly assess what the impact will be from what manufacturers themselves have said, which is that they do not expect the 5% rate to have an impact of any great severity on them. However, it is important to recognise that there needs to be stability, so an assurance that the Government will not raise the rate in future would be welcome, as would an undertaking that there will be an assessment of the rate after a year or two to see whether it has had any impact. Generally, the industry has welcomed it.

Mr Gauke: My hon. Friend is right to say that the industry has welcomed the change to our policy. As we would expect, it does not anticipate the 5% rate to have a significant impact on it. As far as the stability of the rate is concerned, the standard wording is to say that all decisions are for the Chancellor and all taxes are kept under review, but I do not anticipate that the Government will return to this issue in any great hurry. I am sure my hon. Friend will be pleased about that. Were we to do so, I have no doubt that he would make strong representations once again. I hope he will take some comfort from that.

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Diana Johnson: The National Caravan Council has said that the caravan industry is fragile after the problems that it experienced in 2008. Based on the figures in the KPMG report, there would have been 6,000 job losses if the imposition of the 20% rate had gone ahead. Am I right to assume that with the 5% rate, the Treasury is working on the assumption that the impact will be a quarter of that number, which means 1,500 job losses?

Mr Gauke: Perhaps it will help the hon. Lady if I run through the situation. We have to raise a certain number of taxes, and VAT probably does less harm to the economy than almost any other tax that one could mention, whether it be employers’ national insurance contributions, which reduce the number of jobs, or corporation tax, which reduces investment. There is an issue with any tax.

On this particular policy, however, we are talking about a 5% rate on 80% of the price of a caravan, the other 20% being standard rated already, and on 85% of sales, the other 15% being standard rated already—or rather the purchaser being able to recover input taxes on it. There is then an elasticity of demand, and the 5% rate might result in a 5% reduction in demand, but of course that involves various assumptions and some uncertainty. As my hon. Friend the Member for Brigg and Goole (Andrew Percy) said, however, much of the industry does not think it will have a significant impact.

Simon Hart (Carmarthen West and South Pembrokeshire) (Con): I wish to reinforce that point. The site operators, of which, as the Exchequer Secretary knows, there are many in south and west Wales, would also come to the same view—although not ideal, they thoroughly understand the situation and recognise it as one they can manage for the foreseeable future. They much welcome the news that it will not be revisited in the foreseeable future.

Mr Gauke: My hon. Friend is absolutely right. Tax is but one of the various factors that will have an impact on demand, and VAT is but one tax. I shall not dwell on it, Mr Speaker, but I should mention that the Government are putting in place a much more competitive corporation tax regime, which will be to the advantage of caravan manufacturers and many others.

I shall touch briefly on alterations to listed buildings. The reaction to our announced changes to VAT on approved alterations to listed buildings demonstrated the need for the measure on the grounds of simplification alone. The consultation and media coverage have highlighted the huge uncertainty over whether an item of building work is an alteration or a repair. The purpose of the measure is to avoid the need for such discussions by applying the same VAT liability to all alterations, repairs and maintenance. Repairs and maintenance to all buildings, including listed buildings, have always been liable to VAT, and alterations to non-listed buildings have been since 1984. The Budget announcement changes none of that, although a zero rate currently applies to alterations to protected buildings—mostly listed dwellings but also scheduled monuments and listed buildings used for charitable and other residential purposes.