I want also to talk about transportation in rural areas, because it also has an effect. There is a double whammy: people are paying more for oil and off-grid gas and more for transportation and fuel. I very much welcome the Government’s freeze on fuel duty. I have campaigned for it for a long time, under previous Governments, and previous Chancellors have frozen the duty for many years. Members will recall that the fuel duty escalator was introduced in the ’90s. It escalated quite a lot, and there was a crisis point in 2000, when there were fuel protests in this country. There were price freezes thereafter for a number of years. People in my constituency and many rural areas in the UK are affected by the fact that they are paying

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VAT on their fuel. That 2.5p in every pound that people spend on diesel or petrol has an impact and creates a cost of living crisis in such areas. We are not talking about cars as luxury items; we are talking about essential means of transport.

Mr Mark Williams: Does the hon. Gentleman share my disappointment that the whole of Wales is excluded from the Government’s laudable attempt to achieve a derogation of fuel duty? That is despite Wales being a sparsely populated area by anyone’s standards—his constituency and mine certainly are.

Albert Owen: I agree with the hon. Gentleman. I compliment the Government for introducing the fuel duty rebate and for making representations on the issue. I am sure that the Minister and my hon. Friend the shadow Minister will know that I am not shy of criticising my own party, and I was not shy of criticising it when we were in government, because it should have taken that step. Nevertheless, it is wrong now to exclude a whole area—a whole country—because it is within 100 miles of a refinery. No one in my area, the most north-western point of Wales, can plug into a refinery. The independent suppliers are paying extra for fuel because of the cost of transport from those very refineries. The 100 mile radius principle is really a fly in the ointment. People in Wales, unlike those in remote areas of Scotland and in some parts of England, have been seriously disadvantaged. They are paying extra.

Mr Dodds: I want to pick up on a point made in the previous intervention. The hon. Gentleman will no doubt join me in expressing concern and anger that the rural fuel rebate scheme does not apply to any part of Northern Ireland either, even though we have the highest diesel and petrol prices anywhere in the UK and, indeed, sometimes in Europe. This is a major issue for us as well, and it must be revised and looked at.

Albert Owen: Absolutely. The criteria should take rural areas into account, as well as peripheral areas of the UK, because they are the ones that are disadvantaged. Someone in a rural area of central Yorkshire, for example, could probably travel in all directions to get a better deal on their fuel. However, for someone in a peripheral area, such as the hon. Member for Ceredigion (Mr Williams), there is only one way to get their fuel.

Roger Williams: The hon. Gentleman and I are at one on this issue. I emphasise the importance of independent petrol retailers, without whom many rural areas would not be served. They also serve to keep the bigger suppliers and supermarkets honest: without the independents, we do not know what the supermarkets would charge.

Albert Owen: Absolutely. I ask the Minister to put pressure on the Treasury to reconsider the criteria for the fuel rebate, so that areas such as the periphery areas in west and north Wales and Northern Ireland can be given a fair chance. There is absolutely no doubt that people in those areas pay more for their fuel, as any cost comparison shows. That fly in the ointment—being 100 miles from a refinery—should be excluded from the criteria and the formula. I reiterate that I congratulate the Government on taking the initiative forward, because some areas of the UK will benefit.

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I finish on the green deal, which I think everybody in the House welcomes. We welcome the focus of attention on alleviating fuel poverty and introducing energy efficiency measures. However, the green deal that has gone through the House and is now in place is a little cumbersome and expensive. It is well-intentioned, but the rates at which people would borrow money are too high. Again, there is a simpler solution.

I will try to answer the question asked by the hon. Member for Brecon and Radnorshire about boiler replacement. The evidence that I am hearing—I am talking to many of the energy companies as well—is that most energy is lost through inefficient boilers, many of which are in older properties. They are placed in the living room, and most of the heat goes up the chimney. The boilers themselves are inefficient, so the heat goes out through the flues. A package is needed to help with boiler replacements, because modern boilers—condensing boilers, for example—are hugely energy-efficient.

We must remember that most households replace their boilers only after they break down. We are probably all guilty of that: “Oh, this inefficient boiler’s got another year left in it.” That is why the scrappage scheme under the last Government was so successful. People realised, “I might have a year or two to go on this one, but it’s well worth replacing it now.” We are finding—anecdotally, but I have read it on numerous occasions—that there is a pattern. Many people who want to use the green deal get the assessment, go through all the paperwork and find out that just replacing the boiler or the thermostat on the radiator does the job. That is why I think that we should have a reduced version of the green deal, so that people can get quick fixes, perhaps while raising revenues for exterior insulation, for example, for hard-to-heat homes.

There are some good examples in Wales of energy companies—yes, I pay tribute to the big six for this—giving free insulation for lofts, or giving pensioners additional insulation in their lofts and walls. That has been a huge success, but the green deal is missing a trick due to its cumbersome nature. Fuel poverty is hugely important, and I am pleased that it has come to the House. This is an important debate on an important issue. The hon. Member for Brecon and Radnorshire has outlined the issues in a measured way, and I know that the Minister will respond in an equally measured way.

It is in everybody’s interest that we reduce fuel poverty and the amount of carbon emissions. It is in everybody’s interest that we have energy-efficient homes and businesses. When we have this debate, we tend to exclude businesses. We need energy-efficient businesses. Members from all parts of the United Kingdom have businesses in their constituency that are concerned about their energy prices, and they do not get the deals that many individuals get that are easy to switch. It is difficult for small businesses as well. I am pleased to have taken part in this debate, and I hope that the Minister will consider some of the points made by the hon. Member for Brecon and Radnorshire and me. The issue unites the House, and the House of Commons is at its best when united.

3.14 pm

Mr Mark Williams (Ceredigion) (LD): It is a pleasure to serve under your chairmanship, Mr Sheridan, and a privilege to follow the hon. Member for Ynys Môn

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(Albert Owen) and my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), who has done so much in this area. He has done the House a good service in securing this debate. He set the parameters for the debate clearly and effectively, stating what we can do to improve energy performance and reduce bills in our homes. We heard some interventions from the Opposition about the immediacy of the issue—a point that I do not think is lost on anybody—and my hon. Friend gave a longer-term vision of the action that must start soon. The truth is that both approaches must be undertaken.

This debate is particularly timely, given that last week was cold homes week, a campaign to raise awareness of the Energy Bill Revolution that we have heard about in gatherings here over the last week. I will use this opportunity to discuss some smaller measures that could be taken to make our homes more fuel-efficient and keep them warm, an issue on which my local authority has been active.

Research undertaken by the Energy Bill Revolution campaign has shown that overall, the UK ranks bottom of 16 western European countries with comparable properties on a range of factors, including the affordability of space heating units, the share of household energy spent on heating, the percentage of households in energy poverty, the number of homes in a poor state of repair and the thermal performance of walls. That is particularly pertinent to rural Wales, as I said in an intervention, as much of our housing stock is dated and of a poor standard, with poor heating systems, insulation and so on. It is of great concern to hear that we are performing so badly compared with our European counterparts, but it goes to show that if the issue is dealt with in the right way, it can be addressed effectively, as it has been elsewhere.

Rushanara Ali: Does the hon. Gentleman agree that although the Prime Minister spoke well, before he was elected, about having the greenest Government ever, the Government are missing a trick by not investing in the kinds of initiative that can genuinely create a green economy and jobs, and deal with some of the issues that he and other colleagues have raised, including retrofitting and improving energy efficiency? Will he join us in encouraging his Government to take more active steps to consider how to promote the green economy while addressing fuel poverty?

Mr Williams: I am grateful for that provocative intervention. I will not join the hon. Lady. I actually aspire, like the hon. Member for Ynys Môn, to a cross-party approach to the issue. The Prime Minister and my party leader made various comments before the general election, many of which have been or are being delivered on, through the green deal. However, I do agree with the hon. Lady that we must be even more ambitious and take the agenda forward, so there is partial agreement.

The Energy Bill Revolution campaign, in whose measures I am particularly interested in this debate, calls for revenues from two carbon taxes—the EU emissions trading scheme and the carbon floor price—to be invested in a widespread energy efficiency programme in the hope of eliminating poverty. The campaign believes that investment in improving the energy efficiency of

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the UK’s leaky homes would save the average family money, provide the jobs mentioned by the hon. Member for Bethnal Green and Bow (Rushanara Ali) by developing the green economy, and boost growth. Incidentally, it has also undertaken polling that suggests that it would be a popular form of investment. Most people feel that it would bring them more benefit than some of the more controversial road or rail projects.

What makes the debate even more timely, especially for Wales, is the fact that figures released last week indicate that in Wales, fuel poverty has increased by 13% over the past year and that, more worryingly, more than one in four families with dependent children are fuel-poor. Families are struggling to keep their homes warm at a reasonable price due to our poor housing stock, as has been outlined. The hon. Member for Bethnal Green and Bow alluded to work done by Barnardo’s; I concur with that work. Barnardo’s and the Children’s Society support the Energy Bill Revolution. The Children’s Society found, in a survey of 2,000 children across the UK, that about 28% of them thought that their homes were too cold, and this winter more than 3 million families are likely to have to cut back on essentials such as food to pay their energy bills.

Some good moves have been made, as was pointed out by the hon. Member for Gosport (Caroline Dinenage). One of those was the warm home discount introduced in 2011—inadequate in its coverage, of course, and not enough, but important to many. It required the big six to provide £135 towards energy bills to low-income, more vulnerable households. Low-income pensioners are in the core eligibility group. However, energy companies can use criteria to decide whether struggling families qualify. It is scandalous that although it may be known that a family are struggling, they may still not get that support. I endorse the Children’s Society’s call on the Government to ensure that no household is without a warm home discount if it is known that there is a child living in poverty there.

Will the Minister consider encouraging companies to extend the eligibility criteria for a warm home discount so that poorer families are automatically included? Perhaps that would be families who receive extra child tax credits, or households earning less than £10,000. The Government have done wonderful things on tax thresholds for those earning less than £10,000, and have taken many people out of tax altogether. The additional action that I suggest is something immediate and pertinent that could be done. Does the Minister have any dialogue with energy companies, or does he plan to have any, about extending the criteria for the warm home discount to working families in which there are children living in poverty? That would help many of my constituents.

I want to mention some local initiatives. The hon. Member for Hexham (Guy Opperman) spoke about the need to develop bulk-buying oil syndicates; 70% of my constituency, including my house, does not have access to mains gas, and I wonder what the Department of Energy and Climate Change is doing to support the development of such syndicates, for domestic oil in particular. There have been schemes in the past. I think that a predecessor of the Minister’s alluded, in a letter, to a competition; I think it is less a question of a competition than of a drive to encourage the development of oil syndicates. I declare an interest, because my family is the beneficiary of one, organised by an inspiring lady, Jane Wakeham, in the village of Llanddewi Brefi.

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She has built an oil syndicate for her community; we have talked about the big society, but I think that that initiative was always there. What should the Department do to encourage the development of such syndicates? We need them on a much bigger scale, not least in my area, which is off-grid for gas.

I was delighted, for cold homes week, to visit two projects in my constituency that do fantastic work to help my constituents make the most of the energy on which they spend their hard-earned money. One is Ymlaen Ceredigion, a charity that runs the Keep Cosy initiative in conjunction with Ceredigion county council and Aberystwyth university. It gives residents free advice in a home visit, pointing out ways to minimise energy consumption, including through draught-proofing, energy monitors and radiator backing, and signposting them towards energy schemes. Funding to enable 400 households to benefit has been secured, and built into the project is the expectation that the information on energy conservation will cascade down to other families. I also visited Cymdogion Cynnes—the Ceredigion Warm Neighbour scheme—which aims to help residents by collating all information on available energy grants and schemes in one place. That is a valuable resource; we hear time and again that lack of access to information about schemes is a barrier. That county council project is most welcome.

I was sitting at home on Sunday evening and the telephone rang; it was an automated message offering me a free home insulation service. I was supposed to press 2 on the telephone and an agent would enlighten me and my wife about the benefits on offer. I am not sure where that came from, or whether it was from green deal operatives; perhaps the Minister or his shadow would know. I await enlightenment. It is a good, proactive way to deal with things, but it makes the point that people need to know where to get information, or, in my case, where it is coming from.

Annette Brooke: I agree with my hon. Friend that small community initiatives are incredibly important. The point has come my way that some older people, who could have free loft insulation, cannot face dealing with the loft to make it possible; we need voluntary bodies on hand to help and make things easier—and to explain that perhaps it will not be the upheaval they imagine.

Mr Williams: I agree. Elderly people are one of the target groups that we want to approach, and briefings from Age Cymru or Age UK make that point strongly. What my hon. Friend says is important; somewhere along the line, more of a one-to-one dialogue will be needed to get those people engaged in schemes.

I want to reiterate the point that the hon. Member for Ynys Môn made when he talked about his passion for getting people on to mains gas. As I have mentioned, 70% of my constituents do not have mains gas in their homes. People talk about swapping suppliers, but we are limited in our choices and there is a need to renew work on that. I am sure—or I hope—that DECC is undertaking such work. I was in the main Chamber earlier, and in a discussion of energy policy in the nations of the UK, the Minister’s predecessor, the hon. Member for Wealden (Charles Hendry), pointed out that there is a need for that renewed emphasis, particularly for rural areas and people who do not have the range of choices that many others have.

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The Government have undertaken some good initiatives, and the hon. Member for Ynys Môn was big enough to acknowledge that. We must build consensus on some of those; that is what the campaign that I am associated with is about, and the number of organisations that have joined the Energy Bill Revolution campaign is relevant to that. I want a renewed vision for rural areas. If the Minister will answer me on one matter, perhaps it could be the development of community oil syndicates. I feel strongly about that, because it is a good and proven way for consumers, in the absence of choice, to get something approaching justice in relation to the bills that they pay.

3.28 pm

Julie Elliott (Sunderland Central) (Lab): It is, as ever, a pleasure to serve under your chairmanship, Mr Sheridan. I thank and pay tribute to the hon. Member for Brecon and Radnorshire (Roger Williams) for securing this vital debate. We could almost say that we have had a Welsh debate, because the three speeches have come from Welsh Members of Parliament, but that is not what it was; it has been much broader, although the speeches highlighted issues that affect rural communities, and much of Wales is rural.

There is wide agreement throughout the House that whatever measurement is used, the number of people in the country classed as fuel-poor is too high. It should be a source of shame that in Europe only Estonia has a higher proportion of its population in fuel poverty. Things appear to be getting worse, and among the reasons for that is the fact that the issues raised in the debate are so complex and wide-ranging that there is not one solution. There are knock-on effects for many Departments. Housing issues have been mentioned a number of times in this debate, but they are not the responsibility of the Department of Energy and Climate Change. There are also issues about the supply of energy to off-grid homes. The solutions to these difficulties will be many and multifaceted, and we must recognise that.

The scale of the problem of fuel poverty is severe. As a result of the age profile of the UK’s housing stock, we have some of the least energy-efficient dwellings in Europe. Earlier, an hon. Member mentioned the U-rating of public housing as opposed to private housing. In my experience, public housing—social housing—is often of a far better standard, particularly in the rented sector, than private rented housing, which has some of the worst energy insulation standards in our housing stock. There are some difficulties. The fact that our country has a long-standing population going back many thousands of years means that we have some beautiful old buildings, but we do not have buildings that are particularly energy-efficient, and some of the issues around modernising them are complex.

Recent figures show that 2.4 million households in the UK are classified as being fuel-poor. Furthermore, the distressing statistic that there were 31,000 excess winter deaths last year shows just how vital it is that we combat fuel poverty. I recognise the important work being carried out by organisations such as the Energy Bill Revolution, which the hon. Member for Brecon and Radnorshire talked about in some detail; the Association

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for the Conservation of Energy; and Age UK. Last Friday, I went along to support Age UK’s bobble day in my constituency, which highlighted some of the issues that we are debating. Such organisations are bringing the issue of fuel poverty to a wider audience, and I hope that the coalition of groups committed to fighting fuel poverty continues to grow.

I am proud of the good work that the last Labour Government did on fuel poverty, and I am concerned that the current Government are undoing much of it. Projects such as the carbon emissions reduction target, the community energy saving programme and Warm Front were not perfect, but they all helped to lift people out of fuel poverty.

The energy market reforms that my right hon. Friends the Members for Doncaster North (Edward Miliband), and for Don Valley (Caroline Flint), have set out in detail will help to address the issue of rising energy bills. Our reforms will improve competition and transparency in both the wholesale market and the retail market, establish a new energy security board to plan and deliver the capacity that Britain needs, and replace Ofgem with a new regulator with real teeth to prevent overcharging. Moreover, while these reforms are being implemented, we will freeze energy bills for 20 months.

It should go without saying that energy efficiency must also be a key consideration when combating fuel poverty. However, the Government’s record on fuel poverty and energy efficiency has been hugely disappointing. The energy company obligation in its original form, which I should remind Members was the only energy efficiency programme available to the public under this Government, was expensive, bureaucratic and poorly targeted at the fuel-poor. Of course, any scheme that attempts to address fuel poverty must be welcomed, particularly after the Government scrapped Warm Front. However, ECO was a scheme of only modest ambition, aiming to lift only 125,000 to 250,000 households out of fuel poverty, and it has been condemned by the Select Committee on Energy and Climate Change as

“insufficient considering the scale of fuel poverty”.

ECO could certainly be much improved. It could be made more efficient by focusing its delivery on specific geographic areas, and by devoting a far higher proportion of the money that it raises to lifting people out of fuel poverty. Alongside a properly functioning green deal, an improved ECO would also allow us to hit our carbon reduction targets and generate many thousands of jobs.

The Government’s announcement on ECO in the autumn statement was all the more frustrating and disappointing because just as ECO was beginning to achieve limited success, the Government caved in to pressure from the energy companies and let them off the hook, so that they did not have to extend ECO. The effect of that has been disastrous.

Many of the consequences of the changes to ECO are still unknown. In his response, can the Minister tell us when the impact assessment and consultation on the changes to ECO will happen? There are numerous examples of the devastating repercussions that followed the changes to ECO, such as the effect on the scheme in Clifton, which is in the constituency of my hon. Friend the Member for Nottingham South (Lilian Greenwood); there, the Government’s changes allowed British Gas simply to walk away from a project that was due to deal

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with problems affecting somewhere in the region of 4,000 homes. Does the Minister agree that where deals have been signed but the work has not been done, the energy company should honour its commitment?

The greater worry about some of the changes to ECO is that the more difficult solid-wall insulations will simply not happen and, as is often said, only the low-hanging fruit will be picked. However, until we start to tackle the very complex properties, particularly the solid-wall properties, we will not really tackle the problems.

I will briefly mention the green deal, the Government’s flagship project on energy efficiency. It was meant to dovetail with ECO, but it has been an abject failure. Just over 600 homes have taken advantage of the green deal financial packages. In its current form, the green deal is an unattractive offer, with a sky-high interest rate and an incredible amount of bureaucracy for both home owners and installers. To all intents and purposes, it has become a boiler replacement scheme. There is nothing wrong with boiler replacement schemes, but it was not the ambition and objective of the green deal that it should be a boiler replacement scheme. Boilers need replacing and get replaced, but the issues are so much more complex than that. We need a scheme that really works to address the wide-ranging problems, and that makes finance accessible to everybody to solve those problems.

I must comment on the reference the hon. Member for Brecon and Radnorshire made to Liberal Democrat party policy on energy. Much of it is honourable, and much of it I would not disagree with. However, it is a shame that the Secretary of State for Energy and Climate Change, who is a member of the Liberal Democrat party, does not vote in the House for Liberal Democrat policy. A particular example is the 2030 decarbonisation target. He is on public record as saying that he agrees with it, but he does not vote for it. Everyone I meet in the sector who invests in energy, whether they are in insulation or renewables, says that one of the things they want is that 2030 target, in order to secure investment. I had to draw attention to that.

At every stage of life, living in fuel poverty is a terrible way to live. Young people in cold homes are twice as likely to suffer from respiratory diseases and five times more likely to suffer from mental health problems. For adults, cold homes impact on existing health conditions, and for older people, cold homes can be a killer. We need to improve energy efficiency in all homes in the UK, but particularly in the homes where people need it most. That is why Labour would ensure that the help that is available would first go to people in fuel poverty and others who need it most. Better insulated homes mean warmer homes, lower bills and more comfortable lives, so it is shocking that the Government are scaling back their energy efficiency programmes.

It is our intention in the spring to publish our Green Paper on energy efficiency, which my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) will lead on.

Chris Williamson (Derby North) (Lab): Is my hon. Friend aware of the poll carried out for the Energy Bill Revolution group, which showed that 85% of people—a massive proportion—want the Government to prioritise energy efficiency and make it one of the key things that they use their investment in infrastructure for? Clearly,

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that would be a popular policy, as well as one that would help to address the implications of climate change and take people out of fuel poverty.

Julie Elliott: I thank my hon. Friend for that intervention. Fuel poverty and energy efficiency are important issues. Whenever I knock on doors and talk to people, they are among the main issues that they are very concerned about. People are very worried about their heating bills, and tackling heating bills is not only about tackling energy costs at source but about ensuring that homes are insulated as well as they possibly can be, so that the amount of energy used is as low as possible; that is important because of the impact that it would have on not only climate change, but household bills. Of course, it is not just in the domestic market that energy is a key factor; energy bills are one of the biggest factors in industry, and in employing people. The knock-on implications of energy are massive, so getting it right is very important.

Albert Owen: Will my hon. Friend share with the House her views on the regulator being the champion for people who are not on the gas grid? This is the crux of the issue. Many people who are off-grid do not have somebody to speak up for them in an impartial way. She mentioned the Secretary of State, who is looking at the Office of Fair Trading and the Competition Commission in respect of gas prices. Many hon. Members have been calling for that for some time. Again, the OFT and the Competition Commission are being brought in, whereas, if we had a strong regulator, it could deal with this matter.

Julie Elliott: I thank my hon. Friend for making those two important points. Of course, we are proposing, as a party, to abolish the current regulator and bring in a new one with more teeth, which will cover some of the off-grid issues that are not covered at the moment. I represent an urban community, and it has been shocking for me to hear, over the past few years, some of the stories about off-grid people’s problems. The situation is bad for everybody, but they have so many other issues on top of that, and that needs sorting out for the long term.

The Secretary of State made great play yesterday of the moneys involved in the big six, and figures were quoted that we published a month ago, so that is not new news. However, at least he has suddenly found that what is going on is a problem. The problem in all this is that the regulator is simply not working and operating in the interests of the general public. We need to focus not just on paying less for energy, but on using less energy. Hon. Members from all parties care passionately about fuel poverty. I hope that the Minister listened carefully to what was said in the debate. I urge him to place fuel poverty, cold homes and, ultimately, energy efficiency at the top of the Government’s agenda.

3.41 pm

The Minister of State, Department of Energy and Climate Change (Michael Fallon): I, too, congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on securing this debate on fuel poverty and cold homes. Like the hon. Member for Sunderland Central (Julie Elliott), I note that all the Back-Bench

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speakers were from Wales. I make no complaint about that at all; these are important issues. I note that fuel poverty, as a subject, is a devolved matter. I am not trying to escape responsibility—I will try to answer a lot of these points—but perhaps some questions should also be addressed to the Welsh Government and their spending decisions.

Let me begin by saying a little bit about fuel poverty, something on the retail market and prices and something about the off-grid issue, which a number of hon. Members mentioned. I will then try to answer some points made by hon. Members in their speeches. I hope that they will allow me to write to them if I do not cover every point that has been mentioned.

I hope that hon. Members welcome the fall in the last reported fuel poverty figures as much as I do. Of course, that followed a period in which fuel poverty rose between 2004 and 2009, reaching a peak of 5.5 million households. I put that on the record as a criticism not of the previous Government, but of how fuel poverty was measured. To help us meet the challenge better, with the new more accurate measure that we are introducing, which deals with low income and higher cost together, we will be better able to design and deliver effective policies that can cut bills and increase comfort for those on low incomes who live in the very coldest homes. I am pleased that the House agreed to the Energy Act 2013, which allows us to bring in the new definition.

Chris Williamson: Does the Minister understand the scepticism out there about the Government’s changing how fuel poverty is calculated? People want to see significant investment in energy efficiency, to ensure that the shocking increase in excess winter deaths last winter is not repeated in future. Fiddling around with the measurement of fuel poverty will do little to address that. People see winter deaths rising and fuel poverty increasing, but they see spending on tackling it falling. The Government need to deal with that, rather than simply changing the definition of what constitutes fuel poverty.

Michael Fallon: I am a little disappointed about that. We all deplore any excess deaths arising in the winter months, but in terms of fiddling with the figures, the new definition of fuel poverty that we are securing was reached by agreement with fuel poverty action groups that have welcomed the new focus, which, as I say, is on low-income households as well as high-cost households. The problem with the previous definition was that it essentially picked out large houses and wealthy people can be living in large houses. That was not the right way to tackle fuel poverty. It was also a measure that kept moving; people kept moving in and out of the definition.

We are now moving to a better definition, with the agreement with those who work in the area. That will form the foundation for a new fuel poverty strategy that we will publish later this year, which will be deliverable and on which the public can hold us to account.

Albert Owen: The Minister makes an important point. There will be issues about whatever calculation we use. However, now that we have moved to a different definition of fuel poverty, will DECC, the Government and other

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Departments ensure that there is a comparison with the old figures, so that people are not as sceptical about the change for change’s sake? I agree with the Minister that drawing wealthy people into this is not the way forward, but for people to have confidence in the new calculation, there needs to be a comparison over the transition period.

Michael Fallon: That seems to me a reasonable point. I will see whether we can set the tables side by side. Of course, I have to tell the House that the figure was not dreamt up by the Government; it was the work of Professor Hills, who consulted widely on it. It has been supported by those who work in this area.

We had already moved, under the 2013 Act, to ensure that the energy market, with its confusingly large number and range of tariffs, which had not been serving the consumer as well as they might, could make it much simpler for consumers to understand prices and ensure that everybody is put on the cheapest tariff that meets their preference. I am glad, too, that that seemed to secure all-party support, as the energy legislation went through the House.

We were confronted in the autumn with some quite unacceptably large price increases, by some major suppliers, of 8%, 9% and 10%. We moved immediately, as would be expected of a listening Government, to consider what could be done to reduce the bit on the bill—the green levies—that the Government have control over. We have secured an average reduction of some £50 per household. That is important. People do not have to wait for an unworkable price freeze. This Government take action immediately to ensure that people see a reduction in their bills as quickly as possible.

Julie Elliott: Although we would welcome any reduction in bills, does the Minister acknowledge that the average consumer will still pay about £60 more this winter than last winter?

Michael Fallon: No, I do not think that is the right figure. In any case, the hon. Lady would be advised to go a little bit further back and see the scale of the increase under the final years of her Government. This debate, so far, has been reasonably good natured. I am not sure how useful it is to tempt her back on to previous ground, but I will come to some remarks that she made.

I want finally to say something about off-grid and then deal with hon. Members’ individual points. Four million households are off the gas grid and face higher than average energy bills. Of course, winter is a particularly expensive time for them. One of my first duties as Energy Minister was to chair the off-grid gas round table, not least at the instigation of the all-party group on off-gas grid, which has been working on this issue. I launched, at the all-party group’s request, the Buy Oil Early campaign in September and promulgated a better code of practice for oil suppliers, so that people pay the price advertised, and so on.

The group meets every six months, and we will reconvene in May to learn the lessons of this winter. We will have the regulators, the advisory bodies, the charitable bodies, people who have worked in oil-buying clubs and representatives from Northern Ireland, where there have been real difficulties. We will learn the lessons of this

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winter again to see what more can be done to improve the security and affordability of the off-grid fuel supply and to share best practice. One of the things on which we are working is how we can better pool data between Government agencies to ensure that we better understand which off-grid households need the most help.

Roger Williams: I welcome the Minister’s insistence that people are sold, for instance, heating fuel at the price quoted by the supplier, but will he also try to insist that the supplier includes VAT in his quote? When the supplier trades with other wholesalers, he might do so at a price that is minus VAT, but VAT is included in the price that the consumer has to pay.

Michael Fallon: I will take up that point. It is important for those who are off-grid that there is as much transparency as possible, so that they understand what the costs are likely to be.

I will now address some of the individual points that have been raised. The hon. Gentleman drew our attention to harder-to-treat homes, which probably lie at the core of the long-term challenge. Getting energy efficiency measures into harder-to-treat homes lies at the heart of solving the problem and catching up with the progress that has been made elsewhere in Europe. I accept that those comparisons are not encouraging for us as one of the wealthier member states.

The hon. Gentleman asked about hypothecating some of the carbon taxes towards this objective. If that were to involve additional spending, the revenue from those taxes would have to be produced from elsewhere, or else we would become involved in additional borrowing. None of that is easy at a time when we still face a deficit of more than £100 billion. He asked specifically about extending the gas grid, and the grid is being extended in the current seven-year period that runs from 2013 to 2020. The aim is to connect some 75,000 off-grid homes each year. Those homes will be reasonably close to the existing grid, but that is expensive and a contribution has to be made by the householder, by some other agency or by the local authority. I do not want him to be under the impression that nothing is happening. I will take his points back to the transmission operators and the companies, including his view that more should be done. The aim is to connect more homes to the grid in each successive year.

Chris Williamson: I am grateful to the Minister for giving way again. Extending the grid is welcome, but is not the key actually to reduce energy demand? Surely, a huge uplift in investment is needed to address fuel poverty—in other words, properly insulating people’s homes—using the money that is already in the system. Unless we can do that, extending the grid will not address the problem of fuel poverty for millions of people.

Michael Fallon: I understand that this problem must be addressed across a number of fronts. The hon. Gentleman is right that energy efficiency has a huge part to play, which allows me now to address the energy company obligation. The ECO has been criticised, so I will first address the suggestion that some of those who work in the ECO scheme have run out of budget. I am advised that, by the end of November 2013, published figures from Ofgem showed that approved ECO measures

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accounted for some 60% of the affordable warmth obligation that was to be delivered by March 2014, so there is still work to do. There are still affordable warmth targets out there for 2015, and we are now extending the scheme to run through to the end of March 2017. We are also ensuring that, having considered the working of the scheme, it is better targeted at lower-income households.

I welcome the support of the hon. Member for Ynys Môn (Albert Owen) for shale gas, and I am sorry that he will not be able to demonstrate that support for any application in his constituency at the moment. No application has yet been made that would allow him to campaign more openly on the scene of an application, but I note what he says. We simply do not know the full potential for shale, so we are not able to estimate the likely revenues, which is what he was homing in on. I am sure that if shale takes off here, as it has taken off in the United States, there will be many claims on the additional revenues that it brings in. The revenues will, of course, not only simply be brought into the Treasury and reallocated outwards to public services; they will also be brought into local communities through the local community benefits package that the industry has already agreed.

The hon. Gentleman asked about the green deal. Some 130,000 assessments have now been made through the green deal, and it is perfectly true, as I think he said, that not all have taken up green deal finance, but the green deal is being taken up. More and more assessments are being made, and the scheme is proving successful.

The hon. Member for Ceredigion (Mr Williams) welcomes the warm home discount, and he asked about eligibility. He will be pleased to know that 2 million households get the warm home discount each year, but we have committed to extending the scheme not simply for 2015-16, but with an additional spend of some £320 million. More than 1 million additional low-income households will therefore receive the payment, without having to take any action at all.

The hon. Gentleman also asked about oil syndication, which we are pursuing through the twice-yearly round table that I chair. We will pick up experience from his constituency and from other constituencies to see what the Government can do to encourage syndicates. There are some good examples of syndication and oil buying in the north-east of England, in Ceredigion and in Northern Ireland, and I want to see what role the Government can play in incentivising that form of syndication.

The hon. Member for Sunderland Central said that she is proud of the previous Labour Government’s record, but she then outlined the reforms that she wants to make. I am not sure why she should be both proud of Ofgem and determined to abolish it. Her Government set up Ofgem, and now they are going to abolish it. I am not sure that she should be proud of that or of having started with 14 energy suppliers and ending up with the big six. She must develop her policy for a future Labour Government, if there is ever to be such a thing, in her own way.

I preferred the hon. Lady’s earlier remarks, in which she said that the Labour Government did not get everything absolutely right. That is probably a good motto for any Government. I am not pretending that the current Government have all the answers on fuel poverty, which

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is a deep-rooted problem. A lot depends on the state of our housing stock, which needs to be addressed. The hon. Member for Derby North (Chris Williamson) is right that we need to do more on energy efficiency, but we also need to measure the problem better to ensure that the data that we have are properly matched so that, with all the different schemes, we get help to those who need it most.

I am sure, Mr Sheridan, that you would like me, on behalf of all the hon. Members who have spoken, to thank the hon. Member for Brecon and Radnorshire for bringing this important subject to the House today. I assure him that the Government will respond to him and the other Members who have spoken on all the points that have been raised. This is a serious subject, and we are grateful to him for raising it.

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Welfare Reform

4 pm

Charlie Elphicke (Dover) (Con): It is a pleasure, Mr Sheridan, to have this debate under your chairmanship. I want to explore where we are with welfare reform and the options for the future. The coalition Government inherited a broken welfare system that was in desperate need of reform. We have started and are seeing through the most far-reaching reforms in more than half a century. The reforms are not about saving money; they are about saving lives. They are about replacing dependence with independence.

Let us look at what has been done to date. Labour left the biggest ever peacetime deficit, with £120 million a day in interest bills. Under Labour, welfare spending increased by 60%, taking inflation into account. That is £3,000 a year for every household in Britain. More than £170 billion was spent on tax credits, four and a half times the cost of the benefits they replaced. By the end, out-of-work benefits were increasing nearly twice as quickly as earnings. That was the toxic legacy left by the Labour party, and that is the out-of-control spending that the Government have fought to keep in check while protecting pensioners with the triple lock.

Welfare spending is now falling as a share of GDP. Savings of £25 billion will have been made by the end of this financial year, with £50 billion having been saved by the end of the Parliament. At every turn Labour has been unapologetic. Labour has opposed every single reform, including universal credit, and has provided no ideas. Labour has nothing to say. Indeed, the few policies developed so far are spending pledges, rather than savings. For example, the jobs guarantee will cost a staggering £1 billion. On my count, it is the 10th time that Labour’s bank bonus tax has been spent. To every problem, its answer is the same: more spending, more borrowing, more debt and more welfare. It is small wonder that the Labour party is increasingly known as the welfare party.

The Institute for Fiscal Studies says that we need to reduce the benefits bill by a third, but Labour has failed to name even one working age benefit it would cut. Government Members have given thought to the reforms that could be made to promote a greater sense of fairness: fairness to people on welfare, so that they might have independence in place of dependence; and fairness to hard-working people and their families, who expect their taxes to be used to help people escape poverty and welfare, rather than further to enchain them within it.

I have been giving thought to how work-based benefits could be reformed, particularly to improve the position of women in the workplace. In our system, industrial injuries benefits cost £907 million a year, while maternity pay costs £2.3 billion. The maternity pay system, however, too often hampers rather than safeguards the position of women in the workplace. There are still too many barriers to hiring women. Too often employers are scared of employing women who may go on maternity leave. Even the Labour peer, Lord Sugar, was moved to say:

“We have maternity laws where people are entitled to too much.”

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He also said that the prospect of women becoming pregnant and taking maternity leave puts businesses off hiring women.

That attitude needs to change, as does the shocking complexity of the system, which involves complex reclaims though the tax system and leaves people at risk of their employer going bust or otherwise failing to pay. Women are increasingly self-employed, yet the self-employed are worse off with maternity allowance, and injury benefits are sparse indeed. Meanwhile, pay is not even at minimum wage levels. Pay is set at £137 a week, which is a far cry from the £220 received by a minimum wage earner for a 35-hour week. To my mind, the system is ripe for reform, to safeguard and improve the position of women in the workplace, to increase simplicity and security, to treat the employed and self-employed alike, and to pay parental leave more fairly.

How can that be done? We should think about a new system of workplace benefits, paid for by the workplaces of the nation. We should set up an at-work scheme—a compulsory pooled risk system along the lines of the Financial Services Compensation Scheme, backed up by the state but funded by business with reference to the total pay-as-you-earn income tax paid by each business. In return, businesses would see a corresponding cut in their net employers’ national insurance contributions. That way, the cost would not be affected by the number of injuries or the amount of maternity leave that might at any one time affect any one workplace. The at-work scheme would pay out regardless, whether there were no parental leave absences or many. In that way, the fear of the burden of maternity would be reduced, and so too would the barriers to women in the workplace. The self-employed would contribute on the same basis and be treated in the same way as employed people. Pay for leave could more easily be increased from the current £137 a week to the minimum wage level of £220, and that would ensure that the minimum basic standard would be the minimum wage.

We have seen the toxic legacy left by the Labour party and we have passed welfare reforms to save lives and promote independence in place of dependence.

Mr Nigel Dodds (Belfast North) (DUP): The hon. Gentleman raises an important issue about the future of welfare reform. Will he join me in deploring the fact that the current welfare reform measures have still not been implemented in Northern Ireland, at a possible cost of more than £1 billion over the next five years? The Finance Minister there indicated that the Northern Ireland Executive have already lost £15 million. We have negotiated good tweaks to the system to suit the Northern Ireland situation, yet Sinn Fein holds up that reform, at a massive cost to the Northern Ireland block grant. Does the hon. Gentleman agree that it is time for Northern Ireland to move into line with what is happening elsewhere?

Charlie Elphicke: Yes, I would. It is about fairness to hard-working people and their families. They pay their taxes and want to see those taxes used to help people escape poverty, rather than to enchain them within it. They want their taxes to fund doctors, teachers and nurses, rather than those on welfare. It is also about fairness to people on welfare and their having a greater sense of independence, rather than being locked into a

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cycle of dependence. I hope that the Northern Ireland Executive will think more carefully about the future, and fairness for working people and those not in work.

In the absence of any positive ideas from the Labour party, I hope the Government will consider new reforms like the one I am suggesting. It would promote the role of women in the workplace, increase simplicity and security, treat employed and self-employed alike, and ensure that maternity and parental leave is paid fairly and that the system is funded by the workplaces of the nation on a long-term sustainable basis.

Kwasi Kwarteng (Spelthorne) (Con) rose—

Jim Sheridan (in the Chair): Order. Mr Kwarteng, I notice that you have not registered to speak in today’s debate. Protocol suggests that, with the agreement of the hon. Gentleman who introduced the debate and the Minister, you can speak. Do you have permission?

Charlie Elphicke indicated assent.

The Minister of State, Department for Work and Pensions (Steve Webb) indicated assent.

Jim Sheridan (in the Chair): You have permission, but I ask you to leave some time for the Minister.

4.8 pm

Kwasi Kwarteng (Spelthorne) (Con): I am very grateful for being allowed to speak in the debate. I am also pleased to speak after my hon. Friend the Member for Dover (Charlie Elphicke), who is an innovative and creative thinker on these subjects. I want to say a few words on welfare reform, which is probably the single most important thing that the coalition Government are embarking upon, because the principal reason why the coalition came into being was to reduce the deficit. Everyone here knows that welfare spending, including pensions, is 28% of the entire budget. Surely it makes sense, if we are to reduce the deficit, to look at the biggest part of expenditure.

My hon. Friend is right when he says that there was a huge problem under the previous Government with welfare spending. Between 1997 and 2010, it rose by more than 60% in real terms. Even if pensions are excluded, the welfare bill went up by 55% in real terms. It is right for everyone in the House to realise that that is a real problem. I am grateful to my hon. Friend for bringing the matter up in such a timely fashion and for allowing others to contribute to this important debate. I do not have much time to speak, but I want to say that it is disappointing that so few Labour Members are present, given that they have said nothing constructive about welfare reform over the past four years. They have opposed all the coalition Government’s messages. [Interruption.] The hon. Member for Rhondda (Chris Bryant) looks at me quizzically, but it is true.

Chris Bryant (Rhondda) (Lab): The convention for half-hour debates is that only two people—the Member who secured the debate and the Minister—speak. It is perfectly customary for there not to be anybody else, including the shadow Minister, present.

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Kwasi Kwarteng: I am grateful for the hon. Gentleman’s contribution, but it is extraordinary to say that Members cannot contribute to debates simply because of convention. This is an important matter and I wanted to put something on the record. That is all I have to say.

Chris Bryant rose—

Jim Sheridan (in the Chair): Order. Mr Bryant, you also did not register to speak. Do you have the permission of the promoter and the Minister to speak?

Charlie Elphicke indicated assent.

Steve Webb indicated assent.

4.10 pm

Chris Bryant (Rhondda) (Lab): I am grateful, Mr Sheridan. I also thank the hon. Member for Dover (Charlie Elphicke) for securing this debate. If it had been an hour-and-a-half debate, it would have been more conventional to have several people speaking. I say to the hon. Member for Spelthorne (Kwasi Kwarteng) that it is not only a convention, but a rule of the House that only two people are allowed to speak in these half-hour debates. We are therefore engaging in a rather unusual practice this afternoon, which is why things are slightly confusing. The hon. Member for Dover gave a rather short speech—the debate’s promoter normally takes 15 minutes—and he devoted quite a lot of it to saying nasty things about the Labour party. I understand why he wants to do that, but I want to correct some impressions.

The Labour party has been engaged in a process of welfare reform and was when in government. One of the key things that we wanted to achieve was ensuring that work pays. In my constituency, which has historically high levels of people on one form or other of sickness benefit, people have been trapped in a style of poverty that ends up being inherited from one generation to the next. Opposition Members are desperately keen to ensure that we have a system under which work always pays. That is why we supported the introduction of the national minimum wage, which we see as part of welfare reform, and why we introduced tax credits as another means of making it possible for people to get into work.

I do not accept the argument of the hon. Member for Spelthorne that Labour has never been in favour of welfare reform. Indeed, key elements of what the Government are doing now are right. The move towards universal credit is right. The Government have been too ambitious in the time scale that they have set themselves, and it would help the Government’s cause were they a bit more honest about the fact that the scheme is neither on time nor on budget and that a great amount of money has been wasted. Ministers have not yet made key decisions, such as when somebody goes on to universal credit, whether their children will be entitled to free school meals. At the moment, there is a difference between those on in-work benefits and those on out-of-work benefits. The latter’s children get free school meals, but the former’s do not. Universal credit does not recognise the difference between the two, which is a key policy issue that will have to be determined.

Charlie Elphicke: The Labour party initially voted against universal credit. Labour should be more supportive

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of the Government during a big, important reform, rather than too often appearing to throw rocks from the sidelines.

Chris Bryant: We are keen to try to help the Government make universal credit work, but it is difficult so to do if the Secretary of State is mouthing inanities and presenting such an optimistic version of events that some might construe it not to be entirely true, which is what the Labour party believe has happened. It is a convention that people receive absolution only after confessing, and the Government need to own up to a few more of the problems that they are experiencing with universal credit. We would then be more than happy to help them.

Another classic example is the bedroom tax. People have different views about whether it is right and proper, but my argument is that while it might be a legitimate thing if we knew that everyone had smaller properties to move to, in truth, when those smaller properties are not available, it is a fairly cruel and vindictive assault on some of the most vulnerable people in society, including hundreds of thousands of disabled people. Even more bizarrely, the Government managed to mess that up by not spotting the loophole in their legislation. On the same day, three different Ministers said different things: one said that only 3,000 to 5,000 would be affected; another said in the House of Lords that the number would be insignificant; and a third Minister said that she had no idea how many people would be affected. Through freedom of information requests, which the Government should have submitted, we already know that, from the third of local authorities who have replied, 16,000 households are affected. In other words, it is likely that some 48,000 to 50,000 people are affected.

The Labour party is engaged in a process of welfare reform. We always have been. We want to make welfare work, so that it both supports those who desperately need it at key times in their lives and gives people an opportunity to stand on their own two feet. In your constituency, Mr Sheridan, and in mine, the vast majority of people are not looking for handouts; they are looking to stand on their own feet, to put food on the table for their family and to provide a better future for their children.

4.16 pm

The Minister of State, Department for Work and Pensions (Steve Webb): I congratulate my hon. Friend the Member for Dover (Charlie Elphicke) on securing this wide-ranging debate, which has actually been quite refreshing, because we so often get caught up in the minutiae of a clause, amendment or fine detail and it is good to get back to first principles and the context of what the Government have done over the past four years. I also enjoyed his blue-skies thinking about workplace and maternity benefits and so on. I will try to address both those issues, while providing some reflections on his idea for workplace benefits.

The context that my hon. Friend described was one where, for every £3 that the Government received, they were spending £4. There is nothing progressive or fair about saying that we will pay for a higher standard of living for ourselves now and expect our children to meet the bill. The biggest task that we faced—as my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) said, this was one of the reasons for forming the coalition—

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was to provide the country with a stable Government at a time of economic crisis and to try to get the nation’s finances on an even keel, which has required a series of difficult decisions, particularly because social security spending is the biggest area of Government spending, every one of which was opposed by Labour, but only one of which it now says that it will reverse. There is a distinct lack of consistency.

I am pretty sure that the record will show—the hon. Member for Rhondda (Chris Bryant) will correct me if I am wrong—that Labour voted against the Welfare Reform Act 2013 on Second Reading. He may not recall, but I am pretty sure that Labour did—it may have voted against it on Third Reading, which is even worse. The 2013 Act introduced universal credit, so it is a bit rich to say that Labour supports universal credit when it voted against the legislation that introduced it. That shows no credibility.

The hon. Gentleman may say that Labour has been engaged in welfare reform for the past four years, but it has only said what it is against. It is against our getting the books balanced by the measures that we have taken, but the positive agenda has largely been avoided. On the odd occasion that we get a positive suggestion, it often involves spending more money, not less. A humane welfare system during a time of austerity is a challenging task. One would have hoped that the party that paints itself as progressive would have engaged constructively over the past four years in how to design such a system, but we have essentially heard nothing on that front.

My hon. Friend the Member for Dover is right that the driver of the reforms that my right hon. Friend the Secretary of State for Work and Pensions and the ministerial team have brought forward has absolutely been fiscal rectitude, but it has also been about more than that. My right hon. Friend has said—I do not think that I am revealing any secrets here—that he did not come into his present role simply to cut, but rather to reform. During difficult times, we are reforming and bringing together a fractured system. Why should people have to go to Her Majesty’s Revenue and Customs for tax credits, to the local council for housing benefit and to the Department for Work and Pensions for income support? Why should there not be a single system? One of the fatal flaws of tax credits, which the hon. Member for Rhondda praised, is that, because the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)—the previous Chancellor and then Prime Minister—wanted to pretend that it was not welfare, it was claimed that they were negative tax. They were nothing of the sort. They were social security benefits, but paid over the course of a year. People’s needs, however, arise on a weekly or monthly basis. They cannot wait for end-year reconciliation and a following-year clawback.

The beauty of universal credit is that it is real time. It meets people’s needs when they happen, rather than saying at the end of the year, “Oh, guess what? We underpaid you,” or, more often, “Guess what? We overpaid you three years ago by several thousand quid. Please may we have it back?” That shambles will be over as we introduce universal credit.

Chris Bryant: Will the Minister give way?

Steve Webb: I will not, because it is the debate of my hon. Friend the Member for Dover. I want to respond to some of his specific ideas on workplace benefits. I

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agree with his goals. I absolutely agree that we need a system that is fair for women; that we need to think hard about anything in the system that makes an employer less likely to employ a woman of childbearing age; and that we clearly want the system to work for self-employed women. He has made some important points.

As the system currently works, however, 93% of the cost of statutory maternity pay is refunded to employers. In fact, more than 100% is refunded to small firms. Small firms that take on a woman who becomes pregnant and goes on maternity leave will get back all the maternity pay that they pay out, plus what is essentially a handling charge—another 3% on top. Even a large employer gets 92% or thereabouts of reimbursement.

If an employer is reluctant to take on a woman who might have a child, therefore, the pure finances should not make a huge difference. Clearly, there is a bureaucracy issue with the reclaiming and so on, and we are happy to look at whether that can be streamlined, but the basic principle is that the employers get the lion’s share of the money back. The thing that might put them off, as my hon. Friend said in his speech, is the thought, “Well, I employ this person. They might not be there in some months’ time. I might have to provide maternity cover, retraining and so on,” but however we reimburse maternity pay, that will still be a feature of the system.

I am not therefore sure that having a collectivised—I hesitate to use the word, but my hon. Friend knows what I mean—system of insurance is any different substantively for the employer. Either way, employers are getting reimbursed—the costs are being met and are not in essence falling on the employer.

My hon. Friend’s proposal is interesting and I am grateful to him for suggesting it, but one of my worries arises from something that I have learnt as a Minister. Whenever we set up a new scheme, we have new infrastructure, bureaucracy and sets of rules. If we had the levy—the at-work scheme that he described—we would have to define the new tax base, have a new levy collection mechanism, work out who was in and who was out, have appeals and all that kind of stuff. There is always a dead weight to such things. Simply setting up new infrastructure costs money. I would have to be convinced that we were getting something back for it.

In essence, my hon. Friend is proposing that, instead of the general taxpayer paying into the pot and employers handing out statutory maternity pay, which is reimbursed by the Government from the general taxpayer—the current system—we have a new levy on employers, although he recognises that he does not want a new jobs tax, so that it is offset by a reduction in something else that employers pay and the tax in that world is neutral overall. However, he then says that he wants the rate not to be some £130 a week, but to be £200 and something a week.

My hon. Friend was commendably brief, so I apologise if I misunderstood, but I was not clear where that extra money would come from. If we pay women on maternity leave double, someone must pay for it. If he does not want that to be an extra burden on firms, paying for it will simply be a tax increase. That might be the right thing to do—increasing taxes to pay for it—but it is an increase.

Charlie Elphicke: Part of the reason for raising the rate is to bring it into line with the self-employed position. Also, however, most work places have the

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extra maternity leave as well, yet a small number of less good employers do not top up the statutory amount. The idea is to raise the threshold, so that women on maternity leave are overall in a better position.

Steve Webb: I appreciate that my hon. Friend would like to make the scheme more generous, but my sense is that that is potentially quite a substantial cost. If we spend £2 billion already and he wants to double the rate, is that another £2 billion? I do not know. Without more detail, I could not say, but it might be a substantial cost that we have to think through.

On the important issue of self-employed women, the dilemma is that if they have chosen to be self-employed, they are paying class 2 national insurance of about £2.70 a week, while their employed sisters are paying national insurance of 12%, or whatever the rate is, as an employee, while their employer is paying another 13.8%. The best part of 25% of wages is raised in national insurance from the employed earner, while £2.70 something a week comes from the self-employed—or at class 4, depending on how much she is earning. The amount going into the system from the self-employed is vastly lower; the maternity provision for the self-employed, however, is only a bit lower for some women.

In that first six weeks, when we are on 90% of earnings, the employed earner could get more, but some self-employed women get more than their employed counterparts, because of the detail of the rules. There is an issue about some women who pay voluntary class 2 at two or three quid a week for a period of time, but then become entitled to maternity allowance running into thousands, having only put in £50 or £100 into the system. There is a worry that the system is possibly too lax in that area and we might need to think about it.

It is absolutely right that self-employed women get proper maternity provision, which is what the maternity allowance is for. Relative to what they put into the system, however, what they get out of it is a fantastic rate of return compared with an employed earner. An employed earner is putting far more in, while the employer is also putting in.

On the tax base for my hon. Friend’s idea, he proposes that all firms should contribute. Unless the self-employed are also going to contribute, they will either benefit without contributing, or we are talking about another levy on the self-employed as well. Having chosen to be self-employed, people often change, because of the lack of burdens, costs and levies of being an employed earner. We would have to think about whether we are distorting the choice between becoming an employed earner or a self-employed person if we made those changes.

I do not want to end on a discouraging note, because my hon. Friend has raised an important challenge. We do not want to be in a situation in which employers, through prejudice or for other reasons, are disinclined to employ women of childbearing age. That is clearly an

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important issue. We must ensure, however, that the social security system reflects the labour market as it is now and not as it was after the second world war. We need to reflect on the fact that there are growing numbers of, first, women working and, secondly, self-employed women. The Department is not currently doing work in this area, because we have our hands full with reform, but it is always good to look at such things.

Charlie Elphicke: Part of my thinking is that we are about to have a revolution with the whole concept of shared parental leave, so that issue of men versus women in the workplace will tend to blur. That might be a good time to look at reworking the system in this way, to encourage and help parents in the workplace.

Steve Webb: My hon. Friend is right, and the coalition can be proud of the shared parental leave approach and for rethinking the nature of what happens after a child is born and whether it is mum, dad or a combination of the two who take time off. My hon. Friend is also right to encourage us to think outside departmental silos: the Department for Business, Innovation and Skills does parental leave, but the Department for Work and Pensions does maternity pay, and so on. He makes a welcome link. I am not convinced that his scheme is necessarily affordable, because of the additional cost involved, but he makes an important link.

I have a final word of encouragement to employers, who may be listening to our proceedings. About 10 years ago, less than half of mothers who went on maternity leave came back and worked in the same job; that figure was about 40%, but it is now 80%. The norm now for an employer who takes on a woman who goes on maternity leave is that—four times out of five—she will come back to the job for which she was trained, in which she is experienced and to which she can contribute.

Likewise, we now find that three quarters of women return to work within 12 to 18 months of having their baby. There is a norm: if someone takes on a woman of childbearing age, the odds are that she will come back to the same job within 12 to 18 months. We need to educate employers about the fact that, if they do not employ women of childbearing age, they are depriving themselves of talented people who contribute to the work force. Not employing such women is clearly a bad thing, not only from a social point of view, but from an economic point of view.

I congratulate my hon. Friend on raising the issue and my hon. Friend the Member for Spelthorne, who serves on the Select Committee now and is thinking hard about such issues, on his contribution. We have done a huge amount of reform in this Parliament, and we want to see our reforms through and deliver them, because we want our legacy to be a system that, as my hon. Friend the Member for Dover said, encourages independence, not dependence, that is fiscally responsible, but that works with the grain of people, so that those who want to work hard and get on are encouraged and enabled to do so, rather than being trapped on benefit, which was the risk of the system that we inherited.

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UK Citizenship

4.29 pm

Ms Diane Abbott (Hackney North and Stoke Newington) (Lab): I am grateful for the opportunity to air this issue in the House this afternoon. Although the power to deprive British nationals of citizenship, amplified in clause 60 of the Immigration Bill, might seem to some a mere legal technicality, important issues lie behind it. Clause 60 is wrong-headed, and I hope that airing the issues this afternoon will lead people in another place to throw the clause out of the Bill.

The clause provides for the Secretary of State to render a person stateless by depriving him or her of their nationality where citizenship has been gained through naturalisation and where

“the Secretary of State is satisfied that the deprivation is conducive to the public good because the person, while having that citizenship status, has conducted him or herself in a manner which is seriously prejudicial to the vital interests of the United Kingdom”.

First, I would remind the House that we are talking about terror suspects. Nowadays in Parliament, saying that someone is suspected of terrorist activity is enough for the political class to assume that that person does not deserve due process. It is worth reminding the House that those people have not actually been convicted of any crime. Sadly, I have to say, the currency of political debate about terrorism has been so debased, first under Tony Blair and now under the coalition, that alleged terrorists are now routinely deemed to be the only category of alleged criminal who are not allowed due process—even alleged paedophiles have to have due process, but not alleged terrorists.

My view is that if someone is suspected of terrorism, the obvious step is to put them on trial. I am supported in that view by no less a person than the late Lord Kingsland, the former Conservative shadow Lord Chancellor, who said in 2002:

“If we identify someone as a person proposing to commit a serious terrorist offence…surely the obligation is on us to deal with that person. If we simply deport him, we shall be handing on…this terrorist problem to another state which may not have the same capability of dealing with it…It cannot be a proper response to the terrorist threat to refuse to deal with it ourselves”.—[Official Report, House of Lords, 9 October 2002; Vol. 639, c. 277-278.]

That was the view of the Conservative party in 2002, but clearly things have changed in the intervening time.

Being realistic, we know that the security services have always resisted trial for many suspected terrorists because—this is my understanding—they do not want to make public their wire-tapping and other surveillance methods. I have always found that argument dubious, and it is even less credible post the Snowden revelations, which have revealed to us all more about state surveillance than we ever wanted to know. Instead of due process, the security services and their political adherents in both parties prefer secret courts, detention without trial and now this attempt to strip away citizenship.

That leads me to one of the big problems with clause 60 of the Immigration Bill: it creates two different classes of British citizenship. There are those, such as myself, who are British citizens because we were born here, and there are those, including some of the people who work for me, who are British citizens by naturalisation. We will have two classes of British citizens. That is a dangerous road to go down. In support of that view I

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quote no less a person than the hon. Member for North East Somerset (Jacob Rees-Mogg), who, as I think most people know, is a Conservative MP and not someone who could be described as a bleeding-heart liberal. On Report, when clause 60 was added to the Immigration Bill, he said:

“I am perhaps rather romantic in my view of what it means to be a British subject. I always thought that Palmerston got it right on the Don Pacifico affair—the ‘civis Romanus sum’ principle. Once any one of us has a passport that says we are British, we are as British as anybody else, whether they were born here or got their passport five minutes ago. It is incredibly important that there is equality before the law for all Her Majesty’s subjects who are living in this country and have right of residence here. I worry that if we give the Government the ability to take passports away from a certain category of British subject but not from others, it will create a potential unfairness and a second category of citizen.”—[Official Report, 30 January 2014; Vol. 574, c. 1086.]

That goes to the heart of one of the problems with the legislation.

We should not have, as it were, class A and class B British citizens. In communities such as mine, the fear will be that although this has started with suspected terrorists, where will it end, once the state decides that British citizenship is not indivisible? The Home Secretary has said, rather unfortunately, that citizenship is a privilege, not a right, but citizenship is not a privilege or a right; it is a fact. Deciding that it is not a fact and that the state can chop and change when it comes to the light in which it regards someone’s citizenship, is, I believe—as does the hon. Member for North East Somerset—a dangerous road to go down.

Another problem with the proposal is that in stripping a terrorism suspect of their nationality, there is a danger that we could render them stateless. That problem was raised on Report. The Secretary of State argued that

“we are talking about a situation in which they”—

that is, the person deprived of citizenship—

“would be able to acquire statehood from somewhere else.”—[Official Report, 30 January 2014; Vol. 574, c. 1040.]

However, even the most cursory glance at clause 60 reveals that the provision is not limited in that way, but allows individuals to be rendered stateless without reference to the possibility of securing citizenship elsewhere. The Home Secretary said:

“The whole point of the measure is to be able to remove certain people”.—[Official Report, 30 January 2014; Vol. 574, c. 1043.]

That assertion raises a number of important questions. I am interested to hear from the Minister how the Government will remove people who have no nationality and no travel documents.

Duncan Hames (Chippenham) (LD): The hon. Lady is making an important point. If another state were to remove citizenship from a naturalised citizen who was originally from the UK, does she envisage that it would be at all likely that our country would be enthusiastic about offering citizenship to that person? If we would not, why should we imagine that other countries would offer citizenship to someone who has had their citizenship revoked by this Government?

Ms Abbott: The hon. Gentleman makes an important point. The Government want to be able to move on people whom they consider a threat to the state, but why should other countries accept someone who has been stripped of citizenship here in the UK?

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Chris Bryant (Rhondda) (Lab): It is even worse, is it not? Potentially, the only countries that would offer nationality to a person reckoned to be a suspected terrorist would be countries where we probably would not want that person to end up, because they would by definition be countries that sponsor terrorism. We would end up with people in this country who we would simply be keeping completely stateless, without any role or standing. We cannot simply banish them to France as we would have done in the middle ages.

Ms Abbott: My hon. Friend makes an excellent point. In saying that, I am accepting an argument that I do not really support, namely that somehow, because someone is alleged to be a terrorist, that makes them a terrorist. Even if we accept that logic, we will not be making the country any safer, because we cannot move such people on anywhere.

Statelessness is a notion that the British Government were trying to move away from for a long time. In 1930, Britain was among the first to ratify the convention on certain questions relating to the conflict of nationality, which included a protocol relating to certain cases of statelessness. The universal declaration of human rights, which was adopted by the UN General Assembly with UK support as far back as 1948, says:

“Everyone has the right to a nationality…No one shall be arbitrarily deprived of his nationality”,

yet that is what clause 60 of the Immigration Bill seeks to do.

Deprivation of citizenship is a severe sanction and statelessness is a separate and even more brutal punishment with unique practical and legal consequences. Although it is an aspiration of human rights activists that fundamental rights such as the right to life and the prohibition on torture should attach to all human beings, the reality is that we live in a world deeply divided along national borders, in which it is notoriously difficult to access redress for, or protection on, human rights matters without nationality.

Going further forward, the UN convention on the reduction of statelessness, which is where we are supposed to be going, was adopted in 1961 and ratified by the UK in 1966. It stipulates that, absent circumstances of fraudulent application or disloyalty toward the contracting state, deprivations and renunciations of citizenship will take effect only where a person has or subsequently obtains another nationality in replacement. The clause moves away from that. This country has spent a generation trying to move away from statelessness, but we are now going in reverse.

We may not have seen the end of this matter; that is why the other place should look at the provision. We had the Home Secretary saying that citizenship was a privilege, not a right, but citizenship is a fact. During the same debate, Alok Sharma MP—

Jim Sheridan(in the Chair): Order. It would be preferable to mention hon. Members not by name, but by their constituency.

Ms Abbott: The hon. Member for Reading West (Alok Sharma) raised with the Home Secretary the question of whether we could extend the stripping away of citizenship from naturalised citizenship. He said:

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“I am a naturalised British citizen and the clause therefore applies to me. I support it wholeheartedly…Perhaps my right hon. Friend should go even further…and introduce similar sanctions against anyone who is British, irrespective of how they got British citizenship”.

The Home Secretary responded:

“My hon. Friend makes an important point about…the desire that we have in the House to ensure that we can take appropriate action against people who are acting in a manner that is not conducive to the public good”.—[Official Report, 30 January 2014; Vol. 574, c. 1042.]

One of the problems with the new clause is that it opens the door to further arbitrary deprivation of citizenship. It must be wrong in principle to create two classes of citizenship. It is wrong in practice because it will create a class of stateless people who, in practice, cannot be moved out of the UK. It seems that the coalition Government introduced the clause as a short-term strategy to see off a related but separate clause covering the ability of foreign criminals to resist deportation on the grounds that they have a right to family life. I suggest that the civil liberties of British citizens are too important to be tampered with for short-term political advantage.

Coming as I do from a family in which many members of my parents’ generation obtained British citizenship through naturalisation, and representing as I do a part of London where many of my constituents obtained British citizenship through naturalisation, I am naturally wary of any move to create two classes of British citizenship, as that could affect so many of my constituents and even members of my family. The clause was thought up in a hurry, and as with so much legislation that is thought up in a hurry, it is deeply flawed. I sincerely hope that when Members of the other place consider it, they will take it out of the Bill.

4.44 pm

The Minister for Security and Immigration (James Brokenshire): I welcome you, Mr Sheridan, to the Chair. I congratulate the hon. Member for Hackney North and Stoke Newington (Ms Abbott) on securing this debate, and I respect the passion with which she made her points this afternoon. I hope that my comments will reassure her and clarify some of the misapprehensions she has raised in the context of the measures that have been introduced into the Immigration Bill, which is starting its consideration in another place.

I welcome the opportunity to correct some of the issues surrounding the powers to deprive a person of citizenship and the Government’s proposed legislative changes in the Bill. As the Home Secretary outlined in her speech to the House last month, depriving people of their citizenship is a very serious matter, and the hon. Member for Hackney North and Stoke Newington rightly emphasised that in her contribution this afternoon. It is one of the most serious sanctions a state can take against a person. The decision requires considerable research, evidence gathering and consultation by officials throughout the Government, and the Home Secretary herself reviews and signs it off to ensure that it is proportionate and necessary. The issue also concerns national security and our attempts to remove dangerous individuals from the UK.

It may be helpful if I start by outlining the Government’s existing provisions and powers, and the safeguards that

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already exist, before going on to explain the purpose of the proposals in the Immigration Bill and addressing some of the hon. Lady’s specific questions.

Ms Abbott: The Minister will be aware that in response to a freedom of information request, we now know that between 2010 and 2013, the Home Secretary revoked the passports of 16 British nationals under the current section 40 of the British Nationality Act 1981 on public good grounds. At least five of those people were born in the UK and one had been resident for almost 50 years. When the Home Secretary was asked during Report stage of the Immigration Bill what happened to those 16 people, she did not provide specific information. Can the Minister provide information now, or at least write to me with an explanation?

James Brokenshire: I will certainly address some of the hon. Lady’s points, but I am unable to provide further details about specific cases. She is right about existing powers being utilised. Since 2006, there have been 27 examples of that. The powers have their origin in legislation dating back to the first world war—the hon. Lady looked at some of the history—when provision was made for the revocation of citizenship if a naturalised person was suspected of treasonable activities.

The current position under section 40 of the British Nationality Act 1981, as amended by the previous Labour Government in 2002 and 2006, is that the Home Secretary can deprive a British citizen of their citizenship in two scenarios. The first is when the person acquired it using fraud, false representation or concealment of a material fact. That essentially means that they used deception to obtain citizenship for which they were not eligible or, had we known the full and true facts, we would not have granted the application. In such cases, the person involved may be left stateless. The second scenario is when the Home Secretary is satisfied that deprivation is

“conducive to the public good”

and the person would not be left stateless as a result. We want to amend the second of those two conditions to ensure that individuals who are a serious threat to this country cannot retain citizenship simply because deprivation would leave them stateless.

As I said, a Labour Government amended the British Nationality Act 1981 in 2002 and 2006. That provided for deprivation when it was

“conducive to the public good”.

That is a broad power which gives the Home Secretary discretion to respond to changing threats, and covers cases involving national security, including espionage, war crimes, serious and organised crime and unacceptable behaviours such as the glorification of terrorism. Conducive deprivation can be pursued against any British citizen, including British-born citizens, as a result of the changes introduced in 2002. In practice, because a person cannot be left stateless, it applies only to those who would have another nationality when they are deprived. That provision would remain and is unchanged by our proposals.

A number of safeguards are in place for deprivation cases and those will remain, which is important to understand. First, any decision to deprive will arise only after extensive research and understanding of an individual’s previous behaviour, any potential human

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rights issues and the threats that they pose to the UK. Officials from the Home Office and other Departments are consulted before the information is reviewed and a final decision made by the Home Secretary.

Secondly, any person deprived of their citizenship has a full right of appeal. Grounds for appeal can include both the legality of the action and the merits of the Secretary of State’s decision. Such appeals are heard at either the first-tier tribunal—the immigration and asylum chamber—or, where issues of national security are relevant, at the Special Immigration Appeals Commission, or SIAC. In both cases, any onward challenge can be to the Court of Appeal or other higher courts. That is not being changed by the wider, necessary changes to the appeals system contained in the Immigration Bill.

Thirdly, deprivation action is taken only against those individuals who meet the thresholds that I have outlined. We do not and cannot take deprivation action against family members—husbands, wives or children—on the basis of their relationship to the person being deprived.

Finally, let me be clear: this Government do not take deprivation action lightly. There is a high threshold and only a small number of individuals are deprived of their citizenship. As I said, since 2006, 27 people have been deprived under these conducive powers.

The hon. Lady highlighted the new provisions in the Immigration Bill. Clause 60 is the relevant clause that she touched on: it seeks to address the most serious deprivation cases where we have previously been prevented from taking action because it may leave the individual stateless. At present, we cannot deprive someone of citizenship even in circumstances where an individual could acquire another nationality or reacquire their previous one.

We recognise the need to avoid statelessness and are committed to maintaining our international obligations. However, we do not believe that that should be at a cost to the national security of the UK. It is a fact that article 8(3) of 1961 UN convention on the reduction of statelessness specifies that a state may retain the right to deprive any person of their nationality, regardless of whether it would leave them stateless, if the person has

“conducted himself in a manner seriously prejudicial to the vital interests of the State”,

if, at the time of ratification, those grounds exist in domestic law.

Therefore, when the UK ratified that UN convention, it made such a declaration that allowed for the prospect of leaving a person stateless in certain circumstances. Those circumstances, as they existed in the domestic law of the time, include the ability to deprive a naturalised person of their citizenship—regardless of whether it would leave them stateless—when an individual has conducted themselves in a manner seriously prejudicial to the vital interests of Her Britannic Majesty. That is a high threshold for cases involving national security and those who take up arms against British or allied forces. Clause 60 of the Immigration Bill seeks to recreate that very set of circumstances.

Ms Abbott: Many of us are puzzled about why the Minister calls in aid national security in making people stateless, if making people stateless would in effect make it almost impossible to move them to another country. Some people cite the case of Bilal al-Berjawi,

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who was a British-Lebanese citizen whom we did make stateless when he was overseas. His solicitor has argued that

“the process of deprivation of citizenship made it easier for the US to then designate Sakr”—

who accompanied Bilal al-Berjawi—

“as an enemy combatant, to whom the UK owes no responsibility whatsoever.”

This man was killed in a drone attack. Are we really talking about making people stateless when they are overseas in order to make them vulnerable targets of drone attacks by the United States?

James Brokenshire: May I directly address the suggestion that any action on deprivation of citizenship is linked, in any way, to the sort of activity that the hon. Lady highlighted? I strenuously deny that. They are two clearly separate issues and there is nothing to indicate, in any respect, that they are linked.

It is true that people have been deprived while outside the UK, but I do not accept that it is a particular tactic. It is simply an operational reality that in some cases the information comes to light when the person is outside the UK or that it is the final piece of the picture, confirming what has been suspected. In other cases, we may determine that the most appropriate response to the actions of an individual is to deprive that person while they are outside the UK. Equally, there are cases where it can be determined that it is appropriate to take action to deprive individuals while they are inside the UK.

It is not true that all those deprived under the clause will be stateless. Some may be able to acquire or reacquire another nationality. In those cases, where the individual has been deprived while in the UK, we would seek to remove that individual from the UK once they had acquired another nationality. However, the clause is not limited to those cases and can be applicable to those who cannot acquire another nationality. In that event, it is open to them to make an application to stay in the UK as a stateless person.

The UK would continue to comply with the provisions of the 1961 UN convention on the reduction of statelessness, regarding the rights of stateless persons. Where appropriate, we could regularise a person’s position in the UK by granting limited leave—possibly with conditions relating to access to public funds and their right to work and study.

I come back to the hon. Lady’s point about the concept, as she described it, of two-tier citizenship. We do not accept that there is, or will be, a two-tier citizenship system. The proposal merely reflects the fact that there are differing routes to citizenship, and therefore, different actions permissible depending on the actions of the person concerned. The power to deprive a person of citizenship, as I have explained, already exists and certain aspects can only be applied depending on a person’s route to citizenship. Naturalised or registered citizens

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can be deprived if they obtained it by means of fraud, false representation or concealment of a material fact. Any citizen can be deprived if the Secretary of State considers it conducive to the public good and the person would not be left stateless as a result, so I do not accept the hon. Lady’s suggestion.

I understand that Members are concerned about instances where deprivation action takes places when a person is outside the UK, and I hear the hon. Lady’s point. I restate that the Home Secretary takes deprivation action only when she considers it is appropriate and that may mean doing so when an individual is abroad, which prevents their return and reduces the risk to the UK. That individual would still have a full right of appeal and the ability to resolve their nationality issues accordingly. It is often the travel abroad to terrorist training camps or to countries with internal fighting that is the tipping point—the crucial piece of the jigsaw—that instigates the need to act.

Duncan Hames: The Minister refers to the right of appeal, and he outlined earlier the courts available for that process. Will he confirm that it would therefore, in some cases, be an appeal that is conducted under closed material proceedings?

James Brokenshire: As I indicated, a route is open to SIAC to consider that, and closed material proceedings could be applicable in certain circumstances—not automatically; it would depend on the nature of the individual case. It is appropriate, however, that there is that right of appeal and right of challenge, and SIAC effectively provides that ability to do so.

I reassure Members that the new power would apply only to those who are naturalised citizens—crucially, not children, who are not able to naturalise as British citizens, nor anyone who is British by birth or registration. That is because our original declaration reasonably limits action only to those who have sought the privilege of British citizenship but then betray the values and laws that they swore to maintain.

Ultimately, the new power will be used sparingly. It will be relevant only in a small subset of the most serious deprivation cases, where we are currently precluded from taking action because those people would be left stateless. Our proposed clause is a targeted and proportionate measure that protects the security of the UK without jeopardising our international obligations. It provides for effective rights of appeal and for upholding the 1961 UN convention on the reduction of statelessness.

I am grateful to the hon. Member for Hackney North and Stoke Newington for bringing the matter to the Chamber this afternoon and for enabling me to set out more details on the proposals. As she has rightly identified, this matter is before the other place, and I am sure that it will give the issues careful scrutiny and consideration.

5 pm

Sitting adjourned without Question put (Standing Order No.10(13)).