Under the Lords amendments and subsequent regulations, credits will be available for people who reach state pension age on or after 2016. Those credits build on the prospective credits in place from 2010-11,

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and help to ensure that people will not be prevented from gaining a full single-tier pension, even if they are in the now rare situation of having spent their entire working life accompanying their spouse abroad. The detailed design of the scheme, including the application process and information on when applications may start to be made, will be set out in regulations. Although it is difficult to give a precise figure, we estimate that about 20,000 people could benefit from the credits. Lords amendment 19 is a technical measure to accommodate the retrospective credits in the calculation of an individual’s foundation amount.

Lords amendment 2 deals with the issue of a statutory override for protected persons. The single-tier pension means the end of contracting out, so employers will have to pay more national insurance. The Bill provides for a statutory override to allow employers to change future contribution levels or accrual rates in order to recoup that increased national insurance when they would otherwise be prevented from making changes by their scheme rules. During the Bill’s passage through this House, the Government consulted on whether protected persons should be within the scope of the statutory override. We think that a relatively small group of individuals—perhaps 60,000—are affected.

The responses to the consultation were polarised, as employers wanted the flexibility to apply the override, while trade unions and others representing employees did not. We took the balanced judgment that we should honour promises made at the time of privatisation—promises that, in many cases, were subsequently confirmed by Ministers when legislation providing for pension protection was enacted. Lords amendment 2 makes it explicit that the statutory override cannot be used in relation to protected persons. Regulations will specify the details of who is considered to be a protected person, but the intention is to include all the people set out in our consultation response, especially rail workers, including Transport for London employees, and workers in the electricity, coal, and nuclear waste and decommissioning industries.

The group includes several technical amendments. Lords amendments 20 and 22 amend the Social Security Contributions and Benefits Act 1992 to make it clear that funds for paying the single-tier pension are provided by national insurance contributions, and that references to “benefit” include the single-tier pension. Lords amendment 23 repeals redundant provisions in the Marriage (Same Sex Couples) Act 2013, while Lords amendment 24 removes a redundant reference in legislation to the contracting-out compliance standard. Lords amendment 25 deals with the application of the statutory override to shared-cost arrangements. Lords amendment 26 is a response to a recommendation made by the Delegated Powers and Regulatory Reform Committee. It removes the power to create exceptions to the limit on the amount that employers may recoup under the override. The Bill originally allowed regulations to be made to create exemptions to the limit to deal with unconventional funding arrangements, but we are now making provision for such a power in primary legislation under Lords amendment 25.

In response to points made by the Delegated Powers and Regulatory Reform Committee, Lords amendments 12 and 13 provide that several regulations under the Bill will be subject to the affirmative procedure, rather than

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the negative procedure. Lords amendment 13 specifically provides that frozen-rate regulations should be subject to the affirmative procedure on every use.

Lords amendments 3 and 27 create a new class of voluntary national insurance contributions—class 3A. As the concept of the contributions was introduced in the other place, it is worth my spending a moment explaining more about it, as the House has not yet had the chance to consider it. The new class of contributions will allow pensioners to top up their additional state pension. It will be available to people who reach state pension age before the introduction of the single-tier pension on 6 April 2016. Details of the scheme, including the pricing, the maximum number of units and the administrative processes, will be set out in regulations. We will make details of the prices available shortly, but they will be set on an actuarially fair basis using the latest longevity figures. We envisage that the scheme will open in October 2015 and run for 18 months. It will help groups who have only modest amounts of additional pension, if any, such as women and the self-employed whose social and economic contributions were not captured in the state earnings-related pension scheme and are not fully reflected in the state second pension.

The scheme has just two simple entitlement conditions: first, a person must reach state pension age before 6 April 2016; secondly, they must be entitled to a UK pension. Even if someone has the full 30 qualifying years for a full basic state pension, they will not be debarred from paying class 3A contributions and boosting their state pension because they will be buying additional state pension, not basic state pension. I stress that that distinguishes the contributions from class 3 national insurance contributions, which fill gaps in the basic state pension.

We intend to cap the amount of additional pension payable as a result of class 3A at about £25 a week. As that extra pension will be additional state pension, it will be uprated according to the consumer prices index. The pension will be inheritable and people will be able to defer it in line with existing rules. More details of the scheme will be announced shortly, but the main regulations will be subject to the affirmative procedure, so Members will have the opportunity to debate the detail.

We have undertaken research and polling to gauge interest in the scheme. We expect to publish more information on likely interest and take-up shortly after the Budget, but our first poll suggests that 14% of pensioners might be interested. People’s ability to pay class 3 voluntary national insurance contributions to cover gaps in their contribution record for the basic state pension will be unaffected by the introduction of class 3A. We will put in place administrative arrangements to ensure that individuals who apply to pay class 3A contributions are made aware that they should first check their eligibility to pay class 3 contributions. People will need to consider whether making class 3A contributions is the best option for them. We believe that class 3A will allow some people to boost their state pension income with a secure, inflation-proof income that has the added advantage of survivor benefits.

I hope that the House, like their lordships, will support the Lords amendments. They improve the system for military wives and offer protection for protected workers. They tidy up several technical aspects of the Bill and, for people reaching state pension age before April 2016,

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introduce a new option of paying voluntary national insurance to top up their additional state pension. I commend the Lords amendments to the House.

5 pm

Gregg McClymont: I do not intend to detain the House too long on this group. On Lords amendment 2, I welcome the Government’s decision. The issue of individuals with protected status in pension schemes that were nationalised has been significant, both for the House and for the people concerned. Those with protected status are a group of approximately 60,000 individuals employed on the railways, including by Transport for London, and in the electricity, nuclear waste and decommissioning and coal industries. They are protected because they were given guarantees by the Government of the day when the industries were privatised. On Report, the official Opposition made clear their view, and tabled an amendment that aimed to remove these protected schemes from the scope of the provisions on the statutory override as it pertains to the new flat-rate state pension and the end of contracting out.

I welcome the Government’s decision on the continued protection of these schemes. I pay tribute to my hon. Friends, the trade unions, and others with whom Members have worked closely to make the case. It is a good example of how a case properly made, and a Government prepared to listen to the detail and the reality, can produce an outcome that we all welcome.

Grahame M. Morris (Easington) (Lab): My hon. Friend is making excellent points, and I thank him for his efforts to prosecute the case. Does he agree that the principle of trustee consent is an important one that we should honour?

Gregg McClymont: I thank my hon. Friend for his intervention and for his work on the issue. As he knows, we tabled an amendment to clause 24 in Committee on this issue. We welcome the decision to accept Lords amendment 2, a concessionary Government amendment moved on Report.

Let me say a little about Lords amendment 21, another concessionary Government amendment moved on Report, which will place a duty on the Secretary of State to make regulations to allow service spouses and civil partners who are due to reach state pension age from 6 April 2016 to apply for national insurance credits for periods during which they accompanied their spouse abroad. I agree with the Minister that the amendment will strengthen the armed forces covenant and remove some of the disadvantages that the armed forces community may face in comparison with other citizens. I add to the Minister’s tribute to Baroness Hollis for her work in ensuring that the provision was included in the Bill.

I look forward to the provisions in Lords amendment 3 being taken forward by the Government. I look forward also to the pricing of those provisions. It will be striking to see what take-up there is of the offer to procure more state pension for people who retire before the new flat-rate state pension is brought in. On that note of consensus, we welcome this group of amendments.

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Grahame M. Morris: I, too, will not detain the House for long, but there are a few points that I wish to place on record. I thank the Minister for meeting the trade unions on a number of occasions, and the Department for its active engagement in the consultation exercise.

I shall not rehearse the arguments about the importance of maintaining trustee consent, which were made by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) from the Front Bench. The workers concerned are those in former nationalised industries, including coal mining; electricity transmission workers; workers in Transport for London and the train operating companies; and workers in the nuclear waste and decommissioning industries. An important principle is at stake, and I am grateful to the Minister for accepting the Lords amendments. As was pointed out, it is important that we have ongoing discussions, and I hope that the Minister will commit to that. If he would engage with the trade unions, which have undisputed expertise in this area and could assist the Department in the drafting of the regulations, that would be much appreciated.

Steve Webb: I am grateful to both hon. Gentlemen who have spoken for their constructive responses. The amendments relating to protected persons have been welcomed, and I am grateful for that. I welcomed the opportunity recently to meet the hon. Member for Easington (Grahame M. Morris) and his colleagues from the relevant trade unions. I am pleased to assure him that we will be happy to have that ongoing dialogue when it comes to drafting the regulations that will implement these changes. As he knows, we take the view that a statutory override is not a statutory override if trustees have the power to block it. We differ on this point—I understand that—but we are imposing a substantial cost on employers, and we believe that they need to be able to recoup that. We hope and believe that many will do so in a constructive and collaborative way, with engagement with trustees and others.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) mentioned what might loosely be called the army wives provisions. As he says, they are an attempt to do right by our armed forces personnel and their families, and again, the measure seems to have attracted wide support. I am grateful for the support from across the House for these amendments from their lordships, which we accept. I commend Lords amendment 2 to the House.

Lords amendment 2 agreed to.

Lords amendment 3 agreed to, with Commons financial privileges waived.

Clause 37

Automatic Enrolment: powers to create general exceptions

Steve Webb: I beg to move, That this House agrees with Lords amendment 4.

Mr Deputy Speaker (Mr Lindsay Hoyle): With this we may consider Lords amendments 5 to 8, 9 and amendment (a) thereto, 10, 11, 14 to 18 and 28 to 38.

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Steve Webb: We move to the final group of amendments and, as I mentioned earlier, we urge the House to agree with their lordships in all of them. For reasons that I shall explain, we do not accept Opposition amendment (a) to Lords amendment 9.

I shall run through the categories of amendment before us. I shall deal at the end with the charges and disclosure amendments, where there appears to be the remaining lack of agreement. I apologise in advance for the fact that it might take me a moment or two to work my way through the amendments as some of them are quite technical, but at this stage in our proceedings it is important not simply to nod these measures through. In some cases quite substantive changes were made in another place—welcome changes, we believe, but they are ones to which this House should give proper scrutiny.

I shall begin with amendments 5 and 6 and then 4, which relate to automatic enrolment. It is worth putting it on the record that automatic enrolment is already a huge success story, with 3.2 million people now enrolled. I had the pleasure last week of visiting Upton Park to meet someone who I am told is the three millionth person to be automatically enrolled. I have my doubts, but one never knows. I have to declare in some sort of register somewhere that I was given a West Ham shirt with the squad number 3 million on the back, which may be my transfer fee—I do not know. We have certainly reached an important stage in the process. It is one of the almost unsung success stories of this coalition Government to implement automatic enrolment in an effective way, to see more than 3 million brought in and to have very high levels of staying in—of the order of 90%—which means that getting on for 3 million people are now in workplace pensions who were not in such pensions just a couple of years ago. All the signs are that this will continue to be a success.

But ongoing success is dependent on being able to learn as we go and to make changes where necessary, and amendments 5 and 6 are tabled in that spirit and relate to defined benefit schemes. In general, DB schemes are high-quality pension schemes provided by employers who take pensions seriously, and we would not want employers to feel that they could not use a DB pension scheme for auto-enrolment because of some technicality or because in some way we provided a higher hurdle for a DB pension scheme to be used for automatic enrolment than for a defined contribution scheme. Amendments 5 and 6 allow for simpler alternative quality requirements for employers providing good quality DB schemes.

The amendments will allow DB schemes to meet either the existing test for money purchase schemes, or a test based on the cost of future accruals. More work has to be done on adding the detail in regulations, and we look forward to working with our stakeholders on that. The simpler tests will help those employers providing good schemes to meet their automatic enrolment duties. This is important because of the end of contracting out. Contracting out itself had a set of standards that schemes that wanted to contract out had to meet, and once contracting out has gone and those standards have gone we can use the opportunity to set simpler equality requirements for employers wanting to use DB schemes. I hope that that will be welcomed by the House.

Also in the context of making automatic enrolment work, amendment 4 relates to the power to ensure that employers do not have to enrol individuals for whom it

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makes no sense. We tabled a clause at the beginning of the process that would give us the power to exclude a small group of people where it would not make any sense for employers to have a legal duty automatically to enrol them. For example, employers said to us that they had employees who were high earners or who had exhausted their lifetime tax limits and had some protected or enhanced status who were asking not to be put into a pension scheme because that could jeopardise their tax status, and having been auto-enrolled they would have to opt out straight away. That would be a waste of employers’ and employees’ time. If they failed to opt out, they could lose valuable tax protection, which would create unnecessary bureaucracy for the employer and hassle for the employee, and we do not want to do any of that when it comes to auto-enrolment.

We always envisaged that we would exclude tightly defined and limited categories of employees from the auto-enrolment duty. Following consultation, we have now indicated specifically which groups of people those are. I have mentioned those with tax protection status and another would be those on the brink of retirement or leaving. Someone might have said that they were about to leave the company, but the legal requirements on automatic enrolment or re-enrolment meant that the firm had to put them in the pension scheme, perhaps days before they left. Clearly, we do not want to bring automatic enrolment into disrepute. We do not want firms to be required to do things that are not common sense, that have a cost to the firm, perhaps create hassle for the individual and are unnecessary, and we always envisaged that the exceptions would be limited in scope.

5.15 pm

When we first discussed the provisions, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) got very excited about the Beecroft report and he called this the Beecroft clause and thought that we would use it to drive a coach and horses through auto-enrolment, exclude small firms and all the rest of it. We assured him that that was not our intention, but I sense that he did not believe us. In another place, we have chosen to make it clear, through amendment 4, that this power cannot be used to exclude an employer on the basis of size, whether that is the number of employees, turnover, VAT liability or whatever. It was never our intention to exclude these people. Faced with the ongoing, almost universal cynicism of the Opposition, we thought it best, for the avoidance of doubt, to put that in the Bill.

The hon. Gentleman sought such an amendment earlier in our proceedings, but we chose to do this in a cleaner and more precise way, simply so that people can be confident that the Government believe that automatic enrolment is—dare I use the phrase?—for the many, not the few. The process continues right down to firms that employ one person. Just because not many others work with someone, does not mean that they do not need to have a decent pension. We do not think that anyone should be excluded.

We accept that there are costs and burdens to small firms undertaking automatic enrolment, but we believe that the best way to address those is through amelioration measures of the sort that we have taken rather than by excluding them. For example, the National Employment Savings Trust is there to enable small firms to have

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somewhere to go to that has a public service duty to take their business, that has been designed with smaller firms in mind—obviously it is a significant provider at the larger end of the market—and designed to be easy to engage with for people who do not speak pensions, so it is jargon-free.

We have taken a number of other measures to ameliorate the position for smaller firms. For example, we have changed the phasing of the roll-out of auto enrolment so that those that employ 50 or fewer will, in general, not have to auto-enrol until at least June 2015, or, in some case, a good while after that. We have introduced a waiting period of up to three months, which again will help smaller firms. Crucially—I know the Opposition have objected to this—we have raised the trigger threshold to £10,000 a year from April 2014, which will mean a small firm employing perhaps one person on £7,000, £8,000 or £9,000 a year will not have to go through automatic enrolment. We believe that all of those measures are better ways of helping smaller firms than simply some sort of blanket exclusion. Therefore, amendment 4 makes it clear that that is not the way that we propose to proceed.

I will come back to the amendments on charges, because I think that that is the area of principal difference, and deal now with the other amendments in the group where there might be greater agreement. Amendments 28 and 29 relate to automatic transfers and what happens when somebody leaves a firm, leaving behind a small pension pot. We envisage that any pension pot of less than £10,000 left behind would fit our definition of a small pot. Their lordships debated whether our proposed model of automatic transfers, where the pension pot by default follows people as they change job, was the right model, or whether an alternative aggregator model—a home of lost pots model—would be a better bet. There was a high-quality debate where arguments were carefully made on both sides, and their lordships, by a large margin, with considerable Cross-Bench support, backed the Government’s position on this measure. So we will move ahead with our proposals for pot follows member, but we have to get the framework right to ensure greater consolidation. The Bill will provide that framework. Pot follows member will reduce the number of people with five or more dormant pension pots from one in four under the current system to one in 30. Our focus now is to work with employers, providers and consumer groups to deliver a safe and secure system.

It is clear that we should try to use the existing infrastructure where possible, including the existing PAYE system. As I told the House at oral questions on 24 February, we are working with our colleagues at HMRC on that. In addition to expenditure incurred by the DWP, amendment 29 extends the provision to allow any specific costs incurred by HMRC to be met from the general levy, which is the levy on pension schemes. If we go down that route, which incurs costs—we are finalising it at the moment, so this is an enabling power—HMRC will be able to recover them.

One of the attractions of going down that route is that if HMRC already holds data on the jobs that people have had, for example in the previous 12 months, and could also hold matching data on the pension schemes of which people were a member, it would be ideal to look at existing data sources. However, we have to do a full cost-benefit analysis internally. For example,

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a new pension scheme might be able to look at the member’s previous employers over the past 12 months and at other pension schemes of which they were a member. The new scheme could then contact those schemes, check for stranded pots and pull them across by default, unless the member objected, and the costs could be recovered from the general levy under Lords amendment 29.

Lords amendment 28 is a technical change designed to clarify that the automatic transfer provisions can apply to those who are not yet in receipt of their pension but are eligible to have access to their benefits—that is, those who are over the age of 55.

The next set of amendments relates to the Pension Protection Fund compensation cap, which we introduced during the course of our proceedings in this House. We said at the time that it would be necessary to complete the primary legislative framework in the House of Lords, and that is what we have done. Lords amendments 32 to 34 provide further detail on how pensionable service, for the purposes of the cap, is to be determined in specific circumstances, such as when a person is a member of two separate but connected schemes.

I will explain why that is important. The change we have made to the Pension Protection Fund cap is designed to help people who have given long service. The cap prevents people from getting very high levels of Pension Protection Fund compensation and is designed to exclude in particular some of the high earners who might have been involved in decisions about the future of a company. It also captures people who are not gratuitously rich, but who have built up a substantial pension, perhaps through working for one employer for their entire working life. We do not think that the cap was ever meant for such people, so we have provided that, beyond 20 years, it should be increased at a rate of 3% per additional year. The definition of the length of pensionable service is important, which is why Lords amendments 32 to 34, which tidy that up, are necessary.

Lords amendments 37 and 38 deal with the application of a cap during the assessment period and wind up. They provide for the valuation of scheme liabilities if the scheme is in assessment when legislation is commenced. The valuation will continue to be based on the current cap, although members of such schemes will be paid using the new cap during the assessment period. The amendments also provide for schemes winding up when the legislation is commenced. They will allocate assets based on the current cap.

Lords amendments 35, 36 and 38 clarify details such as the transitional provision to be made for those who share compensation following divorce. The policy for people with a pension in their own right and a pension based on a pension-sharing order is that each is kept separate and capped separately. This is to the benefit of members. The Pension Protection Fund has been applying the current cap in this way.

Finally on the PPF cap, Lords amendments 10 and 17 deal with the change to the application of the existing cap on compensation from two sources of pension and bring legislation in line with policy and practice. The current legislation assumes that the cap is applied after the amounts are added together. Amendments 10 and 17 amend the legislation so that it reflects current practice, and this will apply retrospectively. As I have said, that is to the benefit of members.

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Lords amendments 11, 15, 16 and 18 relate to the Public Service Pensions Act 2013. In layperson’s language, the amendments allow consolidation of schemes without loss of transitional protection. The 2013 Act reforms public service pension schemes and provides for transitional protection from that reform for members of public service pensions who were less than 10 years from their normal retirement age in April 2012. The Act also stipulates that, for the larger public service schemes, the individual needs to have been a member prior to that date in order to be eligible for that protection.

Lords amendments 11, 15, 16 and 18 create exceptions to that rule to allow members of smaller public service schemes to be transferred into a larger scheme without losing their transitional protection. The Government’s intention is to seek to make administrative and management savings by consolidating smaller schemes into larger ones. The amendments mean that that can happen with no impact on members’ benefits.

Finally, the substantive set of amendments are those led by Lords amendment 9 which relate to charging. Obviously, this is a contentious issue. We believe that their lordships have improved the Bill and we will urge the House to accept their amendments.

Making automatic enrolment work is not just about the employer duty; it is about ensuring that people are enrolled into high-quality schemes. I want to be absolutely clear, because no doubt there will be a lot of hand-wringing from the Labour party on this issue. When the previous Government put in place part of the necessary legislative framework for automatic enrolment, they put in place no quality standards at all for auto-enrolment schemes, bar the requirement to have a default fund—just to have one; there was nothing about charges or quality—and a minimum employer and employee combined contribution. It is pretty shocking that the previous Government thought it was good enough to put 10 million people on workplace pension schemes with no consumer protection at all. When hon. Members hear what the Labour shadow spokesman—the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East—has to say about this issue, they will imagine that Labour has somehow been riding to the rescue of the consumer. However, they should remember that when the legislation was first passed it was done with no regard, as far as I can see, for the position of consumers. There was no action on charges, no action on small pots or, to be frank, no action on anything.

The coalition Government are committed to ensuring that schemes provide good value for money and are well governed. Lords amendment 9, therefore, deals with the transparency of costs and charges, which we believe is vital for good scheme governance. We already have powers to require disclosure under the Pension Schemes Act 1993. However, for the avoidance of doubt, amendment 9 places a duty on the Secretary of State and the Financial Conduct Authority—I will come back to that, because it is an important point—to require the disclosure of costs and charges. The charges to be disclosed will be set out in regulations, and rightly so.

On amendment (a), the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East wants to put in primary legislation a shopping list of the charges he can think of. I think the House will immediately see the flaw in that. The hon. Gentleman would be the first to say that the financial services industry has been known to be

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creative—if we ban something, it will do something else—so what is the point of putting in primary legislation a list of the charges he can think of, saying that they should be disclosed and then adding, “and anything else”, on the end? Clearly, there could be a new category of charge at any point and we do not want to be governed by having to pass a new Act of Parliament every time there is a new charge on which we want to take action. We think that the charges to be disclosed should be set out in regulations because that approach gives the Government maximum flexibility to respond to a fast-moving market. That is why we do not agree with amendment (a).

Under Lords amendment 9, the duty is placed on both the Secretary of State and the FCA, which reflects the dual regulation of pensions and means that the FCA will consult on how and what to disclose, but not if costs should be disclosed. One of the many problems with the Opposition’s amendment (a) is that it would remove that duty from the FCA. I do not know whether that is accidental or deliberate. The amendment would leave the power solely with the Secretary of State, but with none of the sanctions available to the FCA. Just to be clear, amendment (a) would take the duty to consult on how and what to disclose away from the FCA and give it to the Secretary of State, but the Secretary of State does not have the powers that the FCA has. To be frank, that is a muddle. I know the Opposition will vote for their amendment because they tabled it and they want to make a point and tweet about it, but the substance of the amendment, even in terms of what the Opposition want to achieve, is deeply flawed, because it would take a duty away from a body that has a power and give it to the Secretary of State, who does not have that power.

Gregg McClymont: I know the Minister believes that God is a Liberal, but does he really have to be so pious?

Steve Webb: I usually sound grateful to the hon. Gentleman for his interventions, but I am not sure I am for that one. There is a bit of a pattern here. Labour has already called one vote on an amendment that was flawed, but it decided to vote for it anyway in order to make a point. I am explaining why amendment (a) is flawed, even according to the terms of what the Opposition want it to achieve, and it is obvious that the message has hit home, given the tenor of the hon. Gentleman’s response.

Richard Graham (Gloucester) (Con): On the charges that will be outlined later and the requirement for them to be disclosed, how does the Minister envisage that process being taken forward? Will there be a consultation? Within what sort of time frame does he imagine the charges being outlined?

Steve Webb: I am grateful to my hon. Friend who, as chair of the all-party group on pensions, has great knowledge and expertise on these issues. We need to take forward the matter in partnership with the FCA. As he knows, the Pensions Regulator regulates defined benefit and occupational defined contribution schemes, while the FCA works on group personal pensions, for example, but we want to make sure that, as far as possible, parallel regulations apply to both. We will, indeed, consult on exactly what should be included. We

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certainly want to get a move on with it all, so we will move as fast as we can, but we want to do so in partnership with other regulatory bodies. I hope that that offers him the assurance he seeks.

5.30 pm

We are working out how best to publish the information. Some have suggested that we should just bung it on a website. We obviously want meaningful information, not just to have tens of thousands of pension schemes recording vast amounts of data. We think that it is most important to make the information available first to the fiduciaries in any scheme—the people, whether the trustees or the independent governance committees, who act on behalf of scheme members—and that members should have the information in meaningful form, not just pages of gibberish. We have all seen how information that is required by law to be sent to scheme members can turn out to be more or less useless, because nobody ever reads it. We therefore have to think about the right formats in which to supply information to fiduciaries and to scheme members, and the right way to make the information public, and we are thinking that through at the moment. Disclosure on its own is not enough; powers in the Bill will allow the Government to regulate to control charges and to require minimum standards of governance.

A further ambiguity or slight inconsistency in amendment (a) is that it specifically requires the Government to restrict “transaction costs”. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East may want to intervene, because the Opposition have previously said that transaction costs should not be part of a cap, certainly at this stage. We therefore assume that it is a drafting error but if their position is now that transaction costs should immediately be part of a cap, perhaps he can explain why he has changed his mind.

Lords amendments 7, 8, 30 and 31 remove references to work-based schemes, which will allow us to extend the powers to closed schemes. That is important, because a legacy scheme review of old, closed and other schemes is currently taking place, and we will need a legislative route if it is necessary, following the voluntary approach of the Association of British Insurers, to review high-cost and legacy schemes. Finally, amendment 14 means that regulations under the powers will be brought forward as soon as practicable, which follows a recommendation from the Delegated Powers and Regulatory Reform Committee, and ensures that the regulations will be affirmative on the first use. Our full response to our consultation on such matters will be published soon.

This is another group on which we urge the House to agree with their lordships in all their amendments. The Lords amendments will make automatic enrolment work better, particularly for defined benefit schemes; ensure that small employers are not excluded; allow HMRC to recover the costs of pot follows member, if we go down that route in relation to involving HMRC; make the PPF compensation cap work; ensure that protections for public service pensioners are properly implemented; and implement the changes made in another place to require the disclosure of information, particularly on transaction costs. All the Lords amendments make the Bill better. I commend Lords amendment 4 to the House.

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Gregg McClymont: I rise to speak to amendment (a), but let me start with Lords amendment 4. In Committee, the Opposition argued strongly that clause 37, as drafted, was far too widely drawn and left a possibility that those with an agenda to exempt smaller businesses from auto-enrolment could do so. We therefore welcome the Government’s concession. Among the Minister’s rather curious language, he said that I “got very excited” and that there was “almost universal cynicism” from the Opposition, but within that odd framing he has actually accepted what we said in Committee. That is very welcome, because it makes the Bill better.

Let us think about amendment (a) in the context of the wider debate. The issue of costs and charges for pensions has shot up the political agenda for obvious reasons. If the Government are enrolling millions of people into a pension scheme for the first time, they had better make sure that the schemes are all value for money.

Steve Webb: I agree that the Government had better make sure that the schemes are value for money. Why, therefore, did Labour not legislate for that when it could have done so?

Gregg McClymont: The Minister made that point in his speech, as he has done repeatedly, and he has now put it on the record again. Let me pick him up on something he said. In what has become his quite common style, he suggested that it was rather peculiar to give the Secretary of State powers to ensure that transaction costs are disclosed. However, he must be aware—in fact, he alluded to this—that the FCA already has powers to require transparency of transaction costs, but has never exercised them. Making the Secretary of State responsible does not mean that the Government should not use the FCA’s expertise. Indeed, the Government’s amendment states that the Secretary of State must consult the FCA when setting transaction costs for those pensions over which he wishes to retain responsibility, so why could the same model not be maintained for contract-based pensions? Of course it could be so maintained.

On the Minister’s suggestion that it is somehow peculiar in his world to list the transaction costs that must be disclosed in amendment (a), I have to tell him that we used Lord Lawson’s amendment in the House of Lords, where it was commended by Members on all sides, including by the Government spokesman, Lord Freud. [Interruption.] The Minister is mumbling, but he suggested that the amendment was peculiar, although Lord Lawson’s amendment was along exactly the same lines. I am afraid that the Minister is disagreeing not just with the Opposition, but with Government Members.

Let me say a little about our additions to Lord Lawson’s list. I make it very clear that our list of transaction costs is the same as that tabled by Lord Lawson in the Lords, with two additions—transaction costs in underlying funds; and interest on client cash balances or profits from stock lending retained by the fund manager. The reason for including such additional transaction costs is that it needs to be strongly signalled to the body setting the rule—whether the FCA or the Secretary of State—that those items should be declared.

Let us remember that the Investment Management Association has deliberately failed to include those items in its draft statement of recommended practice.

17 Mar 2014 : Column 589

Amendment (a) should be discussed in that context, not the diversionary trail thrown up by the Minister. It is important that transaction costs in underlying schemes are disclosed because a transparency regime can otherwise easily be bypassed by any fund manager that operates multiple funds. The fund receiving moneys can simply use them to purchase units in another house fund. The IMA SORP recognises that the fixed charges in underlying funds should be reported, but it fails to apply the same principle to transaction costs, which is why they are laid down in the amendment.

The House should be aware of the wider context. The Government have previously left it to the fund managers’ trade association to decide what, if any, transaction costs should be declared. The IMA has put forward a draft statement of recommended practice, which would require fund managers to declare some transaction costs in their annual accounts. The SORP must be agreed by a Government quango called the Financial Reporting Council. The concern that the SORP failed to include significant types of transaction costs led a cross-party group of MPs and peers to write to the FRC to say that it would be inappropriate for it to agree to a statement of transaction costs that omits significant types of transaction costs. That was widely reported at the time. It is common knowledge that a number of critical submissions were made to the FRC. Unusually, those submissions were not released at the end of the consultation period, and we still await them.

Richard Graham: Will the hon. Gentleman give way?

Gregg McClymont: I am always delighted to hear from the hon. Gentleman, but I must make progress.

It is worth adding that the FCA sits on the working group that reviews the IMA’s SORP.

To put the SORP of the IMA—the fund managers’ trade association—in context, the Government refused to accept Labour amendments in Committee and on Report that specified a non-exhaustive list of transaction costs that needed to be made transparent. The noble Lord Lawson then made it clear that the Government’s position was not acceptable. He said that it was like putting the fox in charge of the hen coop. He added that there is a reason why fund managers meet in Monte Carlo and pension fund trustees meet in Manchester. That was the context in which Lords amendment 9 appeared. Lord Lawson, who sits on the Government Benches, made it clear that he agreed with the Opposition, rather than the Minister, who has failed to get to grips with the disclosure of transaction costs. That is the context in which this debate has been taking place for the past year and a half.

Lords amendment 9 does not state which transaction costs will be included. It gives the Secretary of State the right to include

“some or all of the transaction costs”.

It also allows the Secretary of State to not require full transparency in contract-based defined contribution schemes—those that are provided by insurance companies —if the transparency regime is “equivalent”. Lord Freud, speaking for the Government, emphasised that those words were intended to ensure that no costs were missed and that they were not an attempt to water down the regime for contract-based DC pensions.

17 Mar 2014 : Column 590

Lords amendment 9 removes the responsibility to set transparency rules for workplace DC pension schemes from the Secretary of State and gives that power to the FCA. The FCA does not currently require the publication of transaction costs for workplace pension schemes. Its view is that any transparency requirements should be identical to those for retail investment products.

Richard Graham: Is not the key point that is under discussion whether the list of charges to be covered should be included in the Bill? We agree that there are many issues of detail, especially on the transaction side, that should be consulted on. The Minister has said that that will happen. The hon. Gentleman has not answered the central question of why the list should be included in primary legislation.

Gregg McClymont: The answer to the hon. Gentleman’s question is that nobody who looks at this matter reasonably can have confidence that the Government will deliver the disclosure of any transaction costs. The only reason we have the inadequate Lords amendment 9 is that there was a rebellion among Conservatives in the House of Lords that was supported by Cross Benchers. Before that, the Government had no intention of disclosing transaction costs, as far as one could see. To answer his question, amendment (a) is a way of ensuring that the Government deliver what they say they want to deliver.

To sum up, the Government have brought forward in the Bill a hard, fast, rapid wind-up of the state second pension. If that is to be successful for those who can no longer accrue into the state second pension, there must be similarly speedy action to ensure that there is an adequate, meaningful pensions cap as quickly as possible. Alongside that pensions cap, all transaction costs must be disclosed. Before the campaign by the Opposition and, more recently, Lord Lawson, the Government had been very slow to get to grips with the disclosure of transaction costs, never mind the pensions cap. The intervention of Lord Lawson has led the Government some of the way down the necessary path towards ensuring that there is disclosure of transaction costs, but they have got to that stage only because of the threat of a rebellion in the other place.

5.45 pm

Amendment (a) would ensure that all transaction costs were disclosed and that the Secretary of State had the authority, power and obligation to ensure that that happened, rather than the FCA, which has shown no interest in disclosing any transaction costs. If we are to have decent workplace pensions to replace the income that is lost through the hard, fast wind-up of the state second pension, all these things must be disclosed. In this day and age, it is simply not good enough to say that those who are involved in pensions should not be aware of all the costs and charges that are extracted by fund managers. For that reason, I commend amendment (a) to the House.

Steve Webb: I will respond briefly to the hon. Gentleman. However, I suspect that he decided to press for a vote on amendment (a) a good deal earlier this afternoon, so I do not think that anything that I say will have the power to change his view.

For the record, the hon. Gentleman seems to be confusing a power and a duty. He says that the FCA has the power to require transparency, but it has not done

17 Mar 2014 : Column 591

so. If he reads Lords amendment 9, which I encourage him to do, he will see that it states in subsection (2):

“The FCA must make”.

That is the bit that he wants to take out—the bit that requires the FCA to do the thing that he wants it to do—so his amendment (a) is incoherent. Instead, he would give the duty to the Secretary of State, but the Secretary of State does not have the same powers as the FCA over the schemes that it regulates. The hon. Gentleman wants to take the duty away from the body that has the sanctions and give it to somebody who does not have the sanctions. That would not achieve what he wants to achieve.

Gregg McClymont: Will the Minister confirm that the Government’s amendment states only that

“some or all of the transaction costs”

should be disclosed? Will he put that clearly on the record?

Steve Webb: The text of Lords amendment 9 is before the House. The whole point is that we want all sorts of pension schemes—those that are regulated by the Pensions Regulator and those that are regulated by the FCA—to ensure that there is effective disclosure. His amendment (a) is defective because it would take the duty away from the FCA, which regulates one category of schemes, and give it to the Secretary of State, who does not have the sanctions to enforce the very thing that he wants to happen. I know that he does not care that his amendment is flawed, because he wants to make a point, rather than to pass good law, but for the record, his amendment would fail to achieve what he says he wants.

The hon. Gentleman said that the noble Lord Lawson, who has made a valuable contribution to this debate, came up with a list and that we should therefore have a list. Of course, the noble Lord Lawson did not pursue his amendment because he accepted that we did not need all the detail in primary legislation. If the hon. Gentleman lists the name of a charge in primary legislation, all it would take is for the ever-inventive investment industry to give it another name and we would need regulations anyway. Including a list would achieve nothing.

The hon. Gentleman asked about the words “some or all”. To clarify, the intention is to require full disclosure of all costs and charges. The reason for that wording is that it will future-proof the legislation—something that he has called for—by providing the flexibility to deal with new costs as they arise. That is all that we are trying to do by using that wording.

Gregg McClymont: I thank the Minister for that clarification. Has he spoken to the FCA and asked what its view is about the disclosure of all transaction costs? Does it support that?

Steve Webb: The hon. Gentleman will know that the FCA is regulated by Ministers from the Treasury, rather than the Department for Work and Pensions. However, I have met the FCA on a number of occasions, as have my Treasury colleagues, and we have corresponded on these matters. We are agreed that there should be full disclosure, as under the terms of the Bill, of all categories of pension scheme that are covered by the legislation.

17 Mar 2014 : Column 592

The hon. Gentleman avoided the question I asked on an intervention. His amendment (a) appears to contradict what he has said in the past, and it brings transaction costs into the scope of any potential charge cap. That was not his policy this morning, but it appears to be his policy this afternoon. Quite how he would set such a cap when we do not have the data on transparency is beyond me. Clearly, amendment (a) is not about how the law of the land should be written; it is simply about making a political point and doing so rather badly. On that basis, I urge the House to reject amendment (a), and to agree with Lords amendment 9.

Lords amendment 4 agreed to.

Lords amendments 5 to 8 agreed to.

Amendment (a) proposed to Lords amendment 9.—(Gregg McClymont.)

Question put, That the amendment be made.

The House divided:

Ayes 214, Noes 277.

Division No. 234]


5.50 pm


Abrahams, Debbie

Alexander, rh Mr Douglas

Ali, Rushanara

Allen, Mr Graham

Ashworth, Jonathan

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Balls, rh Ed

Banks, Gordon

Barron, rh Kevin

Beckett, rh Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blears, rh Hazel

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Buck, Ms Karen

Burden, Richard

Byrne, rh Mr Liam

Campbell, rh Mr Alan

Campbell, Mr Ronnie

Champion, Sarah

Chapman, Jenny

Clark, Katy

Clarke, rh Mr Tom

Coaker, Vernon

Coffey, Ann

Cooper, Rosie

Cooper, rh Yvette

Crausby, Mr David

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Dakin, Nic

Danczuk, Simon

David, Wayne

Davidson, Mr Ian

De Piero, Gloria

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Donohoe, Mr Brian H.

Doran, Mr Frank

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Eagle, Ms Angela

Eagle, Maria

Efford, Clive

Elliott, Julie

Ellman, Mrs Louise

Engel, Natascha

Esterson, Bill

Evans, Chris

Farrelly, Paul

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Fovargue, Yvonne

Francis, Dr Hywel

Gardiner, Barry

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goodman, Helen

Green, Kate

Greenwood, Lilian

Gwynne, Andrew

Hain, rh Mr Peter

Hamilton, Mr David

Hanson, rh Mr David

Harman, rh Ms Harriet

Harris, Mr Tom

Havard, Mr Dai

Healey, rh John

Hendrick, Mark

Hepburn, Mr Stephen

Heyes, David

Hillier, Meg

Hodgson, Mrs Sharon

Hopkins, Kelvin

Hosie, Stewart

Howarth, rh Mr George

Hunt, Tristram

Irranca-Davies, Huw

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Mr Kevan

Jones, Susan Elan

Jowell, rh Dame Tessa

Kane, Mike

Kaufman, rh Sir Gerald

Keeley, Barbara

Khan, rh Sadiq

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Leslie, Chris

Lewell-Buck, Mrs Emma

Llwyd, rh Mr Elfyn

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

MacNeil, Mr Angus Brendan

Mactaggart, Fiona

Mahmood, Shabana

Mann, John

Marsden, Mr Gordon

McCabe, Steve

McCarthy, Kerry

McClymont, Gregg

McDonagh, Siobhain

McDonald, Andy

McDonnell, John

McFadden, rh Mr Pat

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Meale, Sir Alan

Mearns, Ian

Miller, Andrew

Mitchell, Austin

Moon, Mrs Madeleine

Morrice, Graeme


Morris, Grahame M.


Mudie, Mr George

Murphy, rh Paul

Nandy, Lisa

Nash, Pamela

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Powell, Lucy

Qureshi, Yasmin

Raynsford, rh Mr Nick

Reed, Mr Jamie

Reed, Mr Steve

Reeves, Rachel

Reynolds, Jonathan

Riordan, Mrs Linda

Robertson, Angus

Robertson, John

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sawford, Andy

Seabeck, Alison

Sharma, Mr Virendra

Sheerman, Mr Barry

Shuker, Gavin

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Nick

Smith, Owen

Spellar, rh Mr John

Straw, rh Mr Jack

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, rh Keith

Vaz, Valerie

Watts, Mr Dave

Weir, Mr Mike

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Williamson, Chris

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Woodcock, John

Woodward, rh Mr Shaun

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Phil Wilson


Tom Blenkinsop


Adams, Nigel

Afriyie, Adam

Aldous, Peter

Amess, Mr David

Andrew, Stuart

Baker, Norman

Baker, Steve

Baldry, rh Sir Tony

Baldwin, Harriett

Barclay, Stephen

Barker, rh Gregory

Barwell, Gavin

Beith, rh Sir Alan

Bellingham, Mr Henry

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Blunt, Mr Crispin

Boles, Nick

Bone, Mr Peter

Bottomley, Sir Peter

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brooke, Annette

Browne, Mr Jeremy

Buckland, Mr Robert

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, rh Paul

Byles, Dan

Cable, rh Vince

Cairns, Alun

Campbell, Mr Gregory

Campbell, rh Sir Menzies

Carmichael, Neil

Carswell, Mr Douglas

Cash, Mr William

Chishti, Rehman

Chope, Mr Christopher

Clappison, Mr James

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Cox, Mr Geoffrey

Crockart, Mike

Crouch, Tracey

Davey, rh Mr Edward

Davies, Glyn

Davies, Philip

Davis, rh Mr David

de Bois, Nick

Dinenage, Caroline

Djanogly, Mr Jonathan

Donaldson, rh Mr Jeffrey M.

Doyle-Price, Jackie

Drax, Richard

Dunne, Mr Philip

Ellis, Michael

Elphicke, Charlie

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Farron, Tim

Field, Mark

Foster, rh Mr Don

Francois, rh Mr Mark

Freeman, George

Freer, Mike

Fuller, Richard

Gale, Sir Roger

Garnier, Sir Edward

Garnier, Mark

Gauke, Mr David

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Glen, John

Goldsmith, Zac

Goodwill, Mr Robert

Graham, Richard

Gray, Mr James

Grayling, rh Chris

Green, rh Damian

Greening, rh Justine

Grieve, rh Mr Dominic

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, rh Mr Philip

Hammond, Stephen

Hands, rh Greg

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Harvey, Sir Nick

Haselhurst, rh Sir Alan

Hayes, rh Mr John

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hendry, Charles

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Horwood, Martin

Howarth, Sir Gerald

Howell, John

Hughes, rh Simon

Hunt, rh Mr Jeremy

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, rh Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Knight, rh Sir Greg

Kwarteng, Kwasi

Lamb, Norman

Lansley, rh Mr Andrew

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leigh, Sir Edward

Leslie, Charlotte

Letwin, rh Mr Oliver

Lewis, Brandon

Lewis, Dr Julian

Lilley, rh Mr Peter

Lloyd, Stephen

Lopresti, Jack

Loughton, Tim

Lumley, Karen

Maynard, Paul

McCartney, Jason

McCartney, Karl

McPartland, Stephen

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Miller, rh Maria

Mills, Nigel

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morgan, Nicky

Morris, Anne Marie

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, rh Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, rh Sir Richard

Paice, rh Sir James

Parish, Neil

Patel, Priti

Paterson, rh Mr Owen

Pawsey, Mark

Penning, rh Mike

Penrose, John

Percy, Andrew

Perry, Claire

Phillips, Stephen

Pickles, rh Mr Eric

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Pugh, John

Raab, Mr Dominic

Reckless, Mark

Redwood, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Rifkind, rh Sir Malcolm

Robertson, rh Hugh

Robertson, Mr Laurence

Ruffley, Mr David

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Shepherd, Sir Richard

Simpson, Mr Keith

Skidmore, Chris

Smith, Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Spencer, Mr Mark

Stanley, rh Sir John

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Streeter, Mr Gary

Stunell, rh Sir Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Swire, rh Mr Hugo

Syms, Mr Robert

Tapsell, rh Sir Peter

Teather, Sarah

Thornton, Mike

Tomlinson, Justin

Tredinnick, David

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Vaizey, Mr Edward

Vara, Mr Shailesh

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Charles

Wallace, Mr Ben

Watkinson, Dame Angela

Weatherley, Mike

Webb, Steve

Wharton, James

Wheeler, Heather

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Willetts, rh Mr David

Williams, Roger

Williams, Stephen

Willott, Jenny

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Yeo, Mr Tim

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Amber Rudd


Mark Hunter

Question accordingly negatived.

17 Mar 2014 : Column 593

17 Mar 2014 : Column 594

17 Mar 2014 : Column 595

17 Mar 2014 : Column 596

Lords amendments 9 to 38 agreed to, with Commonsfinancial privileges waived in respect of Lords amendments 9 to 13, 15 to 23, 27, 29, and 32 to 38.

Ordered, That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendment 1;

That Tom Blenkinsop, Gregg McClymont, James Morris, Claire Perry and Steve Webb be members of the Committee;

That Steve Webb be the Chair of the Committee;

That three be the quorum of the Committee.

That the Committee do withdraw immediately.— (Mr Gyimah.)

Committee to withdraw immediately; reasons to be reported and communicated to the Lords.

17 Mar 2014 : Column 597

Payment Scheme (Mesothelioma)

6.7 pm

The Minister of State, Department for Work and Pensions (Mike Penning): I beg to move,

That the draft Diffuse Mesothelioma Payment Scheme Regulations 2014, which were laid before this House on 3 February, be approved.

It is a pleasure to move these regulations on the Floor of the House. We had good debates on the Mesothelioma Act 2014, which allows us to move the regulations we need to ensure that the payments go to those who need them so much. The debates in the House and those with my noble Friend Lord Freud in the other place were incredibly valuable. I should like to place on the record my thanks to the late Paul Goggins. Paul campaigned for many years for the compensation for which these regulations make provision. It is a fitting tribute to him that I listened to him so much that we have moved to the figure of 80%, as I will say later in the debate.

We have debated these provisions, but it is good to mention at the start that the Act and the regulations continue to refer to 75% average civil compensation payments. I announced to the House on 6 March that, because the scheme administrator contract was let, and because we will stay within the 3% of the levy to employers, I am able to raise the percentage from 75% to 80%. I will introduce further regulations later, but I did not want to delay in any shape or form the compensation that is so badly needed.

Stephen Phillips (Sleaford and North Hykeham) (Con): Will the Minister confirm that, now we are moving to a scheme that will have an 80% compensation rate, 80% will apply to all claimants, including those who make their application under the regulations, on the face of which is the figure of 75%?

Mike Penning: My hon. and learned Friend is absolutely right. I was going to say that, even though the regulations are being debated today, all those eligible for the scheme will get 80%. It is important that people do not get one or another of the figures. It will be 80% across the board.

Ian Lavery (Wansbeck) (Lab): I am pleased with the increase from 75% to 80%. Will there be an opportunity in the near future to review the legislation to increase it from 80% to 100%?

Mike Penning: No, because I have to stay within the agreed 3% of the levy. The important thing, as we said throughout the deliberations on the Mesothelioma Bill, is to ensure that the cost is not passed on to new business. I have come under huge pressure not to raise payments to 80%, because of the risk to the levy. However, because we managed to let the contract to a reputable organisation, we have been able to raise payments to 80% without putting the fund at risk.

Although we will review the legislation, we will not raise payments to 100%. If nothing else, the hon. Gentleman has been consistent in pushing for 100%, and I fully understand why. I promised throughout the deliberations on the Bill that I would listen and that nothing was

17 Mar 2014 : Column 598

fixed in stone, but raising the level to 100% would push me, or whoever happened to be Minister at the time of such a review, too far.

Mr Gregory Campbell (East Londonderry) (DUP): Everyone will welcome the move to 80%. Can the Minister give an estimate of the cash differential between 75% and 80% for potential beneficiaries?

Mike Penning: The move will take the payment up to some £126,000, which represents an extra £13,000. That is in addition to the payment of £7,000 for legal fees, which will be introduced in separate regulations. When Ministers promise the House that they will listen, it is important that they try to do what is requested of them. I stuck rigidly to 75%, because I was not confident that there would be enough money in the fund to increase payments to 80%, let alone 100%. However, I am now confident that there is enough capacity to move to 80%, so when the scheme starts—I hope that that will be on 6 April—all those affected will receive 80%, even though we have been looking at 75%

Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): I am grateful to the Minister for his explanation, and I admire what he has done in getting us to 80%. In truth, compensation ought to be at 100%. Sufferers feel 100% of the injury, and the industry took 100% of the premiums at a time when it believed that it would often have to compensate for pleural plaques as well as for mesothelioma. I hope that the matter is not closed and there will be an opportunity to discuss it again.

Mike Penning: I would be amazed if we did not discuss the matter again, as we have done over the years. It would be right and proper for us to do so. If we raise compensation payments to 80%, many people will receive more than they would have done through a civil court. The payment is an average, so some people would have received less in the civil courts. By raising the level from 75% to 80%, we have ensured that more people will receive more than they would have done if they had found their employer or their employer’s insurer.

Mr Jim Cunningham (Coventry South) (Lab): I apologise for being a little late. It would be interesting to know the difference in costs between payments of 80% and 100%.

Mike Penning: I will write to the hon. Gentleman with that information. We debated the matter at length at each stage of the Bill, and I reiterate that the key is to stick within the 3% agreement, which is not being passed on to new business. The House agreed when we debated the subject that to pass on costs to new business would be improper.

Kate Green (Stretford and Urmston) (Lab): While we are on the subject, does the Minister accept that, as we discussed in the Mesothelioma Bill Committee, even if we maintained the levy at 3%, the Government’s impact assessment makes it clear that after four years it would at least be possible to raise payments to 90%?

Mike Penning: We looked at that extensively in Committee, but those figures are all based on assessments. When the four-year review comes up, we will look

17 Mar 2014 : Column 599

carefully to see what is in the pot, but it would be irresponsible of me or any Minister to stand before the House and commit to emptying the pot completely by going even further. By moving to 80% I have moved as far as I can, and a lot further than many wanted me to move. I promised to increase payment levels if I could, and I have done so.

Ian Mearns (Gateshead) (Lab): The measure is not perfect, but we are greatly relieved that at last something is happening on behalf of sufferers all over the country. Has the Minister made any special provision for legal costs in the scheme?

Mike Penning: The hon. Gentleman must have been reading my notes, because I was just about to come to that. During the passage of the Bill, we made provision for payment of £7,000 for legal costs to all successful claimants, which will be made on top of the 80% payment. I was adamant that that £7,000 would go to the claimant or their families as the fund of last resort, and not directly to any lawyer. It is up to the individual to decide whom they appoint and how much they pay them.

We are looking carefully at the operation of the scheme and the website, and we think that many people will be able to make claims without the need for legal advice. If they can do so and they spend none of the £7,000, they will keep the money. If they spend part of it on legal fees, they will keep the remainder. It is important the moneys do not simply go off to lawyers as they have done in other, not dissimilar, schemes.

Steve Rotheram (Liverpool, Walton) (Lab): I congratulate the Minister on the progress that has been made. Any progress towards the 100% that the Opposition believe to be justifiable is a step in the right direction. Can he assure the House that the legal payment of £7,000 will not be a pro rata payment, and that claimants will receive the full amount even if they do not use it all on legal advice?

Mike Penning: Let me try to be as blunt as I possibly can, which is not unusual for me. The £7,000 is theirs. Even though the money is targeted at legal fees, how claimants spend it is entirely up to them. As I have said, we are trying to make the application as simple as possible. If they spend none of the money—remembering that we are talking about a fund of last resort for those who have been unable to find their employer or their employer’s insurer, and that, sadly, the money will often go to the dependants and loved ones of sufferers of this terrible disease—they will be able to keep all of it. Others, including hon. Members and trade unions, will assist them to ensure that they are not ripped off. The important point is that the £7,000 is an additional sum on top of the 80%.

I know that some colleagues are disappointed that we have not moved to 100%. Some colleagues may also be disappointed about the cut-off date, which we discussed extensively during deliberations on the Bill. As I have said—the right hon. Member for Newcastle upon Tyne East (Mr Brown) will understand this as a former Minister—I did not want to delay compensation by

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breaking the existing deal. The regulations are in their current format to avoid delay and allow the scheme to start, we hope, in the first week in April. We want to help those who desperately need the funds quickly.

Grahame M. Morris (Easington) (Lab): I congratulate the Minister and welcome his announcement that the level of compensation will be increased. We anticipate that there will be a rush of claims. If the fund is in surplus when that initial rush has been addressed and settled, will he give an assurance that the Government will look at using that money for other asbestos-related diseases or research?

Mike Penning: We expect there to be a surge, and that is why the scheme has received Government funding, which will be claimed back. It would be improper for me to make a commitment now about how any money that might be left in the fund will be used. However, we are working closely with the Department of Health and specialist research bodies. We are particularly focusing on the tissue bank, which is important in finding out why mesothelioma acts as it does so long after contact with asbestos; a gestation period of 40 or 50 years is not unusual.

If there is money in the fund when the review happens, whoever is the Minister at the time—I may still be in place; one never knows—will look at how best to use it. I am conscious that if I take any more praise from the Opposition, my reputation will be diminished enormously. With that in mind, I commend the regulations to the House.

6.19 pm

Kate Green (Stretford and Urmston) (Lab): I am very pleased to see the progress that has been made on the introduction of the scheme and, at risk of doing further damage to the Minister’s reputation, I should like to join colleagues from across the House in congratulating him on taking this further step towards ultimately, we hope, securing full justice for mesothelioma victims. I want to take this opportunity to pay tribute again to the many campaigners involved, especially the victim support groups and trade unionists, and to acknowledge that the uplift in the level of payments was pressed for in both Houses of Parliament and across all parties. I am grateful to the Minister for highlighting the contribution of our much-missed colleague and friend, Paul Goggins.

We are all pleased that the Minister has been able to bring this increase to the House. I note that he intends to achieve the increase in payments through negative regulations to be tabled immediately after the regulations before us come into force. On that basis, we are entirely happy to accept the motion before us tonight, although it is clear that the amount of scheme payments in schedule 4 do not represent the level of payments that we now expect to be made.

The Minister said that he had been able to achieve the increase in payments because of savings made on the administration costs. He will recall that I suggested doing exactly that in Committee on 12 March 2013, so I am pleased that he has been able to take up my suggestion. Will he give us a little more information about exactly where the savings have been found? We have discussed this before in Committee. The Government’s impact assessment told us last November that an uplift in

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payments from 75% to 80% of average civil damages would cost an additional £11 million in the first four years of the scheme, and an additional £22 million over the first 10 years of the scheme. It also stated that, with the payments set at 75%:

“The costs of the scheme are split between a levy of £371m on the insurance industry and £17m in government funding. This covers scheme payments direct to individuals (£261.4m), benefit recovery (£72.2m), applicant legal fees (£24.6m) and admin of £30.0m (including case legal fees of £24.2m, set up of £1.4m and running costs of £4.4m).”

The Minister will recall our extensive discussions in Committee about the detail of those admin costs, and about the legal fees within them. As the impact assessment shows, there are two sets of legal fees involved: applicants’ fees, at £24.6 million, and case legal fees, at £24.2 million. However, despite extensive discussion in Public Bill Committee—and despite what he has said tonight, which is reassuring—I am still unclear about the respective levels and purpose of the two sets of legal fees.

Claimants’ legal fees were set at £7,000 per case when the legislation was first introduced in the House of Lords, when payment was set at 70% of average civil damages. During the passage of the Bill through the House of Lords, the legal fees were reduced to £2,000 per case and payments increased to 75%. I think we understood that to be a quid pro quo. But later, during the Committee stage in the Commons, legal fees reverted to £7,000. The Minister told us that he had had discussions with the Association of Personal Injury Lawyers and felt £7,000 to be a reasonable figure after all. However, he also said that if cases could be conducted more cheaply, applicants would none the less receive the full £7,000. He has confirmed that again this evening, which we welcome. That did not cut much ice with the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) in Committee. As a lawyer himself, he might be assumed to have some insight into lawyers’ thought processes in these matters. He suggested that if £7,000 was the assumed rate for the job, that would de facto become the tariff, whether it accurately reflected lawyers’ costs or not.

Now the Minister tells us that extra moneys have been squeezed out of the admin costs to fund a further, and very welcome, uplift in payments. Can he tell us exactly where it has come from? He has placed on record that £7,000 per head remains the sum allocated to applicants for their legal fees, and that if their actual fees fall short of that amount, they will receive the difference, in cash, up to £7,000. If there are no changes in the position in relation to applicants’ legal fees, can he tell us where he has found the additional £11 million, or £22 million, necessary to pay for the uplift in payments to 80%?

On the face of it, the extra money must come from a combination of the other admin costs. Will the Minister tell us what he now assesses the running costs and set-up costs of the scheme to be? Have those costs decreased since the impact assessment was conducted? If so, will he tell us by how much, and how that was achieved? Will he tell us how much is now allocated for case legal fees, as opposed to applicant legal fees? I am still struggling to understand what these encompass, but the Minister assured us in Committee that they would be incurred for the benefit of claimants. Will he therefore tell us whether the sum of £24.2 million in the

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impact assessment has now been reduced, and if so, by how much? What effect will that have on the handling of cases, and what impact will it have on claimants?

Will the Minister tell us whether the contract with Gallagher Bassett International, which is to administer the scheme, includes a profit element? I assume that it does. If so, is it included in the running costs? If the additional funds to meet payments at 80% have been found elsewhere, rather than from the costs I have just mentioned, will he tell us exactly where we should look? He has just told us that the levy on the insurance industry would remain at 3%. I had hoped that the Government’s commitment to maintain it at 3% would appear in the regulations, but it has not done so. Will he tell us whether payment at 80% remains affordable within a levy of 3%, during and beyond the first four years of the scheme?

Mike Penning: We have always tried to have a consensus, and I thought the shadow Minister knew that that was exactly what I had said. That is exactly what is going to happen, and I do not know why she is going over this old ground again. We went through all this in Committee, and she seems to be reiterating the arguments that she made at that time. We are talking about the regulations that are now before us, and we need to get through this tonight so that the compensation can be paid.

Kate Green: I am simply trying to understand where the additional £11 million has been found. It would be helpful if we knew that. We are particularly anxious that this should not have a detrimental effect on the way in which the scheme works for claimants. I know that the Minister does not want that to happen, but it would be helpful to understand how he can give us an assurance that it will not.

On some of the other aspects of the scheme, regulation 5 sets out the general duties of the scheme administrator, including a duty to take reasonable steps to publicise the scheme. Now that the administrator has been appointed, will the Minister tell us more about how that will be achieved? What discussions have taken place with the administrator to ensure the widest possible dissemination of information about the scheme to those who might have a claim under it, and what discussions are taking place with trade unions, victims’ groups and others to ensure the widest possible promotion of the scheme? Have health care professionals in the NHS been alerted to it, and will there be clear signposting to the application process?

I was pleased to hear the Minister say a moment ago that he expected applications to be accepted with effect from 6 April. However, there is nothing on the Department for Work and Pensions website explaining how people should make an application—or at least, there was no such information there two or three hours ago, when I last checked. The Minister will understand the importance of making that information available very quickly, given the poor prognosis of the disease. Will he tell us when he expects the application form to be available, and how claimants will be able to access it?

Regulation 5(4) requires the scheme administrator to ensure that there are sufficient numbers of suitably qualified persons to determine applications under the scheme. Will the Minister tell us more about the likely professional background and qualifications of those

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persons, and in particular about their independence and how they will be employed? Will they be employees of the scheme administrator, or might they work on a freelance basis? Is it possible that they could have a conflict of interest if they held other appointments or roles within the insurance industry at the same time? How would such conflicts be identified and dealt with, and how will the public and claimants be reassured of the independence of those employed to take decisions in the scheme?

I welcome the provisions in regulation 9 on time limits for applications. The Minister has made good on his assurance in Committee that applicants would have three years from the date of diagnosis or three years from when the regulations come into force if diagnosis is after 25 July 2012 but before they come into effect. However, there are concerns about time limits when we look at regulation 18.

Generally, if a claimant dies before the case is determined, a payment may be made to his or her personal representative in the event that they leave no dependants. This will, however, still leave a small group of mesothelioma sufferers without dependants who were diagnosed on or after 25 July 2012, but who died before they could make an application, for example because the forms were not available. In those cases, it is my understanding that no payment will be made to the deceased’s personal representative. That seems unjust. It has been clear in all our discussions that the Government’s firm intention is for claims to be met for anyone with a diagnosis after 25 July 2012, and it cannot be right that a small group, who otherwise would qualify, should be excluded. Will the Minister say what he intends to do to address that situation?

I welcome regulation 11, which sets time limits for the provision of additional information. That was a suggestion made by my noble Friend Lord Browne, in discussion with the Minister’s officials. I am very pleased that it has been taken on board. I must emphasise my continuing concern, however, that where information is needed from Her Majesty’s Revenue and Customs—a situation I raised in Committee and on Report—the problem of HMRC insisting on a court order to release the employment records of deceased claimants remains totally unresolved. This is a very serious matter, as it risks building in delay and costs for claimants accessing the scheme. On Report, the Minister assured the House that a suitable vehicle for dealing with this problem would be found in good time for the establishment of the scheme, and I recall that he responded positively to the suggestion of the hon. Member for Gainsborough (Sir Edward Leigh) that it could be dealt with in secondary legislation. There is, however, no sign of any such provision in the regulations before us. Indeed, as recently as 25 February, I received a letter from the Exchequer Secretary to the Treasury which suggests that the Government have made absolutely no progress whatever on the matter since we discussed it at the beginning of January. That is really concerning, given the imminent launch of the scheme. I hope the Minister will be able to update us on what urgent action the Government are taking.

I welcome the provision in regulation 18, which provides for the applicant to request a review of a determination—another of Lord Browne’s suggestions. I also welcome regulation 24, which adopts the suggestion of the hon.

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and learned Member for Sleaford and North Hykeham that in conducting a review, the administrator must ensure that anyone who had responsibility for the original determination will play no role in the consideration of that review.

I am disappointed that schedule 2 continues to include eligibility for payments under the Turner and Newall schemes as grounds for exclusion from access to this scheme. As the Minister knows from our discussion in Committee, this will leave a number of people considerably worse off than if they had been able to access this scheme. I had hoped he would have wanted to be as generous as possible to those sufferers, and I regret that he has not been able to do that.

Finally, may I ask the Minister to say a little more on a discussion that took place a few moments ago in relation to the review of the scheme? I welcome the commitment in regulation 27 to annual review of these regulations, but will he be absolutely clear that in addition there will be a full review of the scheme after four years? In Committee, he told us:

“It is very important that the insurance companies know that the 3% is there. In Committee in the other place, Lord Freud committed to a review at the end of the smoothing period, after four years, to see exactly how things were going…I will place that fact in regulations so that the Committee has confidence that a review will take place after the four-year smoothing period. At that point, we will have a much better idea of how much the levy collector is collecting. We may be able to spend that by increasing the percentage, or we may be able to do other things with it.”––[Official Report, Mesothelioma [Lords] Public Bill Committee, 10 December 2013; c. 77-8.]

That is important, since by my calculation an even more generous level of payment—at least 90% of average civil compensation—could be affordable within the proposed 3% levy after the first four years of the scheme. I had hoped the regulations would specifically provide for a four-year review to take place, but they do not. Will the Minister say why they do not and what his intentions are in that regard?

Let me sum up as follows: we warmly welcome the progress that has been made towards the establishment of the diffuse mesothelioma payments scheme and we certainly have no intention of delaying or opposing the regulations, but there remain a number of outstanding issues. I hope the Minister will be able to respond and offer further reassurance on them.

6.35 pm

Tracey Crouch (Chatham and Aylesford) (Con): I do not wish to detain the House long. As the Member who tabled the amendment on Report and put it to a vote, I was disappointed when the Government did not listen to the call to raise compensation to 80%. Members will therefore not be surprised to learn that I am delighted that progress has been made and that the Minister and his officials have managed to find savings, through the tendering process, to ensure that those who contract this dreadful and fatal condition receive the compensation they deserve.

It is worth reminding the House that mesothelioma is one of the worst diseases that anyone can contract simply by going to work. There is no reason behind having mesothelioma other than exposure to asbestos. Unfortunately, those who do contract it often die very quickly, leaving their dependants without the financial security that they would have hoped to have provided in any other circumstances.

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The Mesothelioma Act 2014 provides compensation to those who are unable to get compensation via the civil claims process. Increasing the compensation level to 80% is the right thing to do. I know there is still disagreement across the House on the level of compensation, but there was consensus on an initial minimum compensation level of 80%. Other hon. Members may wish to increase that to 90% or even 100%. The perfect outcome would be 100%, but that is unachievable, and I believe that 80% is the right figure to settle on at this stage.

Following Report, many people across the country—not just in my constituency—contacted me to ask when the scheme would start and how they would be able to access it. Will the Government ensure that a “How to” guide is published on the website and is readily available for all victims?

Mike Penning: It is important that we make the scheme as simple as possible. There will be a direct link on the Department for Work and Pensions website to the administrator’s website. We want to make that as simple as possible so that, as I suggested earlier, in some cases the legal profession will not need to be involved. I urge colleagues and representative bodies to get the information out there. The administrators will do that, and we need to do that in constituencies where mesothelioma has blighted the lives of so many. All hon. Members across the House have websites, and they should use them to promote the scheme.

Tracey Crouch: I am grateful to the Minister for that response. It is very important that we make it as simple as possible for people to understand exactly how to access the scheme. As long as they are aware that it is a scheme of last resort, and have gone through the appropriate civil process, we can do what is best to ensure that victims and their families receive compensation quickly and fairly.

There has been good progress, and that is a fitting tribute to the late Paul Goggins. The issue of mesothelioma is wider than just compensation, although that is very important, and I will do my bit to continue to fight on many of the issues on which he made a start, such as better research funding to ensure that we find a cure; that is beyond the remit of the Minister’s Department. I recognise that the Minister has done an incredible job. He has not just listened to Members in all parts of the House, but ensured that the level was increased, and that those in the insurance industry settled for that. I will not say that they have welcomed that, or are happy with it, but they have settled for it, and they have not walked away from the scheme. It will provide valuable financial security for those who contract this dreadful disease.

6.39 pm

Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): It is a pleasure to follow the hon. Member for Chatham and Aylesford (Tracey Crouch), and to find myself broadly on the same side of the argument as her. I particularly thank her for her kind words about Paul Goggins, who had many friends in all parts of the House, and who made a really significant contribution to our debates on the Bill and on the issue more generally. He is still sadly missed.

The Minister has stuck to the departmental briefing that was agreed with the Treasury, and to his original agreement with the insurance industry on the parameters

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of the scheme, so no one could reasonably criticise him for the way in which he has carried out his responsibilities; I hope that the Government Whips and the Leader of the House, who are listening, will find that satisfactory. Having spelled that out, I must add that the Minister has done everything that he could to help the victims of this terrible condition. I pay tribute to him for that work, and to Lord Freud for his work in the other place.

Above all, I pay tribute to the Minister for sticking with this issue, because not every Minister would have done so; it is not a popular issue in Whitehall. It may be appropriate for me to conclude the thanks that are due by thanking the civil servants in the Minister’s Department who have helped us to reach this point. Once the administrator of the scheme was established, some issues must have become clearer. It must have been easier to see whether an agreement could be reached on the vexed issue of whether the compensation level should be the 75% at which it stood at the end of the Bill’s Committee stage, the 70% at which it stood when it started life, or the 100% that I wanted, which always seemed out of reach in view of the parameters of the scheme. As I have said, the Minister stuck with this, and has brought us to 80%. I must say to him, “Well done.”

The Minister has also preserved the “3% or less” parameter on which the industry would no doubt have insisted. That is an industry figure, and there is some scepticism about it on the Opposition Benches. In the letter that he courteously sent to those who were members of the Committee, he said that he felt that it would be possible to keep the cost to less than 3%. I wonder whether he is able to tell us today how much less, and whether this scheme of last resort involves a trade-off between that and a yet higher compensation level for victims. It is early days, and I do not criticise the Minister. I have no reason to doubt his good faith in these matters; indeed, far from it. He has stuck his neck out for our side as far as one would expect any Minister to do. However, having seen the calculations produced by his Department, I should like to hear something about the period over which the costs will be spread. Perhaps he could tell us whether there is any prospect of taking the compensation rate in this scheme of last resort closer to the 100% that many of us think is justified.

We have had to sacrifice our wishes for an earlier start date for eligibility. Opposition Members still think that eligibility should start from the date on which the last Labour Government consulted on the introduction of a scheme of this kind. We believe that the consultation exercise, during which the Government made it clear that they were minded to legislate, raised legitimate expectations in the minds of potential applicants. I wonder whether there is room for a little more generosity within the scheme’s parameters. The cost of picking up the several hundred cases that I understand to be involved would be a one-off; continuing costs would not be incurred, because eligibility would have to fall between the start date advocated by the Opposition and the date on which the Government settled.

The Minister said that he wanted a clear-cut scheme that would be easy to access and would not put undue pressure on applicants. I welcome that, but applicants still have to demonstrate that they are eligible. It is up to them to show that there is not still an employer whom they can sue, or an insurer who has an obligation to pay compensation. That is a big responsibility to put on the

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shoulders of an applicant. I welcomed what the Minister said about the £7,000 and the legal costs, but someone who puts £7,000 in front of a claims farmer or a lawyer will be presented with a bill of about £7,000.

Ian Mearns: I agree with my right hon. Friend that proving that one has been susceptible to exposure to asbestos during a long and sometimes diverse career can be very tough. I know that a number of people who have succumbed to mesothelioma have not worked in heavy industry but have, for instance, taught in schools in which asbestos has been present. It is very difficult to prove exposure, because asbestos fibres often lie dormant in the lungs for decades.

Mr Brown: My hon. Friend and constituency neighbour is absolutely right. The effects of this horrible condition can be with a victim for decades, but once full-blown mesothelioma has been diagnosed, life expectancy is extremely short. It is no accident that the north-east of England is disproportionately represented on the Opposition Benches today, because we represent people who are in the older tranche of victims. I know that I do not need to explain this to the Minister. I am talking about people who worked in heavy engineering, shipbuilding and ship repair, people who sprayed carriages with asbestos, and thermal insulation laggers. Members of that generation were the victims of those industries. However, as my hon. Friend the Member for Gateshead (Ian Mearns) pointed out, the new victims will be teachers who have been scraping on asbestos-based boards, school caretakers and janitors who have breathed in asbestos from insulation that is flaking because it has not been properly lagged, and builders who have carried out occasional repairs without being properly protected against the asbestos that they were drilling into, and have generated dust.

Mike Penning: The right hon. Gentleman is right to say that there has been a disproportionate effect in the north-east in particular because of the heavy industry there, and to mention many of the organisations involved. However, in such cases it is relatively easy to trace the victims’ employers, because they are large companies in large industries. This scheme is intended to cover cases in which we cannot find the employers, and hence the insurers, who are legally responsible. That is why it is a scheme of last resort. As for the right hon. Gentleman’s other point, I think it is absolutely right for us to help, because the scheme will not work if a large number of people resort to it when they could have claimed elsewhere. We need to help them to obtain compensation from the source from which they deserve it.

Mr Brown: I agree with the Minister that in the public sector it should be easier to trace a responsible insurer, and indeed a responsible employer, but there is a rich history of subcontracting, even in the public sector, and not all these people have insurers who maintain liability. It is the missing insurer, as well as the missing contracting or subcontracting company, who generates the cases with which this last-resort scheme is intended to deal.

The Minister is right to anticipate more public sector cases in the future. I have asked the Department of Health how many mesothelioma cases were being dealt

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with in England by the Department, and that number of cases, as you of all people will well know, Madam Deputy Speaker, is a precursor to the number of compensation claims that there will be—if, that is, the injury was inflicted through work. The House will be distressed to learn that the number is still rising. The number identified by the Department is now over 7,000 a year, and that is not a very easy fit with the projection of the number of fatalities coming from the Department via the Health and Safety Executive.

Ian Lavery: With regard to public sector workers, 10,000 teachers died because of mesothelioma. Does my right hon. Friend agree that we have to look seriously at the impact on children in schools where asbestos is present? If an adult—a teacher or a caretaker—can get mesothelioma from being at school, what has happened to the kids?

Mr Brown: Like my hon. Friend, I stand up for every single individual who has been exposed to asbestos. This is an entirely preventable condition. Although I understand why in law we draw the distinctions we do, morally this is not right. We should set out to save each and every one of the citizens we represent from being exposed to this awful condition. That applies to young children, too. My hon. Friend will recall me referring to the young children who found a pile of asbestos just lying in a yard in Leeds, and who threw it at each other as if it were snowballs. Of course, the inevitable happened, and 40 years later they are coming down with mesothelioma, but whom do they sue?

Mike Penning: As I said on Report, I think, and certainly in the Committee stage of the Mesothelioma Bill, I hope this is the start of a fund of last resort in other areas as well. What the hon. Member for Wansbeck (Ian Lavery) and the right hon. Member for Newcastle upon Tyne East (Mr Brown) are alluding to is a public liability area, not liability for employers. It is absolutely right that we should try to protect everybody, but sadly I think I have gone as far as I can within the scope of the regulations and the scheme before us.

Mr Brown: I welcome what the Minister says. If any Minister could take this forward in government, he would be the Minister to do so. I thank him for what he has done, and welcome what is in front of us tonight.

6.52 pm

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown) who made, as usual, a very thought-provoking, good and balanced contribution. I would also like to associate myself sincerely with all the genuine and heartfelt tributes to our late friend and colleague Paul Goggins, who worked tirelessly on this issue—as I know he did on many others, but he was particularly involved with this issue for many years. As the hon. Member for Chatham and Aylesford (Tracey Crouch) said, this is a fitting tribute to him as well.

The scheme we are debating today is of course a step forward for victims of this disease, many of whom will for the first time be given recourse to compensation if the insurers of their former employers cannot be traced. There are, however, problems with this scheme which

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were highlighted in part from the outset, and indeed from the Second Reading of the Mesothelioma Bill onwards, and some of these problems are still with us. The hon. Member for Stretford and Urmston (Kate Green) detailed several of them.

First, the scheme, which was established under the Mesothelioma Act 2014, will apply only to the victims suffering from mesothelioma and will do nothing for those with other asbestos-related conditions, such as asbestosis. That seems fundamentally unfair. I hope that the Government will consider implementing similar schemes for all victims of asbestos-related diseases who are unable to trace the insurers of their former employers.

Secondly, it seems to me to be equally unfair that the victims who are eligible for compensation under this scheme will be able to claim not 100% of the average compensation claim but, rather, 80%. The individuals who will find themselves in a position to make a claim for compensation through this scheme will not only have been exposed to asbestos, but will also have had to go through the rigmarole of attempting to trace the employers’ insurers only to find that it cannot be done, thus they are being penalised for others’ negligence.

I also remind the Government that an individual is not usually alive for very long after being diagnosed with this awful disease. Yet still, dependants will be left with only 80% of the average value of a compensation claim after their loved one has passed away. Of course, until very recently the Government were determined that the victim should be able to gain only 75%. We heard that the Minister recently sent a letter stating that the figure has been raised to 80%, and we are grateful for that. We are grateful that he has moved on the issue, having heard representations, as the right hon. Member for Newcastle upon Tyne East said. I also understand that the letter specifies that applicants can now expect to receive average payments of about £123,000 prior to benefit recovery, as well as £7,000 towards legal fees.

We have heard from several Members this evening about the £7,000 for legal fees and the fact that people presume that lawyers will just take the money and do as little as they can. Speaking as a lawyer—I have been a solicitor and I am a barrister—I remind those who will have to claim that they are entitled to have the lawyer’s bill evaluated independently by a professional body and if it is found to be too much, the lawyer will pay it back. It is a straightforward procedure and will cost the applicant nothing. More often than not, these professional bodies are very strict in not allowing huge, unwarranted fees to go unchallenged.

I would argue that claimants should be entitled to 100% compensation, but it is easy to say that. I know the Government have worked hard and that the dead hand of the Treasury floats above us all, day in, day out, particularly those on the Treasury Bench. However, the Pneumoconiosis etc. (Workers’ Compensation) Act 1979—which I am proud to say my party, Plaid Cymru, was instrumental in introducing—did introduce 100% compensation. Indeed, Dafydd Wigley, then a Member of Parliament, together with another colleague, drove it through and had an understanding with the Labour Government that it should be introduced. My friend the noble Lord Wigley, as he now is, was instrumental in introducing the legislation before us in the other place, and I am pleased to say that it is coming to fruition. However, at the very least the scheme should follow the

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model of the Financial Services Compensation Scheme, which pays out 90% of the value of civil compensation claims to individuals exposed to asbestos before employer’s liability insurance was made compulsory in 1972.

Finally, the fact that claimants will be eligible for compensation under this scheme only if they were diagnosed on or before 25 July 2012 is arbitrary and will be desperately unfair on many. However, as was argued in both Houses in debates on the Mesothelioma Bill, it would surely make far more sense to allow all claimants to claim compensation if they were diagnosed during or before February 2010, when an initial draft of this scheme was first proposed, or when the consultation was proposed, as the right hon. Member for Newcastle upon Tyne East said. Just before the 2010 general election, the then Government began a consultation proposing that an employer’s liability insurance bureau should compensate all individuals with industrial diseases who were unable to trace their employer’s insurers. I am pleased that, in any event, that is now coming through. However, individuals diagnosed between these two dates are being left out of the scheme through no fault of their own, but simply because the Government did not perhaps expedite the scheme sufficiently.

I find it difficult to be hyper-critical, because I know that this measure will make a huge difference to many people, and broadly speaking we all appreciate that. However, the insurance industry could surely afford also to compensate those falling between the two dates, not least since the industry’s costs will be lowered, as it will not be entering into negotiations on a case-by-case basis, but awarding average compensation to claimants. I hope we can build on the progress thus far, in order, somehow or other, to compensate these people, who, as I have said, are being dealt with detrimentally for no good reason and through no fault of their own. After that long diatribe, I can say that there is no doubt that this scheme will assist many people, and I am sure we are all very grateful for that.

7 pm

Mike Penning: Although some of this evening’s discussions were similar to those we have had previously, it was right and proper that many colleagues reiterated some of their concerns about the scheme and how it is going to work, particularly in respect of the regulations.

As we discussed at length during the passage of the Mesothelioma Bill, which is now an Act, there are different callings on the money in the pot—let us bring it down to basics. There were calls for us to go further back with the scheme, not only to when the previous Administration made the announcement, but even further; to move the compensation percentage from 75 to 80; to include others in the scheme, perhaps the wife, spouse or loved one of someone working in this industry who had contracted mesothelioma as a result of cleaning her husband’s overalls—I am not being sexist, but that was the environment at the time; and to be generous in other ways.

The right hon. Member for Newcastle upon Tyne East (Mr Brown) was kind enough to allude to the fact that I inherited the Bill. Lord Freud had done a fantastic job. When the Bill entered the Lords the compensation figure was 70% and he is the one who got the insurers around the table to come up with any scheme whatsoever—herding cats is probably a good way of describing it.

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I am sure that the Association of British Insurers will not like me saying that, but it is one of the reasons why, even when previous Administrations tried to do this—the right hon. Gentleman tried and so did Paul Goggins—it has taken so long. In the end we did a deal—let us be honest, we did a deal at 3% which would not be passed on to new business. We then started to frame where the money could go in the scheme of last resort.

Assumptions were made and some are still being made today, even though we have appointed a scheme administrator, which has cost us less—that was what the shadow Minister was asking about earlier. Assumptions were made about case legal fees—I am no lawyer, but my brief says that. Legal fees were highlighted by the shadow Minister and there are case legal fees that we now know we do not need, so we have saved money. I could have gone to 81% today, but that would have stretched the credibility of my honesty to the House and to the sufferers in terms of making sure the scheme is safe. A myriad different questions have been asked during our consideration of the regulations, but the crux of the matter is: how far could we go without putting the scheme at risk. That is why I have resisted some suggestions throughout our consideration, even though my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) rightly pushed me very hard. As the Minister, I had to stand firm until I knew how much money was in the pot—how much the scheme was going to cost us. So we are where we are.

Ian Lavery: Will the Minister assure the House that he will examine an anomaly outside the 3%: the situation of the people who receive 80% compensation but will have 100% of their benefits taken? Is it not right that anybody who gets 80% of what they should get should have to pay only 80% of the benefits back, too?

Mike Penning: I pay tribute to the hon. Gentleman for raising the issue again. I do not think there is an argument with the moral position, but the legal position is something completely different. When someone gets benefits—the right hon. Member for Newcastle upon Tyne East is nodding because he was dealing with exactly the same schemes—and then gets compensation, those benefits are reclaimed to the taxpayer. That is what happens across the board. I said all along that I would love to have paid 100%—my heart tells me that—but it has not been possible. I would like to have touched on a lot of the things that the right hon. Member for Newcastle upon Tyne East discussed in his speech such as groups of people outside the scheme. I would like to have dealt with those outside employee liability and with public liability. We talked earlier about young children in schools today who might inhale a tiny fraction of asbestos into their lungs and, 40 or 50 years from today, might get a preventable disease. It would be in their lungs and there is a possibility that they would get mesothelioma, which is terminal, and die within four to nine months.

Bob Stewart (Beckenham) (Con): I apologise for my ignorance, but once a person has been diagnosed with this dreadful disease should they not go straight to a civil servant and say, “I have been diagnosed with this,

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what should I do? Can you please help me?” Is that the system that operates at the moment? If it is not, it should be.

Ian Lavery: I will second that.

Mike Penning: The motion is not carried. I appreciate that my hon. and gallant Friend has not been with us for all the debates on this, but I am afraid that that is not the case. This is a scheme of last resort. In most cases, people who get this abhorrent, horrible and preventable disease will be able to claim from their employer and thus their employer’s insurance. Employer’s liability insurance is compulsory. The stakeholder groups and the trade unions have been excellent over the years. I pay tribute not only to them but to Members across the House for representing people with mesothelioma, because it is a horrible and terminal disease. The employers who put those people into this position should be liable. This has to be a scheme of last resort.

Kate Green: Can the Minister say what progress he and the Government are making in order to obtain employers’ records from HMRC? He is right that most people will be able to make a claim against an employer, but they will need to be able to obtain those records to do so.

Mike Penning: The hon. Lady is absolutely correct, and we are still working with HMRC to ensure that that happens. If necessary, we will introduce legislation. However, at the moment, the Data Protection Act prevents us from doing that. I explained that in Committee. I am sure that that was never the intention, but it is one of the restrictions that the Treasury lawyers have had to look at.

I want to deal with a couple of issues quickly because I do not want to delay the House. Should beneficiaries of someone who qualifies under the scheme—not dependants or loved ones—get a payment? The answer is that they will not, because the scheme is designed specifically for the sufferers of this terrible disease, their loved ones and their dependants to allow them to get on with their lives.

On the £7,000 payment, we will look enormously closely with the Association of Personal Injury Lawyers, our own lawyers and the Ministry of Justice to ensure that no rip-offs take place.

Ian Lavery rose

Mike Penning: Bear with me for a second, because I need to make a tiny bit of progress on this.

The scheme is as simple as we can possibly make it. There is a huge amount of skill out there among the stakeholders who know this disease and the compensation scheme back to front. I think that quite a bit of the £7,000, if not most of it, will stay with the people who are claiming.

Ian Lavery: Does the right hon. Gentleman share my fears that once the £7,000 becomes common knowledge there will be claims farmers advertising in every paper up and down the country? Can the Minister say whether claims farmers will be able to claim part of that £7,000, or is it strictly for the legal profession?

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Mike Penning: It is being paid directly to those who are beneficiaries of the fund, and it is for them to decide who they pay it to. When we introduced these regulations, I was absolutely adamant that the lawyers should not get direct payments from this scheme. I am not a lawyer and I have seen what happened before, but because everybody knows exactly where we are and how simple the scheme is I would tell the stakeholders and everyone else to shop around to make sure that they are not ripped off. There are decent lawyers out there even though there are some scallywags as well.

The four-year review, which the shadow Minister specifically asked for, is in place. This is an important set of regulations that will ensure that we get this compensation through as soon as possible. I have not been able to answer all the questions that have been asked this evening, but I will write to hon. Members, including those on the Opposition Front Bench, with the answers. I hope that the House will pass the regulations this evening so that we can get the compensation to those who deserve it so much.

Question put and agreed to.


That the draft Diffuse Mesothelioma Payment Scheme Regulations 2014, which were laid before this House on 3 February, be approved.

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Business of the House

7.10 pm

The Leader of the House of Commons (Mr Andrew Lansley): I beg to move,

That at the sitting on Tuesday 18 March:

(1) proceedings on the motion in the name of the Prime Minister relating to Ukraine may continue for three hours and shall then lapse if not previously disposed of; and

(2) notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall put the Questions necessary to dispose of proceedings on the motions in the name of Secretary Eric Pickles relating to Local Government not later than three hours after the commencement of proceedings on the first such motion; proceedings on those motions may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.

Last Thursday, during the business statement, I announced three items of business for consideration tomorrow, Tuesday 18 March. They are a general debate on Ukraine, the consideration of motions to approve statutory instruments on combined authority orders and the consideration of a motion on three EU proposals on criminal justice. The business motion before the House will control those proceedings.

The effect of passing the motion will be to allow three hours for the debate on Ukraine. It is an important debate and I am pleased that my right hon. Friend the Foreign Secretary will update the House during the opening of the debate before appearing before the Select Committee on Foreign Affairs tomorrow afternoon. The House has been kept up to date with statements, but it is important that there is also a debate so that we can hear from Members. I have provided Government time for that and we will continue to keep the situation of how the House is kept informed and can discuss such important issues under review.

The motion also allows for statutory instruments relating to combined authority orders to be considered for up to three hours. They are important orders that affect a large number of members and their constituents. I hope that the House agrees that it would be for the convenience of members for them to be debated together on the Floor of the House. If the motion is not passed tonight, those four motions would be taken separately for up to 90 minutes each. I do not think that that is a sensible way to proceed.

We will also debate a motion on three EU proposals on criminal justice for up to 90 minutes, as provided for under Standing Order No. 16. That business is therefore not directly covered by tonight’s motion as it is already governed by Standing Orders.

I commend the motion to the House.

Question put and agreed to.


Bingo Duty

7.12 pm

Dr Thérèse Coffey (Suffolk Coastal) (Con): It is my pleasure to present a petition signed by 220 people that was arranged by those who enjoy bingo at Palace Bingo in Felixstowe. I thank Vivienne Warren for organising the petition.

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The petition states:

The Petition of the people of Suffolk Coastal,

Declares that the bingo industry is currently subjected to bingo duty at 20% whereas most other forms of gambling are taxed at 15% and further that the Petitioners believe that bingo venues offer a pleasant and safe environment for people to come together and enjoy themselves.

The Petitioners therefore request that the House of Commons urges the Government to reduce bingo duty from 20% to 15% so investment can take place in the bingo industry modernising premises and creating jobs.

And the Petitioners remain, etc.


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Transport Infrastructure (South of England)

Motion made, and Question proposed, That this House do now adjourn.—(Amber Rudd.)

7.14 pm

Caroline Dinenage (Gosport) (Con): I am delighted to have the opportunity this evening to raise the important issue of transport infrastructure in the south of England. In particular, I want to talk about the south coast, but the regional economy of the south is undergoing deep structural changes. Improved connectivity between our southern cities and better links to the capital are vital if we are to ensure that no one gets left behind as we move forward. The presence of international hubs such as Portsmouth and Southampton means that the south and, in particular, my region of the Solent act as a gateway to the world. Good transport links are therefore crucial to connect local firms with the rest of the country and international markets. Unfortunately, people in the south too often feel cut off from prosperity due to unreliable and overcrowded transport links.

The deep pockets of deprivation across the south coast will never be overcome while we have the second-rate transport network that we currently endure. Better connections would allow suppliers to reach more businesses, allow businesses to reach more customers, and allow customers to visit more towns to spend their hard-earned cash. In short, they would increase trade, create jobs and raise the living standards of people throughout the region. They are also vital if flagship Government projects such as the Solent enterprise zone, which is an attempt to breathe new life into the disused military airfield at Daedalus in my constituency, are to fulfil their economic potential and generate the employment and prosperity that are desperately needed. Such connections would help to spread investment and raise the living standards of some of the poorest people in the country.

I know that the Government fully appreciate the importance of transport and I am glad that they are committed to investing in major developments of our rail and road networks, which are welcome and cannot come too soon after decades of rising congestion and chronic underinvestment. The UK now ranks 24th in the world for the quality of our roads, so the £28 billion that is to be spent on the maintenance and enhancement of national and local roads is long overdue. However, our debates about transport seem to focus too often on two issues: the need to deal with crises in capacity in the capital; and the nebulous desire to rebalance the economy from south to north. That dangerously overlooks the real and immediate need to invest in the south of England at a time when it is undergoing huge economic changes.

It is often incorrectly assumed that the south of England is made up of leafy suburbs and rural shires that are untouched by poverty. Sadly, parts of the south suffer from shocking deprivation. In the town of Gosport, 19% of children live in poverty, and the proportion rises to 32% in parts of neighbouring Portsmouth. Gosport has less than half a job per working adult—it has one of the lowest ratios of people to jobs in the UK—which means that 20,000 people have to commute out to work every day along a single carriageway road. Given

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that we have low average wages, it is testament to my constituents’ strong work ethic that our unemployment rate is not significantly higher.

As both a peninsula and the largest town in the country without a train station, we are hugely reliant on our bus network. Unfortunately, recent commercial decisions to change bus routes risk cutting people off from prosperity, stifling aspiration and allowing pockets of poverty to deepen. Local people are not afraid to get on their bikes, as Gosport has the UK’s third highest regular bicycle use. Everyone is doing their bit to try to ease the congestion, but it is plainly insufficient to have a single carriageway on and off a peninsula.

Better connections are therefore no vanity project; they are essential to fighting the deprivation that is endemic in communities throughout the south of England, and even more important as a result of recent heavy economic blows. Following BAE’s decision to end shipbuilding in Portsmouth and the job cuts at Ford in Southampton, the city deal for Portsmouth and Southampton that the Government have announced is welcome, but to maximise the potential of that investment and subsequent business opportunities, we need to improve links between towns and cities in the south.

The distance between Portsmouth and Southampton is just 20 miles, yet at peak times that journey can take well over an hour by road. The journey by rail often takes the same time, as there are only two or three direct trains an hour. Inevitably, slow journey times and poor service frequency on the rail network mean that more and more people take to the roads, thus clogging up the already hideously busy M27. I have heard that it can be quicker for commuters in the extreme western end of the Solent to get to Portsmouth via the Isle of Wight, which involves taking two ferries, than by using the M27, which is clearly ridiculous. Such wholly inadequate connections are more than just an annoyance; they hold back business. A study by Atkins estimates that road congestion is already costing Hampshire around £400 million every year. More than that, it reduces the attractiveness of the area for future inward investment. Work by Solent Transport shows that without the necessary investment in transport infrastructure, the region could miss out on around 8,000 jobs.

The naval dockyard and the commercial port in Portsmouth are significant defence and economic assets to the UK, and the port of Southampton is seeing massive growth across all its key sectors. The port master plan has identified that cruise passengers through Southampton will increase 113% between 2005 and 2020, and container handling is forecast to increase 95% over the same period. In order to take full advantage of our great southern hubs, it needs to be easier to travel between these two cities.

It is also vital that we improve links between London and the south coast. It is often assumed that geographical proximity to the capital means fast connections, yet it takes longer to get from London to Portsmouth on the fast train than it does to get from London to Doncaster—a distance that is more than twice as far. These journeys are rarely pleasant, as both the trains and the stations are packed. Passenger journeys on South West Trains are up 22% in the past six years, and more people now go through Waterloo in three hours every morning than fly from Heathrow in an entire day. We need more trains on the line as well as more carriages on those trains to

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deal with the crisis in capacity. I join my hon. Friend the Member for Portsmouth North (Penny Mordaunt) in her call for an express train from Portsmouth to London every half-hour. This is an excellent idea that could cut journey times and relieve passenger congestion.

After decades of underinvestment, action to address the problems of nightmare roads such as the A32 is crucial. They were described by a Deputy Prime Minister in the previous Government as strategically unimportant, which does not do much for the morale and self-esteem of an area. Investment in the area would help my constituents who frequently feel cut off from the prosperity being enjoyed in other parts of the country.

At a meeting earlier today Hampshire county council transport team gave the green light to the Solent local enterprise partnership to bid for £90 million of Government funding in order to make desperately needed road improvements around Gosport and Fareham. I hope the Government will look seriously at this bid and understand that it is vital if we are to stand a chance of redressing decades of chronic underinvestment in our local transport infrastructure. This Government have a good record on investment for London and the north. We need to make sure that every part of this country has a modern transport infrastructure that is fit to face the challenges of the 21st century.

7.22 pm

The Parliamentary Under-Secretary of State for Transport (Stephen Hammond): I congratulate my hon. Friend the Member for Gosport (Caroline Dinenage) on securing this debate. It follows on from an Adjournment debate that I was delighted to respond to last week when, as my hon. Friend pointed out, my hon. Friend the Member for Portsmouth North (Penny Mordaunt) made a number of salient points about transport infrastructure in the south of England. My hon. Friend the Member for Gosport clearly made the case tonight that this is a subject of great importance to her and her constituents, including businesses in the area. I am sure she will remember that when she launched her innovative suggestion that the HMS Daedalus site become an economic zone I was delighted to be with her and to support her on that first occasion, some 18 months ago. That campaign has been hugely successful and I shall comment on it later.

My hon. Friend the Member for Gosport is right that effective transport infrastructure is vital in supporting local communities, enabling people to access their workplace, and driving local economic growth, so it is right that we take time to debate these issues. She is right, too, to point out that, as many of us who are Members of Parliament for constituencies in London and the south of England know all too well, the south is not all leafy suburbs. As a man who was born and bred in Southampton, I am delighted that she raised the need for connections between Southampton and Portsmouth. They may have traditional rivalry in a number of things, but the links between the two great cities of the south need improving. I am pleased that the Government are clear that we need to invest in record amounts to maintain, upgrade and expand our road and rail infrastructure.

Bob Stewart (Beckenham) (Con): I go to Southampton by train quite a lot and I totally support what my hon. Friend the Member for Gosport (Caroline Dinenage)

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says about the time that it takes to get to Southampton from London. If we had an express link, as suggested by my hon. Friend the Member for Portsmouth North (Penny Mordaunt), more people could get up to London and get more jobs, helping the depressed people of Portsmouth and Gosport.

Mr Hammond: My hon. and gallant Friend is right. I will comment on rail infrastructure in a few moments, but I want at the outset to set the debate in context.

The Government inherited not only a budget deficit but an infrastructure deficit. In doing what we are doing, we will improve the growth potential of the economy and boost demand. In total, between 2011 and 2014, we are investing £32 billion in roads, rail and local transport infrastructure, and between 2015 and 2021 we are committed to a funding plan of some £56 billion, which will be spread across the length and breadth of the country, including the south of England. We are also working with local authorities to ensure that that is being shaped by local priorities.

My hon. Friend the Member for Gosport was right to raise the issue of investment in rail infrastructure. We are committed to record levels of investment in the network, again supporting economic growth and jobs and delivering a greener and more efficient railway that is better for freight and passengers. During the next five years, Network Rail will be spending more than £38 billion running and expanding our railways. There are major infrastructure projects, as has been pointed out several times before, in and around London as well as across the country. A huge programme of electrification will provide faster and more reliable services on the Great Western main line, including some of those from Southampton to the north of England, and there is a £50 million capital contribution towards the redevelopment of Gatwick airport station.

I am clearly conscious that, as my hon. Friend the Member for Gosport pointed out, Gosport is the largest city not directly connected to the national rail network. She will know that different sections of the branch were closed from the 1950s onwards. Network Rail is identifying funding priorities for the Wessex route for the period 2019 to 2024, as well as the strategy beyond that. I know that my hon. Friend has an aspiration that the town will be reconnected with the national network, and I encourage her, as I did my hon. Friend the Member for Portsmouth North in an Adjournment debate last week, to engage with Network Rail. I will be happy to facilitate that contact. Just as I said to my hon. Friend the Member for Portsmouth North last week that I hope that in the near future there is the Mordaunt Flyer, I hope that there will be the Dinenage Dynamo in the near future from Gosport. My hon. Friend the Member for Gosport is right to mention the number of people who wish to travel to and from Waterloo. She will know that the Government, working with Network Rail, are ensuring that the Eurostar platforms will come back into use over a period of time, which will facilitate growth at Waterloo.

It is also important that the road network is fit for purpose, and the Government have already announced increased levels of funding to deliver improvements all around the strategic road network. That is a step change.

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As the Chancellor made clear in his statement in June last year, we will announce further infrastructure improvements and commitments during the next period. The Government will invest £28 billion in enhancements and maintenance of national and local roads. That includes £10.7 billion for national road schemes and £4.9 billion for local major projects. In addition, £12 billion has been allocated for maintenance on both the local and the strategic road network, which means that 26 new major Highways Agency projects will go ahead, subject to the usual value-for-money and deliverability requirements.

My hon. Friend the Member for Gosport is specifically interested in the south-east, where we have committed to delivering smart motorway schemes between junctions 9 and 14 of the M3 from Winchester to Southampton and between junctions 4 and 11 of the M27 from Portsmouth to Southampton and the A27 Chichester bypass, subject to the finalisation of options and consideration of the business case.

The smart motorway schemes will allow us to make maximum use of what we already have by delivering additional capacity through the conversion of the hard shoulder into an additional running lane. The schemes can be delivered more quickly and provide more real benefits than would be achieved through a conventional widening scheme.

The Highways Agency is also committed to an investment of more than £10 million in two pinch point schemes in the Solent area, on junctions 3 and 5 of the M27. Those junction improvements will help reduce congestion by increasing the capacity of the junctions, reducing the journey times experienced by most road users and improving safety at the junctions. I hope that will ensure that the sorts of delays my hon. Friend mentioned will no longer be experienced by those trying to travel on the M27 between Portsmouth, Gosport and Southampton.

My hon. Friend will be aware that the Highways Agency is currently conducting its route-based strategy process, which is, importantly, involving local stakeholders in the consideration of future priorities. Such strategies provide a new, smarter approach to investment planning across the network and will see much greater collaboration with local interest groups to determine the nature and need of future investment and to ensure that it follows local priorities.

We are in the process of producing a series of strategies for the whole network, a number of which cover the south of England, including the south coast central route, which includes consideration of the A27; the Solent to midlands route, which includes the M27; and the M25 to Solent route, which includes the A3 and M3.

The Highways Agency completed a series of local engagement events last autumn to help identify performance issues and future challenges. I congratulate stakeholders on their engagement in that process.