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Westminster Hall
Tuesday 20 November 2012
[Mr James Gray in the Chair]
Local Government Spending (Floods)
Motion made, and Question proposed, That the sitting be now adjourned.—(Nicky Morgan.)
9.30 am
Miss Anne McIntosh (Thirsk and Malton) (Con): It is a pleasure to speak under your chairmanship, Mr Gray.
I am delighted to have secured the debate, although it concerns some distressing circumstances. After a severe flood, as we saw in North Yorkshire in September, the difficulty we face with clean-up operations is the split responsibilities between two or three lead Departments. I hope that the Minister, whom I welcome and congratulate on his new appointment, will clarify where we are in that regard.
In September, a massive and unprecedented amount of rain was dumped on North Yorkshire, primarily Richmondshire, and the southern part of County Durham. I want to put on record and pay tribute to the work done by the emergency services, in particular the fire service, the Environment Agency—which is very much becoming the fourth emergency service—and especially staff at every level of North Yorkshire county council. Working around the clock, they took swift action to secure the area and make people safe. There was isolated flooding of homes and properties, which I am dealing with separately through the Department for Environment, Food and Rural Affairs, but the hallmark of the September flood was that most of the damage was effected by fluvial escape on to roads and bridges. Notably, the A1 was closed—for approximately 24 to 36 hours—which I do not recall happening before because of flooding.
We are undergoing climate change and extreme weather conditions, such as in Scotland and in south-west England today, and our hearts go out to all those so affected, but the Government response—under successive Governments—is hampered slightly by split departmental responsibilities. Obviously, the Select Committee on Environment, Food and Rural Affairs, which I have the honour of chairing, holds the Department to account and scrutinises its flood-related activities. From that privileged position, I understand that DEFRA is the lead Department, closely followed by the Department for Communities and Local Government, although the Department for Transport deals with roads and bridges, to which I want to refer first.
To set out the facts, the severe weather at the end of September had a significant effect on the local and strategic road network. At the height of the flood, approximately 79 local roads and bridges were closed, including a significant stretch of the A1, as I mentioned. I am sad to say that I was one of those who ignored the warnings not to go on to the A1. I thought that it could not possibly be closed, because it had never flooded before and was a new stretch of fast, good road, but I am afraid that I missed a funeral as a result. Many people were caught unawares.
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Julian Smith (Skipton and Ripon) (Con): Can my hon. Friend explain to the Chamber just how rural that part of Britain is? The area is among the most sparsely populated in England, and as a result the challenge for it was much greater.
Miss McIntosh: I shall first set the scene and make a little progress.
North Yorkshire county council had to pay for specialist drivers to carry out safety checks, for example, and a temporary bridge had to be installed on the B1263, near Scorton in Richmondshire. While the bridge in Tadcaster was out of action, a free bus service was provided to shuttle people across the town because, owing to its geography, the town was split in two. North Yorkshire county council is currently carrying out extensive inspections, assessments and repair works, as the severe weather affected more than half the county.
It will be a number of months before the full extent and cost of the damage incurred are known, but the latest estimate is approximately £1.8 million. That is made up of the initial clear-up, the jetting, sweeping, additional bus services, call-outs and so on, of some £250,000; repairs to infrastructure, including surveys and bridge inspections, of £405,000; temporary carriageway repairs of £5,000; temporary bridge repairs of £35,000; and staff time and design partners, costing £170,000. In addition, a capital spend of about £900,000 is expected, split between carriageway construction and bridge replacement.
I have lived in North Yorkshire more or less since my early years, having been to school there, and I represented the county through the Vale of York constituency and, currently, Thirsk, Malton and Filey. We have, I believe, the longest stretch of rural roads in the country. As was seen in our statistics last week, we have the highest figure for fatalities among young drivers, and the largest number of transit drivers through a county. I also understand that we have something in the region of 168 bridges, a far higher figure than most because of the number of rivers and waterways that we have to cross, which lend themselves to the most beautiful and stunning scenery and geography but also to some extremely testing situations with regard to flood damage.
On the Bellwin scheme, I understand that, specifically, North Yorkshire county council is required to pay the first £1.4 million and 15p out of every £1 thereafter. There is a three-month deadline to make the claim, but bridge inspections, quite apart from road inspections, are of necessity extensive, to test their current safety and to assess the level of damage.
I wrote on behalf of North Yorkshire county council and my constituents to the Department for Communities and Local Government at the end of September or in early October. We are now approaching late November. In that time, I expected the courtesy of a reply from that Department—or from the Department of Transport if my letter had been passed on, as I understand that it was—to share with the council and my constituents. Such a late response gives the House of Commons a bad name. All of us aim to take up constituency concerns at the earliest possible opportunity.
Given that it is almost two months since I wrote my letter, that the initial deadline within which an application must be made is three months, and that there has been
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extensive damage, I hope that the Minister can comment on a number of factors in his reply. Given the 79 bridges affected and the huge mileage of roads to be assessed, and that many of the roads suffered extensive frost damage during the two hard winters of 2010 and 2011, is the deadline moveable? My main concern is that the county council has been told that we do not qualify under the Bellwin formula for capital expenditure on roads and bridges, but I know that that is not true. The
Official Report
of 21 July 2008, column 770W, and of 10 June 2008, column 768W, shows that the previous Government made substantive payments to Hull in particular, and to other parts of the country for damage to roads and other capital expenditure under the emergency highways capital maintenance scheme. I understand that that came from the Department for Transport, but the clock is ticking, and time marches on. First, is the three-month deadline completely immoveable? Secondly, why has North Yorkshire county council been told that it cannot claim for capital expenditure, when clearly there is a history under the Bellwin formula of just such expenditure?
Emergency planning is directly within the responsibility of the Department for Communities and Local Government, and I pay tribute to the Emergency Planning College at Hawkhills near Easingwold in Thirsk, Malton and Filey, which looks at emergency planning measures for flooding. Has the Minister had the opportunity to visit the college, and to consider whether more could be done to bring all the emergency services together in such a scenario, which is becoming increasingly common, to ensure that we are in the best state of preparedness should future flooding occur?
I want briefly to touch on insurance claims and to ask what discussions the Minister has had with his colleagues in DEFRA particularly about replacing the statement of principles, which is due to expire in June 2013. What are the implications for local authorities such as North Yorkshire county council in making insurance claims for otherwise non-recoverable costs? Again, the deadline is tight, because the statement of principles will expire in some eight months.
There is great concern about planning applications on floodplains. An application was made for 300 houses to be built on Muston road in Filey, which Scarborough borough council sensibly turned down, but was overruled by the Planning Inspectorate. Planning inspectors tend to be out of town and out of the immediate vicinity where the decision is made. There seems to be a conflict at the heart of Government policy. We are told that the Localism Act 2011 enables local people to decide planning applications—in this case the local authority turned down the planning application—but the Government now want to limit the terms in which judicial review may be brought.
My argument is that there will be serious implications for Government spending on local authority flood defences from the 300 houses being built in Filey. They will affect Filey town council, which has a limited amount of money, and especially North Yorkshire county council. The field on which the 300 houses are being built acted as an area to retain excess water in times of flooding. In 2007, I witnessed how that water had spilled over into Filey school, causing extensive damage, and into another new development on the other side of the field. Where
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will that water go, and how will the county and the Environment Agency put in any flood defence to keep the school and the other development safe from future flooding? How can a planning decision be overruled by an out-of-town planning inspector when it will have enormous implications for flooding in Filey in the years ahead? That is just one isolated argument.
On flood resilience measures, who has the last word when a kitemarked product is used? In Pickering, a home owner spent £20,000 on installing a flood resilient product—a membrane—only to see in 2007 the water enter just as quickly as if they had not made that investment. Who has the last word in determining whether a product meets the kitemark standard and is indeed flood resilient? If such a product fails, will the Minister's Department step in, or should the local authority or DEFRA step in when someone has, in good faith, purchased and installed such a product, only to see the water enter just as quickly as before?
I understand that the Minister's Department also has responsibility for climate change and sustainable development. It was clear during the floods in September that no development should be built close to a watercourse that is liable to flood and could have enormous implications for existing residents. Future developments such as those I referred to in Filey should be carefully monitored. Will the Minister confirm that under the Localism Act 2011 the local planning authority should have the last say in that regard? What work has his Department done on building regulations to ensure that any houses in areas such as Muston road in Filey meet the most stringent criteria, and will he respond to my concern about the planning conflict at the heart of Government policy?
On the Bellwin scheme, will the Minister set out his specific role, and that of his Department in allocating the scheme? May I have a swift reply to enable the county council to prepare to meet a three-month deadline, or might that deadline be removed? Will he confirm that local authorities such as North Yorkshire county council, the police, the fire service, and the national park authorities are eligible for Bellwin reimbursement in the circumstances I set out?
In a written statement, the then Secretary of State for Environment, Food and Rural Affairs said that the Government would
"reimburse local authorities for 100% of their eligible costs above threshold."— [Official Report, 9 July 2012; Vol. 548, c. 5WS.]
Will the Minister confirm that capital expenditure on roads and bridges and the general clear-up, will qualify as eligible expenditure? How stringently are the eligibility criteria to be interpreted? Hull, Gloucestershire and other authorities have received capital funding under the Bellwin formula in the past, so will he confirm that North Yorkshire county council will also qualify? His ministerial predecessor, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), said that the Bellwin scheme would help councils to clear up streets by removing debris from roads and footpaths, shore up buildings and remove dangerous trees. Has there been a policy change since that statement to the House? Will the Minister confirm that the claims that North Yorkshire country council will make in good faith will be honoured?
This debate is timely. A number of issues remain outstanding from the 2000, 2001 and 2007 floods. With climate change, a massive amount of water can fall in
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one place over 36 hours, causing extensive damage. My hon. Friend the Member for Skipton and Ripon (Julian Smith) referred to the area we represent and live in, which we like to believe is God's own county. We have the most extensive road network, and probably more bridges than anywhere else. We owe it to those living in North Yorkshire to make our roads and bridges safe from future floods. The Department for Communities and Local Government has a role to play in increasing flood resilience, ensuring that building regulations are in place, and ensuring that the Bellwin formula serves the purpose for which it was intended.
9.50 am
Catherine McKinnell (Newcastle upon Tyne North) (Lab): It is a pleasure to serve under your chairmanship, Mr Gray, and I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on securing what I agree is a very important and timely debate. She made a powerful case on her constituents' behalf and I look forward to hearing the Minister's response to the many questions she asked.
I want to speak on behalf of my constituents in Newcastle upon Tyne North, who have unfortunately experienced a dreadful time since the deluge of rain in June this year in particular, and ongoing rainfall has compounded the issues and challenges that many people face. To set that in context, it comes as local authorities are experiencing cuts to their budgets that are deeper and faster than in almost any Whitehall Department. It is right and timely that we have this debate on the implications of the recent flooding for local government spending.
Many Members may have witnessed the devastating floods that hit Newcastle north. The images of the building at Spencer court in Newburn resting only on its stilts were used by many news stations to demonstrate the impact of the downpour not only in Newcastle, but nationally. I want to pay tribute to the area's residents who have suffered terribly from the damage that ensued from the rainfall, and also to clarify some related points that are separate from issues raised by the hon. Lady. What occurred in Newburn and Spencer court, leading to those shocking images, was caused by a culvert being damaged and the rain taking the land away with it. That, however, does not take away from the fact that, for an awful lot of families, it resulted in immense damage, suffering and hardship. Although the local authority and the emergency services had to step in and try to resolve the issue, the repair work, support and funding will have to come from the responsible parties, who are the landowners and developers. They are deciding among themselves whose insurance will need to come into play to resolve those issues. I want to recognise today not only the immediate impact and costs that Newcastle city council faced in dealing with that matter, but the broader issues that the city has experienced, for which it has received no financial support so far.
To put what happened in context, during just two hours on 28 June, Newcastle experienced 50 mm of rainfall, which was the expected total rainfall for the entire month. It caused widespread, localised flooding across Newcastle, with the city's drainage system overwhelmed due to the unexpectedly high volumes of
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water that fell in such a short period. The city's roads quickly became gridlocked and 200 homes were flooded, causing misery for many of my constituents.
Again, I must pay tribute to the heroic staff, particularly at Newcastle city council, and the emergency services—including the fire and the police services—as well as the Environment Agency, which, I agree has, certainly in my part of the world, become like the fourth emergency service. People worked throughout the evening and the night, and it is testament to their hard work and dedication that the majority of the city was ready for business the following day. However, I highlight again the part of my constituency that was not ready for business—down in Newburn and Spencer court—as well as the ensuing problems: the town below in Newburn was flooded, and it is just getting back on its feet after a traumatic few months for its residents.
Since that day, my constituents and Newcastle city council have been counting the costs. The council estimates that the flooding costs will be over £9.2 million. The majority of that—around £8 million—is due to works that have been or will need to be undertaken, such as repairing highways and pavements. Under the Bellwin scheme, the council is eligible for certain costs above an annual threshold of £853,509. Of the £9.2 million in costs incurred by the council during the flooding, only £328,000 can be reclaimed under the Bellwin scheme, and as that is under the annual threshold, the council has not received any financial support from central Government to deal with the aftermath of the devastating floods. That has been confirmed in writing in a letter to the council from the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker).
The funding for dealing with the aftermath of the flooding will therefore have to come from Newcastle city council's capital allowance and further borrowing, with that being serviced through the revenue budget thereafter. As a result, the council will have to find additional funds from the revenue to service borrowing to deal with the aftermath. That is a particular concern, given the importance of the city's focusing all its efforts on creating jobs and boosting growth in a part of the country that has been hit hard by the economic downturn. The situation is compounded further by the unprecedented and, I would say, disproportionate cuts that the council is facing, compared with many other local authority areas in the country.
The council faces cuts of £90 million imposed by the Government from an overall revenue budget of £266 million. That represents a cut of just over one third to the council's budget, or £164 per person. Compared with funding reductions that many Conservative-run councils are facing—more in the region of £16 per person—people can understand why residents in Newcastle and other similarly affected cities feel that there could be some political motivation for those deep cuts, the scale of which is disastrous. They will impact greatly on the services that the council can provide.
The Government gave warm words of support following the flooding, with the Prime Minister, in response to a question from my hon. Friend the Member for North West Durham (Pat Glass), stating that the Government would,
"lend a very sympathetic ear to the local councils."—[Official Report, 4 July 2012; Vol. 547, c. 918.]
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The Secretary of State for Communities and Local Government assured my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) that the Government would, with regards to an application from Newcastle,
"look at it most sympathetically in terms of the formula."—[Official Report, 2 July 2012; Vol. 547, c. 582.]
Despite those warm words, Newcastle city council has not received any financial assistance to deal with the aftermath of the flooding on 28 June. Indeed, the council has had to borrow funds to do so, and again, that is happening on top of the already devastating cuts that it faces.
I hope to hear reassurances from the Minister today, particularly when he deals with the many questions asked by the hon. Member for Thirsk and Malton. Both the Prime Minister and the Secretary of State have said that they will look at cases sympathetically, and they have said specifically said that they will look at Newcastle sympathetically. Rather than give more such vague promises, will the Minister provide assurances that he will look again at Newcastle city council's case, in order to ensure that the burden for the floods does not lie entirely with hard-pressed council tax payers in my constituency?
9.59 am
Rosie Cooper (West Lancashire) (Lab): It is a pleasure to speak under your chairmanship, Mr Gray. I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on securing the debate at a time when communities up and down the country are still reeling from the effects of the most recent flooding and face the prospect of more to come. In my constituency of West Lancashire, there are families who face months of living in short-term rented accommodation as the devastation and damage caused by the flooding are dealt with. I know that hon. Members intending to speak today have constituencies that have been left with massive clear-up costs due to the flood damage to their local infrastructure. Many hon. Members will argue the case that central Government need to provide more effective financial support in reaction to the damage caused by heavy rainfall and flooding, but in the light of the extensive cuts to local government budgets, they have left many authorities exposed to additional clean-up and repair costs once the flooding has subsided, without the necessary reserves to call upon.
In the few minutes of my contribution, I would like to focus specifically on the West Lancashire experience of flooding in September, which shows that the financial implications of flooding are increased due to operational and organisational failings and how, through more proactive management, we could minimise the clean-up costs of flooding in West Lancashire—I make no judgment on any other area of the country.
On 19 October, I held a meeting of the West Lancashire flooding forum to discuss the September flooding. The meeting brought together representatives of the Environment Agency, Electricity North West, Lancashire police, the Lancashire fire and rescue service, the National Farmers Union, United Utilities and West Lancashire borough council. Sadly, Lancashire county council, as
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the lead flood authority, refused at the last minute to send a representative to attend the meeting, having initially accepted the invitation. At the meeting, there was general acceptance that weather patterns are becoming more extreme and that extreme weather incidents are occurring with greater frequency. When it rains, it rains with greater intensity, and we now have a one-in-30-year downpour every few years. I have been astonished by the number of times agencies have said to me after a flooding incident, "Ah, but this happens only once every few years"—two years later, there am I, listening to the same words over and over again.
The recent flooding in West Lancashire makes it clear that there must be changes in how we deal with the flooding of homes, transport networks and food-producing farm land—much-needed food-producing farm land. We need more significant investment in flood prevention measures in homes and a more general commitment to the principle of prevention. We must deal with the ongoing maintenance of watercourses and sewer systems, which has been cut back due to the squeeze on Environment Agency and local authority budgets. Although we have lead flood authorities, the emphasis of their role and responsibility is of course on post-flooding activity.
In West Lancashire, residents at risk of flooding could be eligible for grants to enable them to install flood prevention measures in their homes. That is easily said but very difficult to do because very few people know that that support exists and even fewer know how to apply for it. That includes the local authority, with which the bid to the EA needs to be made. I am weeks into it and I still do not have a clear pathway or a local authority that knows what it should do to get these bids made and the preventive measures installed in homes. Instead, we have been leaving people's homes and streets to flood.
I ask the Government to encourage the Environment Agency and local authorities to make the schemes a priority and simple to apply for. That will prevent the misery of dealing with the aftermath of flooding. I have read all 76 pages of the Lancashire "Multi Agency Flood Plan". It is supposed to set out how agencies respond to flooding incidents, yet the feedback from local residents was that they felt as though they had been abandoned. Residents rang agencies for help before their home was flooded, but were told that they could do something only when the water had breached their property.
West Lancashire borough council has a policy of not providing sandbags except for their own council properties. The council switchboard, when answering residents who were desperate because water was getting close to their homes, very helpfully listed all the local authorities nearby that do provide sandbags, but said that no, it did not do that. My local residents asked me on many occasions what they were paying their council tax for because help was not there when they needed it. Residents found themselves being passed from pillar to post in trying to find the right agency to help them. When the floodwaters were rising, we needed the agencies to spend far less time deciding who was responsible and where the source of the flooding was—and a lot less "Not us, guv."
I absolutely accept that the environment agencies did what they could in very difficult circumstances. They reacted to the homes that were already flooded as a
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priority. I acknowledge their work in visiting those homes and in having an information and advice day afterwards. However, residents did not want that to happen; they wanted help before it all happened. The police and fire services emerged with great credit because they acted beyond their remit.
We must also deal with insurance. I asked the Deputy Prime Minister a question about this a couple of weeks ago; it might even have been last week. The Government had promised to address the question of how people retain insurance after they have been flooded, but worried residents are still waiting to hear the results of the Government action. Perhaps the Minister can update us this morning.
We also have outstanding issues in the local plan. The future building of houses in certain areas of my constituency will only increase the huge flooding risks; indeed, some say that it is the equivalent of building homes on a floodplain. Who will protect the residents and taxpayers of West Lancashire from those horrific risks if they are not protected by the proper processes and the Government's ensuring that people are acting responsibly? In West Lancashire, there has been a failure to react effectively and efficiently in these situations. Surely, in the 21st century, that is not beyond the wit of man.
10.8 am
Chris Williamson (Derby North) (Lab): It is a pleasure to speak under your chairmanship again, Mr Gray. I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on a very passionate and well-argued speech, which set out admirably the difficulties that her constituents have faced as a consequence of the flooding earlier this year. She is right to refer to the impact of climate change, because we are seeing more and more freak weather patterns, which are affecting constituencies all over the country. It is just the luck of the draw whether her constituents or my constituents happen to be the ones facing this extreme and localised flooding. That needs to be set in the context of a Government decision to reduce significantly—by some 27%—the funding for flood defence work. This is work that had been envisaged up until 2010, but will now no longer go ahead. Indeed, 294 flood defence schemes around the country are still awaiting a start date. It is money well spent if the Government invest in flood defence work. According to the figures I have seen, for every pound the Government invest in flood defence work, they save £1. That seems to be extremely good value for money, so it is a mistake for the Government to cut flood defence work.
My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) spoke passionately about the devastating floods to which her constituents were subject. She is right to highlight the consequences for her local authority of the unprecedented funding reductions by the Department for Communities and Local Government. Of all sectors, local government has seen by far and away the biggest share of funding reductions, even though it plays a vital role in people's everyday lives; dealing with the consequences of devastating floods is just one case in point.
My hon. Friend spoke eloquently about the difficult situation in which her local authority is being placed. Not only is Newcastle subject to significant funding
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cuts but the level of cuts that it has to absorb is far greater than that in other parts of the country. How can that be fair? Of course, it is not the only local authority affected in that way. Newcastle faces, in a sense, double jeopardy; the unprecedented funding cuts are far greater than those in many other parts of the country and it is faced with such huge expenditure. How is it supposed to cope? Many other local authorities could face the same dilemma that Newcastle faces as a result of the floods and unfair funding reductions.
My hon. Friend the Member for West Lancashire (Rosie Cooper) made some excellent points, which I hope the Minister will respond to, as did my hon. Friend the Member for Newcastle upon Tyne North and the hon. Member for Thirsk and Malton. My hon. Friend the Member for West Lancashire said that some of her constituents understandably felt abandoned in the situation that they found themselves in. How can that possibly be acceptable in the 21st century in one of the richest nations on the planet? Constituents faced with such extreme circumstances feel abandoned, and that cannot be right, and cannot be justified. Their plight has been exacerbated by funding cuts.
My hon. Friend also mentioned the heroic work of the fire and rescue services, and I pay tribute to them and the water rescue and flood relief work that they do. I hope to hear from the Minister today how he intends to enable the fire and rescue service to respond to water rescue work this winter and beyond, in view of the likelihood of more severe weather and flooding in different parts of the country. It is not only local councils that are subject to swingeing and unprecedented funding reductions and uneven funding cuts; the fire and rescue service is similarly affected.
Metropolitan chief fire officers have pointed out that, unless the Government make more funds available or do not proceed with the further cuts, which are planned in years three and four of the budget cycle, a number of those metropolitan fire and rescue authorities will be unable to fulfil their statutory obligations. It is interesting to note that the role of the fire and rescue service in dealing with flood relief and water rescue work is not a statutory one. As a result of the funding cuts imposed on the fire and rescue service, some fire and rescue authorities might not be able to respond to severe flooding events this year and in future years. I hope that the Minister can reassure us and tell us how he intends to resource fire and rescue services appropriately to enable them to respond in the event of further extreme weather patterns later this year, this winter and in the years to come.
In a sense, local authorities and local people have had insult added to injury. As hon. Members have mentioned, the former Local Government Minister is on record as saying that local authorities would receive a 100% reimbursement for dealing with the impact of the floods:
"I know that many households and businesses have been disrupted by the floods that have affected parts of the country. That is why we have announced that we will reimburse councils 100 per cent of their costs under the Bellwin scheme".
The activation of the scheme was reaffirmed in a written ministerial statement by the then Environment Secretary, the right hon. Member for Meriden (Mrs Spelman):
"The Secretary of State for Communities and Local Government is activating the Bellwin scheme of emergency financial assistance to help local authorities with their immediate costs associated
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with protecting life and property in their areas. Exceptionally, the scheme will reimburse local authorities for 100% of their eligible costs above threshold."—[
Official Report
, 9 July 2012; Vol. 548, c. 5WS.]
And yet, as the hon. Member for Thirsk and Malton mentioned, North Yorkshire county council somehow seems to have been bypassed by the Bellwin scheme. As I understand it, it has not received any money through the scheme as yet.
I do not understand what is happening. How can that possibly be? We had a ministerial statement. The Minister went on record to say that local authorities would receive 100% reimbursement, and North Yorkshire, which has had devastating floods, has not received anything. Gary Fielding, the authority's corporate director for strategic resources, said:
"We wrote to the Department for Communities and Local Government…asking that they activate the Bellwin scheme. Unfortunately, the scheme is restrictive and does not help to meet the costs of capital…which includes infrastructure work…roads…, so the bridge which was swept away at Scawton and which will cost us £600,000 is not eligible. The CLG has declined any flexibility and has not activated Bellwin in any case."
Local authorities are in an impossible position: the most extreme funding cuts are being inflicted on them and severe weather patterns result in extreme localised flooding. Local authorities and local people are left with an enormous clean-up bill, and local government is too enfeebled to respond to the needs of constituents. I do not envy any local councillor, or indeed MP, in that situation, when their constituents come to them for support and assistance, but no funding is available and the funding that was supposed to be available, and has been promised, has not been forthcoming.
I sincerely hope that, when the Minister responds, he will reassure hon. Members who have spoken today, those outside the Chamber this morning and, more importantly, the members of the public who have been subjected to floods. As we head towards the winter months—due to climate change, we see extreme weather and flooding in the summer months as well—people will be concerned about what assistance will be available should they be unfortunate enough to experience extreme flooding in their neighbourhoods. I hope that he will give reassurance that this shambolic state of affairs will be rectified, that the promised funding will be forthcoming and that the DCLG will look to assist local government flexibly, particularly because, as hon. Members have mentioned, it faces unprecedented cuts, so cannot respond as it would wish. Local government relies on central Government, and on the Minister, to give that reassurance and ensure that the funding will be forthcoming, so that we can protect the general public appropriately.
10.19 am
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis): May I, too, say what a pleasure it is to serve under your chairmanship, Mr Gray?
I congratulate my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) on securing the debate, not least because it gives me an opportunity to put on the record, as hon. Members have already commented,
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the effective way in which emergency responders and local authorities reacted to flooding events across England this year. They did a fantastic job.
On behalf of the Government, I want to say how sorry we are for all the people who have had their homes or businesses flooded, sometimes more than once this year alone. As has been said, the effects of flooding are felt not just in the loss of family heirlooms or of a favourite armchair, but in the wait for one's home to dry out before one can move back and live in it again. For the owners of businesses, it is equally devastating. It is a horrible time for all those affected.
I will touch on some general points about the Government's response to flooding, before dealing with the specific issues that have been raised. The Department for Environment, Food and Rural Affairs is the lead Department for flood prevention and for responding to emergencies that are beyond the capacity of local responders. The Department for Communities and Local Government leads on the recovery from high-impact, wide-area flooding emergencies. Other Departments, such as the Department for Transport in relation to highways, also contribute to that response.
Of course, we cannot prevent flooding completely. When the weather deteriorates, there are well-practised approaches to warning and informing emergency responders and the general public about what is likely to happen. The Flood Forecasting Centre issues flood guidance statements and alert levels, and weather forecasts give information to the public. On the ground, emergency responders forewarn such particularly vulnerable places as mobile home parks and camping sites about what is expected, enabling them to take sensible precautions. There are also local resilience forums—one for each police force area—that are responsible for identifying risks faced at the local level and drawing up plans to respond to them if they materialise.
If local responders are overwhelmed or an emergency affects multiple areas, the Government can support the response. As with all emergencies, the lead Department—in this case, DEFRA—is responsible for monitoring the situation on the ground, assessing what Government support, if any, is needed in the immediate aftermath, and ensuring that the Government as a whole respond as necessary. In the case of this summer's flooding, the Department did exactly that, convening daily, and often twice-daily, to achieve it.
I want to be clear about what this Government have done to help communities recover from this summer's floods. We have been there to warn people, through the Met Office and the Environment Agency, about the rain to come, and to inform them how to protect themselves and their property from flooding. We are continuing that effort by providing local emergency responders, through the local resilience forum, with a forward-look at the risk of severe weather.
We have been there when the rain came down and the rivers rose to ensure, through the Environment Agency, that water could flow freely through culverts and ditches to escape. We were also there in the aftermath, not simply to activate the Bellwin scheme of emergency financial assistance—I will come back to that scheme—but to increase the rate of assistance to 100% of eligible expenditure above the threshold for the June and July Bellwin schemes. We are also considering Bellwin support for the more recent flooding.
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We have continued to work with local authorities in their transition from response to recovery, and my officials have called the chief executive of every local authority affected by the flooding, so that we can be clear about local impacts. The former Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for Meriden (Mrs Spelman) has visited Gateshead and Ottery St Mary, and my right hon. Friend the Prime Minister has visited Calderdale, one of the areas affected several times by flooding.
I apologise to my hon. Friend the Member for Thirsk and Malton about the letter she mentioned. It is unacceptable to take too long to respond to any letter, and we will chase it up. The only one we have on record is dated October and had been passed to the Department for Transport, which we will chase up for a reply.
As I have mentioned, we put in place a Bellwin scheme to support the areas affected in June and July, but let me say more about such schemes. As most local authorities are aware, they are the means by which the Government can reimburse a local authority for the immediate, uninsurable clear-up costs following an emergency or disaster in its area. Named after the former DEFRA Minister Lord Bellwin, the scheme provides reimbursement for local authorities in relation to its costs incurred in, or in connection with, immediate action to safeguard life and property or to prevent suffering or severe inconvenience. The Bellwin funding scheme is well recognised, long-used and respected. Local authorities have one month from the end of an incident to notify my Department that they intend to apply for the activation of a Bellwin scheme. The scheme's standard terms usually allow the Department to reimburse the authority for 85% of eligible costs above a threshold, which is 0.2% of the authority's calculated net revenue budget.
I can tell my hon. Friend that North Yorkshire county council has registered for Bellwin support. In such circumstances, there is no three-month cut-off for the receipt of an application. We are still willing to consider its Bellwin application, and we await its response to our questions.
Miss McIntosh: I am grateful to the Minister for that clarification. The chief executive and the leader of the council have been told, for reasons I cannot understand—perhaps it is a misunderstanding that we can clarify today—that it will not qualify for capital expenditure. Earlier, I referred to parliamentary answers showing that other local authorities have qualified for the type of claim that it is making. The Minister has responded on the three-month deadline, but will he clarify whether this business about their being told that the council's claim is not eligible is a misunderstanding?
Brandon Lewis: I thank my hon. Friend for her intervention. I was about to turn to the difference between Bellwin schemes and capital expenditure. As I said, a Bellwin scheme covers only the costs of immediate action to safeguard life and property. Payments made under the last Administration—for example, in 2008—with which I think her local authority is making comparisons, were not Bellwin grants; they were to cover cost recovery from an exceptional event. I will turn to that in a moment.
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A Bellwin scheme typically covers the costs of evacuating people from dangerous structures, and works to make them safe following a disaster; temporary re-housing; and initial repairs to, and the clearing of debris from, highways, pavements and footpaths. Let me make it clear—this may provide clarification for my hon. Friend—that it does not usually cover capital expenditure; the normal wages and salaries of an authority's regular employees, whether diverted from their usual work or otherwise; and the standing costs of an authority's plant and equipment.
Although a Bellwin scheme is discretionary, it has a statutory basis. As a Department, we must therefore ensure that the terms of each scheme and the eligible costs comply with the legislation. In particular, the statute sets out that expenditure must have been incurred on, or in connection with, immediate action to safeguard life and property or to prevent suffering or severe inconvenience. The idea of a Bellwin scheme is to put local authorities in a position to take speedy emergency action, to protect people during and immediately after an incident and to deal with the immediate catastrophic consequences.
Clearly, the statutory basis of the schemes means that longer-term works of repair or restoration will be ruled out, because they fall into the recovery stage rather than into that of immediate action. Although Ministers have previously used their discretion to enhance some of the Bellwin scheme terms—indeed, we have done so in relation to these incidents by extending the percentage of grant payable above the threshold, as others have said—we must continue to have regard to the legislation. Permanent repairs to roads and bridges would not therefore be eligible, but initial repairs and patching up works are fine.
Chris Williamson: Will the Minister comment on the fact that, as he has conceded, the last Administration funded local authorities over and above the Bellwin formula? Given the parlous state of local government finance as a result of reductions in funding, does he not agree that it is even more imperative for his Administration to look sympathetically on local authorities facing such exceptional costs? They simply do not have the resources to meet such expenditure under their funding regime.
Brandon Lewis: I agree with the hon. Gentleman in the sense that it is a shame that we inherited the parlous economic state in this country, and have therefore had to make decisions about how to sort out the debt and deficit problems left by the last Labour Government. I will turn to the capital situation in a moment. We have sometimes faced calls for Bellwin schemes to be amended or refreshed, but we remain committed to the terms outlined in statute. The scheme has the necessary flexibility, and it continues to be well-known and well used by local authorities.
Let me turn now to North Yorkshire. I am aware that the colleagues of my hon. Friend the Member for Thirsk and Malton from North Yorkshire county council registered a possible intention to apply for Bellwin support in September. My officials have requested further information to support a possible activation of the scheme and we await the council's response. I understand that the council now considers that it will not be eligible for the scheme because the costs will not be above the
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Bellwin threshold. However, as allowed under the Bellwin rules, we will record costs for any future claims if further flooding occurs later in the financial year.
I know that hon. Members are keen to understand why the Department has not considered launching a recovery grant scheme, which has occasionally happened in previous years, most notably following the significant and widespread flooding events of 2007. Let me be clear—I appreciate that this is not an easy message to relay to constituents—while the flooding incidents of this summer were locally significant, we did not witness the devastating effects of previous years. Despite the individual stories of loss that we have heard, and our sympathy for those affected, the flooding this year has been on a much smaller scale overall.
Let me put the matter in context. In 2007, 55,000 properties, both houses and businesses, were flooded compared with only 4,000 this summer. The events on those two occasions are not comparable and the response, therefore, must be proportionate. Although we have activated a Bellwin scheme, we have not considered the need for a wider recovery grant. None the less, I will, in a moment, touch on the capital expenditure for roads and highways.
Successive Governments have used the Bellwin scheme as a benchmark, and we are doing the same. If we were to experience flooding on a larger scale, we would doubtless consider further Government support. For now, the balance has been appropriately struck between our Bellwin scheme, boosted to 100% of costs above the threshold to reflect the particular circumstances of the June and July flooding, and local support.
Thanks to the Government's continued investment in flood defences, some 19,000 properties have been protected from flooding. In places such as Carlisle, the local authority has told us that the defences have saved some 2,000 homes from the summer flooding events. Despite the financial situation that we inherited, the Government have continued to invest substantially in flood defence, spending £470 million a year. I am sure that my hon. Friend appreciates that that has undoubtedly protected people's homes and kept businesses operating when, in the past, they would have been under water.
Chris Williamson: I am surprised that the Minister is eulogising the Government's continued investment in flood defence work when there has been a significant reduction in such work, as I pointed out in my opening remarks. Will he concede that there has been a 27% reduction in flood defence work?
Brandon Lewis: I was not eulogising the Government, but making the point that we are spending £470 million a year which, considering the economic mess that we inherited from the previous Labour Administration, is something that we should all know about.
Let me turn now to the role of local authorities. As ever, local authorities have been on the front line of the response to the flooding this summer. Of course, once flooding has subsided, recovery begins. Local authorities support such work from their reserves, which are there to help to meet the costs of emergencies, such as flooding. Of course, Bellwin is also in place.
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I am sure that local authorities will look sympathetically at requests for hardship relief from business rates for businesses affected by the flooding. They were urged to do that quickly in the immediate aftermath of the event. If they grant such relief, Government will fund 75% of the cost.
Catherine McKinnell: The Minister spoke very quickly, so will he go back a sentence and repeat what he said? On what requests will the Government look sympathetically?
Brandon Lewis: I said that I was sure that local authorities will look sympathetically at requests for hardship relief from business rates for businesses affected by flooding. They were urged to do that immediately after the event. If they grant such relief, Government will fund 75% of the cost.
Aside from hardship relief, I am sure that local authorities will have taken advantage of the changes introduced by the Local Government Finance Bill to fund discounts for ratepayers as they see fit. Flooding would seem to be one of the circumstances for which the new power was designed.
Let me deal with transport. My ministerial colleagues at the Department for Transport recognise that many parts of the country have seen high levels of rainfall and significant local flooding incidents, which have impacted on residents, businesses and transport infrastructure. Like me, they pay tribute to the excellent multi-agency response and the ongoing work by local highway authorities to help those who have been affected.
However, local authorities have responsibility for the local roads in their areas and are best placed to determine their own priorities for funding, which include putting in place reasonable resilience measures and contingencies to deal with any incidents, such as flooding, that may occur from time to time.
The Department for Transport is providing more than £91.7 million to North Yorkshire for highways maintenance funding over the spending review period. For this financial year, we are providing more than £24 million. The Department allocated North Yorkshire a further £6.6 million in March 2011 for damage to its highways network caused by the severe winter of 2010.
Despite the current economic situation that we inherited, the Government will continue to provide £3 billion to councils for road maintenance over the next four years to 2015. The Department for Transport also provided a further £200 million in March last year as an exceptional payment to help with much-needed road repairs following the severe weather at the end of 2010.
My hon. Friend the Member for Thirsk and Malton commented on the Emergency Planning College. The college is a Cabinet Office-sponsored facility. Given my responsibility for the Fire Service College, I warmly welcome it and look forward to paying a visit in due course. A great deal of work on interoperability is going on across Government at the moment, to which both colleges are contributing. The joint emergency services interoperability programme aims to deliver significant benefits in future emergency responses. My hon. Friend makes a good point. Over the past few weeks, I, too, have been talking about the facilities at the Fire Service
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College. The more that we can get our emergency services working and training together in such environments, the better it will be for everybody on the ground.
On the planning case in Filey, I hope that my hon. Friend will appreciate that I cannot comment on individual cases. None the less, the Government have ensured, through the national planning policy framework, that new homes and other buildings will not be built in areas of high flood risk.
As for the comments made by the hon. Member for West Lancashire (Rosie Cooper), the climate change risk assessment identifies increased risk of flooding for the years ahead and informs flood defence investment. We cannot prevent all flooding, so the need to plan well locally is important. The hon. Lady's constituents who may feel abandoned need to make their councillors aware of their feelings and to demand improvements.
Rosie Cooper: Will the Minister comment on grants for individual prevention schemes, such as air brick blocking and the various other aids that can enable householders to prevent their homes from being flooded? Will he also give us some detail on how people can apply for such grants? The truth is that, after three weeks' work, including with the Environment Agency and the local authority, I still do not have a plan for how to apply for such grants that I can show my local residents. If the Minister does not have those details, will he write to me, setting out the steps, so that we can make some progress? Householders do not want to have to face the misery of their homes being flooded over and over again, especially if there are grants available.
Brandon Lewis: Either I or my colleagues at DEFRA will write to the hon. Lady with those details. If it is a local scheme through the local authority or Environment Agency, it will be a matter for them, but we will certainly have a look at the matter and give her some feedback.
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As I said at the outset, flooding is devastating for those whom it affects. I am grateful to have had the opportunity to set out what the Government are doing.
Miss McIntosh: The Minister has given some full responses, but before he concludes, will he explain something he has just said? He told us that in future, no building will be allowed in areas of high flood risk. Muston road is an area of high flood risk. The buildings have gone ahead. There will be future flooding, which will have an impact on flood spending. Moreover, will he also comment on flood resilience products—who has the final word if they fail—insurance claims, the statement of principles and the implications for local authorities?
Brandon Lewis: I am sorry that I have not commented on those issues. As I said, I obviously cannot comment on particular planning cases. My comment about the national planning policy framework was to give my hon. Friend and her residents some confidence about where we are now and about the applications for the future. Regarding any particular product, again that is not something I can comment on here today.
However, with regard to the statement of principles, there are continuing discussions between the Government and the Association of British Insurers, and negotiations are going on at this time. The Department for Communities and Local Government is part of those negotiations. My hon. Friend will therefore have to bear with us before I can come back and give her a definitive position on that issue. As I say, the discussions and negotiations are ongoing, with all the parties very aware of the time scale that they are working to.
I am grateful to have had the opportunity to set out what the Government are doing, through local authorities, to support those who are affected by flooding. We continue to invest in flood defence measures. I congratulate my hon. Friend on securing this very important debate.
10.40 am
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European Parliament (Two-seat Operation)
11 am
Charlotte Leslie (Bristol North West) (Con): It is a pleasure to serve under your chairmanship, Mr Gray.
In the week when the Prime Minister is at a special European Council meeting in Brussels to negotiate the multi-annual financial framework, with Europe on a precarious financial and social footing, the debate is important and timely. The subject goes to the heart of the European debate—the economic debate on how Europe spends its money, and a wider debate about what Europe was intended to be and what it has become. The issue is the ending of the two-seat arrangement of the European Parliament, which has become known, not inappropriately, as the Strasbourg circus.
The European Parliament is the only Assembly in the world with more than one permanent seat, and the only one that does not have the power to determine its own location. The two-seat arrangement was formalised in the 1997 treaty of Amsterdam, compelling the Parliament to sit in Strasbourg for 48 days every year, for 12 plenary sessions, in which legislation receives its final vote. For the rest of the year Parliament sits in Brussels, where virtually all the other institutions of the EU are based. The reason is symbolic: a sign of Franco-German reconciliation—a Parliament held on the fields of previous conflict.
As to the practical reality of that symbolism—it is expensive. Brussels is the place where Committee and political group meetings take place, and where Members of the European Parliament have their offices. It is where most other EU institutions, such as the Commission and the Council, are based, and where most of the staff live; so when the monthly plenary sessions take place thousands of people must decamp to Strasbourg: MEPs, their staff, civil servants, Government representatives and diplomats. Lorries are stacked up with office documents and papers, and hit the roads to France. Transport connections to Strasbourg are so bad that it is not possible to fly there from 21 of the 27 EU countries. That means that MEPs—including those from the UK—must take lengthy two to three-leg trips to get to Strasbourg.
The amazing thing is that all that happens so that people can travel to a replica of the Brussels Chamber, in Strasbourg. The part that would be funny, if it were not true, is that the Strasbourg Chamber is left empty for 317 days a year. It is Monty Pythonesque—the Monty Python Strasbourg circus; but it is not funny, because it is expensive. It costs about €200 million each year, which is about €1 billion over the seven-year budgetary period. Each year about 20,000 tonnes of carbon dioxide is released from the convoys of lorries, flights and cars transporting paper, politicians, officials and forms on the 500 km journey to France. Well over 100,000 tonnes of CO2 is estimated to be emitted in that way over the seven-year budgetary period. Once, in 2008, the travelling circus was cancelled because the Strasbourg buildings were in need of repair and it was not possible to go there. On that one occasion €4 million was saved.
Let us not forget that what I have described is happening at a time when politicians across Europe are scrabbling for budget savings. They are cutting public services in a
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desperate attempt to regain control of the continent's finances. If we want a simple way to save £1 billion over this budgetary period, with no cuts to public services and no extreme pain—no outcries across Europe, rioting on the streets of Greece or plastic bullets fired at students in Spain—I would suggest to the Minister, and to the Prime Minister, that surely this is it.
When we consider what we can do, things become a bit frustrating. The two-seat arrangement is embedded in treaties, which, of course, require all 27 member states to agree to an end to what is, frankly, a farce. My colleague Ashley Fox MEP has been doing a fantastic job gathering signatures to a petition in this country, to try to force a debate on the issue in Parliament. It can be found at www.stopthestrasbourgcircus.com. However, it is not only in the UK that a consensus is building, at a time of great financial difficulty, that this unfunny farce needs to stop. Through exceptional and quite historic work Ashley Fox has demonstrated that there is tremendous momentum and desire among a majority of MEPs to put an end to the situation. He has significant support from our European neighbours. He gathered the number of signatures necessary in the European Parliament to hold a secret ballot on just reducing the number of times the Parliament decamps to Strasbourg. Without the pressure of party Whips, what the French have called l'amendement Fox was carried by a majority of 104. That may seem a small step but it is significant in demonstrating that the will of the European Parliament is to do the sensible thing, and that the Parliament is being held back by an anachronistic, impractical, regulatory democratic deficit.
There is not just a little consensus. Ending the Strasbourg circus—the two-seat arrangement—was in the coalition agreement. Hon. Members will know that often there are not many questions to do with Europe on which the entire House will agree; but the two-seat arrangement is such a question. The coalition agreement pledges to end the Strasbourg circus. I have tabled an early-day motion which has support from across the political parties. We have support from our European neighbours as well. The change would save £1 billion in the next EU budget.
Andrew Bingham (High Peak) (Con): I congratulate my hon. Friend on obtaining the debate, which is important. Does she think that the scandal—and that is the only word for it—is made worse when the EU comes to us wanting to increase the budget, whereas we want to keep it the same or, ideally, reduce it? They could make an easy saving, and it rubs salt in the wound.
Charlotte Leslie:
I absolutely agree with my hon. Friend, who makes a good point. One reason why so much social strife is erupting, and not only in this country—it is easy to think that it is only here that there is questioning of the way the EU holds itself together, and its value, but it is happening in other countries as well—is that people are having their pockets pinched, and their daily lives are becoming harder, while a global elite has an idea into which it is prepared to pump ridiculous amounts of money. There are benefits to be had from a Europe that speaks with one voice in an increasingly global, competitive world, and if the nations of Europe saw that the people governing it were representative of them, were careful with their money, and were concentrating on solving the practical realities,
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they would be far more tolerant of the measures that Europe imposes on them. As my hon. Friend says, they are being imposed by an elite that still thinks that it is acceptable to waste £1 billion on some outdated symbolism. I thank him for raising the point, and could not agree with it more. It relates not only to making easy budget savings, but to the credibility of the entire European project.
With budget negotiations taking place, the two-seat arrangement should be exceptionally low-hanging fruit for the Prime Minister, and I hope that he will see that. There is consensus that it is a massive problem, which we must solve; but why has it not been solved? Why has it not been stopped, if the idea that the farce must end is so intuitive? What is in the way? It is—perhaps understandably, from their perspective—the French. They have taken l'amendement Fox, which gained a majority in the European Parliament, to the European Court of Justice, because they considered it raised some issues. We are still awaiting the outcome. I have previously discussed in this Chamber some of the Court's interesting decisions, such as the SiMAP and Jaeger rulings on the effect of the working time directive on the NHS. They did not set a great precedent for sensible rulings to benefit the member states of Europe, but we shall have to wait and see what the Court decides.
The French are loth to give up the tourism industry in Alsace, and I suppose that those who live in Alsace can understand that, but it seems an odd priority for the whole of Europe to adopt now. In addition—this is the point where the debate becomes a much wider one—the French are wedded to the symbolism of the two seats of the European Parliament: mended relations between the French and the Germans. Some might argue that the relations that needed mending, that have been mended and that could be mended further are the relations between the English and the Germans, but that is a debate for another time. There are also those within the European project who see £1 billion in symbolism as money well spent, which goes to the heart of the problem. The Strasbourg circus has become a symbol of European priorities and of why people are so fed up with an institution that is becoming out of touch.
What we do about the Strasbourg circus reflects a choice that Europe must make—and, I suggest, fast. It can remain a project built on anachronistic symbolism and an emotional commitment based on fear of the past and certain member states' shame about past actions, which were indeed abominable but which cannot be allowed to overshadow and rule the future. It can be willing to pump money that nobody has into maintaining anachronistic emblems of unity in a fast-fracturing world. I am not alone in thinking that that is nothing less than dangerous. Alternatively, Europe can get real. It can face practical realities and the differences among and diversity of its member states. It can celebrate and be stronger through diversity, instead of relentlessly homogenising through misled fear. It can put pragmatism above the fantasy of a perfect Europe dreamed up around the dining tables of the global elite. Ending the Strasbourg Circus is not only about saving, with minimal pain and disruption—
Martin Vickers (Cleethorpes) (Con):
My hon. Friend is making a powerful case for ending the circus. The word that keeps cropping up is "elite". Does not the
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whole enterprise of shuffling around Europe highlight how out of touch the entire European project is with the people of Europe? It is evident from the headlines across Europe at the moment. Does she agree that the very least the European Parliament could do is to suspend that shuffling around for a couple of years while the financial position is particularly difficult?
Charlotte Leslie: As ever, my hon. Friend makes a sensible point, which returns to the idea of a global elite who are out of touch and have no connection with the people over whom they rule. It is not only Britain that is questioning its position in the EU; other countries are now doing so as well. It is dangerous for the global elite to ignore the concerns raised by the people. I do not think that institutions can govern and legislate a national attitude or a national psychology. Governments and regimes that try to legislate how people feel end up looking scarily like the communist and totalitarian regimes that we have been so proud to dismantle in Europe. If Governments cannot legislate national attitudes and how people feel, they must take account of them and construct political realities around the psychological realities of the countries they represent.
If we cannot achieve a common-sense solution, we could at least push for a pilot on suspension. However, another issue is that Europe is very inflexible and rigid about what it sees as the right way and the wrong way to do things. The idea of pilots within Europe could be extremely useful. This is a diversion from the debate, but a pilot exemption from some EU social and employment laws would be useful. A pilot would be an interesting way forward if we cannot get a common-sense solution.
We face a choice, and we must make it fast. Ending the Strasbourg circus would send a signal that Europe puts facing facts and getting real above introspection about a dream. Persisting in symbolism in defiance of reality is what most threatens the dream of a harmonious Europe. As one of my heroes Muhammad Ali said, the best way to achieve a dream is to wake up. If we want to secure our own economy by stabilising Europe, ending the Strasbourg circus is a crucial step with a symbolism all its own. I hope that the Prime Minister can play a leading role in doing so this week.
11.14 am
The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire): I thank my hon. Friend the Member for Bristol North West (Charlotte Leslie) for securing this debate. I would like to take this opportunity to respond on behalf of the Government to the points that she and other hon. Friends have raised.
As my hon. Friend has noted, the Government's position on the question of a single seat for the European Parliament is well known. As we outlined in the coalition programme for government, we are in favour of a single seat. My right hon. Friend the Prime Minister reiterated that position recently in response to a question from my hon. Friend the Member for Bristol North West. It remains the Government's view.
The strong case in favour of a single seat for the European Parliament has been well made in this debate. As my hon. Friend set out, there are strong cost and efficiency arguments in favour. Many in the European Parliament agree. The single seat campaign in the European
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Parliament, run by a group of MEPs from a number of member states, makes the same points. The campaign has strengthened its case by attributing figures to the additional costs being incurred as a result of the dual-seat operation. The estimated additional cost, about €180 million per annum, is clearly difficult to justify in the current financial climate in the European Union.
Efficiency arguments in favour of a single seat are also persuasive. Moving away from a situation in which the European Parliament has staff in three different locations is likely to improve the efficiency of the institution as a whole and streamline its work. I agree wholeheartedly with the environmental arguments discussed by my hon. Friend in favour of a single seat. A shift to one location would save hundreds of hours of travel time and associated carbon emissions for Members of the European Parliament, their staff and national Government delegations. I congratulate the majority of MEPs who recognise that the current situation and the associated environmental costs are out of step with what is being asked of member states and their citizens to meet the EU's ambitious climate change targets. MEPs do not want to be seen to preach one thing and do another.
It is important for us to acknowledge the pressure that the European Parliament has increasingly been putting on the European Council about the question of a single seat. It is to be welcomed. Members of the European Parliament have taken steps to address the problems inherent in the current situation. In the name of efficiency, MEPs recently took a decision, initiated by Ashley Fox, MEP for the South West of England and Gibraltar, to host two of the requisite 12 plenary sessions in Strasbourg during one week in October. Hon. Members will be aware of the ongoing court case in the European Court of Justice concerning that decision. The move by MEPs is clearly indicative of a growing consensus in the European Parliament that the current situation must change.
I also note the votes in the European Parliament on 23 October on the question of a single seat, which were adopted by significant majorities, the largest of which was in response to a vote calling for immediate, concrete action towards a single seat. It was passed by a total of 432 MEPs in favour, with 218 MEPs against. Such pressure, coming as it does from the European Parliament itself, should help drive the issue up the political agenda throughout the EU.
Longer-term reform, however, including any potential move to a single seat, would, of course, require changes to the treaties underpinning the European Union. Hon. Members will know that a protocol appended to the European Union treaties governs the location of the seat of the European Parliament. It was agreed by member states at the Edinburgh European Council in 1992. Amending the protocol requires unanimous agreement among all 27 member states. The difficulty of doing that acts as an obvious constraint on action on the single-seat issue, but, in the meantime, we fully support the European Parliament's efforts to reduce the waste brought about by its two locations. We understand the frustration of MEPs that they are not free to decide the location of their sittings.
We will treat any proposal for treaty change on its merits. We have ensured that the UK is no longer liable to contribute to future eurozone bail-outs. Now, our
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absolute priority is to address the crisis in the eurozone and to ensure that the single market is not damaged. That is critical because the single market is of such benefit to jobs and businesses across the country.
When the time comes to consider broader proposals for reform, tackling the waste of the European Parliament's two seats needs to be considered, too. I imagine that MEPs will be doing the same when the opportunity arises, not least on account of the pressure from the one-seat campaign, to which my hon. Friend alluded, and its recent petition that saw more than 1 million EU citizens sign up to its push for a single seat. Who knows? Having given out the campaign's web address, my hon. Friend might attract even more signatures.
Although resolving the dual-seat issue is tied to treaty change, our drive for greater efficiency in the EU and its institutions is not. My hon. Friend will be aware that the UK has a series of tough objectives for the negotiations on the multi-annual financial framework, which will be the focus of discussions at the upcoming November European Council.
In the discussions on heading 5, the administrative part of the multi-annual financial framework, the UK will push for significant savings. The UK has delivered 33% savings in administration in all Government Departments and expects the EU institutions to show similar efficiency and restraint.
We continue to stress to other EU members and those who lead its institutions that any suggestion of waste in the budget damages the standing of the institutions and of the EU as a whole. Examples such as the fact that the median basic salary of EU officials is more than €50,000 per annum more than that of UK officials, or the fact that last year the European Commission planned to spend more annually on its buildings than on measures to protect the environment or to promote justice and the rule of law, already have a negative impact on the EU's reputation as an organisation. The dual-seat issue only adds to perceptions of EU profligacy at a time of severe financial restraint.
My hon. Friend spoke of the position of the French Government, for whom the issue is understandably sensitive. The UK enjoys a strong bilateral relationship with France, and we co-operate on a wide range of issues. We are all conscious of the historical importance of the city of Strasbourg. The Strasbourg seat of the European Parliament dates back to 1952, when the decision on its location brought an important balance to post-war Europe, but the world has moved on. We are in a new century, and the case for two seats is becoming harder to defend and the practical arguments in favour of a single seat cannot be ignored.
The UK's position on the site of the European Parliament is well known among other member states, and as a Government we have reiterated that position on several occasions. As I have already made clear, a move to a single seat requires treaty change agreed unanimously by member states. We will continue to work with our European partners, as we must, to look for a more rational settlement that results in less waste, is less costly to European taxpayers and less damaging to the environment.
I thank my hon. Friend for requesting the debate and for tenaciously pursuing the issue, about which she rightly feels strongly. The current situation, in which the
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European Parliament is based in three separate locations, is difficult to justify. The arguments in favour of a single seat, in terms of the associated cost savings and efficiency impacts, are difficult to ignore.
The Government will continue to support the notion of a single seat for the European Parliament, and to work with our European partners to pursue the coalition commitment to that end.
11.24 am
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Overseas Aid (UK-based Consultants)
[Mr George Howarth in the Chair]
2.30 pm
Mr George Howarth (in the Chair): In the event of a Division, the sitting will be suspended for 15 minutes, but that 15 minutes will be added on to the time available for the debate.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab): I want to draw the House's attention to the growing phenomenon of wealthy UK-based management consultancies creaming off millions of pounds from the aid budget. We are seeing—the process has accelerated in recent years—the emergence of lords of poverty. People are building fat businesses and paying themselves fat salaries creamed from the budget of the Department for International Development. Lords of poverty, hardship tycoons, pinstriped famine magnates: whatever we call them, the phenomenon is growing, and I think the British public would deprecate it.
Let me say from the beginning that I support Britain's commitment to raise its aid budget to UN levels. I congratulate the Government on their willingness to ring-fence their aid budget. We are talking about some of the poorest people in the world. Those who would cut our aid budget are not just wrong; they are not considering how, in the 21st century, we are all our brothers' keepers. For a fraction of Britain's gross domestic product, why would we not take steps through aid and trade to promote stability in other parts of the world? It is not just about standards of living, happiness and health; it is also fundamentally about global stability, and I believe that an aid budget, correctly used, has a big role to play in that.
Aid is not just about a glow of virtue for western Governments and taxpayers; it is about building a world that is safe for all of us. This month's insurrection in the horn of Africa is next month's terrorist attack in western Europe.
Sir Tony Cunningham (Workington) (Lab): To add to the point that my hon. Friend is making, I wonder how many more entrepreneurs, researchers, top doctors, scientists and so on there would be if we lived in a fairer world.
Ms Abbott: My hon. Friend makes a good point. The world as a whole would benefit if it were fairer and if the energies and talents of more people in third-world countries were directed into education, science and entrepreneurship. Tragically, in some cases, they are being directed into piracy and the drug trade.
This country has a proud record on aid, both in personal donations by the British public and in successive British Governments' commitment to aid. It is a known fact that the British public are among the most generous in the world when it comes to donating as individuals to disaster emergency appeals. It is also a fact that under different Governments—I want to be fair—we in this country have been fortunate to have some extraordinarily committed and charismatic Ministers for international development and aid. I am probably one of the few people in the Chamber who remembers Lynda Chalker, but anyone concerned with the future of Africa gives
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her a huge amount of credit for being prepared in both good and bad days to fight the corner for the importance of aid and of work with Africa. She played a crucial role in international development when I first entered the House.
There was also my colleague, Clare Short, of whom even her enemies would say that her finest hours were spent as Secretary of State for International Development. She did a huge amount, with an increased budget, to drive the Department forward. Nobody can deny her commitment and her energy. Members from both parties have done a huge amount, often in adverse political situations within their parties, to drive forward the international development agenda. I believe that when it is presented to the British public in the right way, they feel a lot of support for a properly deployed aid budget that genuinely benefits the people. The British public have shown in their response to disaster appeals that they want to help.
We in this country have a proud record on aid and international development. I welcome the fact that this Government have been prepared to stick to the UN targets for aid and to ring-fence the budget, but in recent years—I am not suggesting that the process began in 2010—more and more aid has been diverted to management consultants at the expense of practical projects that might be of benefit to some of the poorest people in the world.
I draw the House's attention to a small British charity called Operation WellFound. WellFound requested £250,000—not much, as aid budgets go—to build wells and latrines for 60,000 people in Burkina Faso, one of the most impoverished nations on earth. WellFound put in a bid for funding to DFID, which then referred it to an organisation called Triple Line Consulting, a London-based company that advises on overseas aid, which examined it in detail. I will return to Triple Line Consulting. The application for just £250,000 was rejected in August.
WellFound—a tiny charity, but it does tremendous work—got an e-mail giving three reasons why it would not get the money. First, the bid was not considered sufficiently innovative. Digging wells may not be new, but there are millions of people all over the world for whom access to clean water is vital. One would think that the consultancy would have appreciated that. Just because something is not new does not mean that it is not relevant and important.
Sir Tony Cunningham: Does my hon. Friend also agree that clean water is the basis for almost everything else? Kids do not go to school if they are ill because they do not have clean water. It affects their health, education, time at work and so on. It affects everything. If people do not have clean water, everything else falls by the wayside.
Ms Abbott: Clean water may not be new or exciting, but it is the basis for many things. I have been fortunate to travel a bit around Africa—to Nigeria, Ghana and Uganda. Access to clean water is still a vital issue in such countries, yet that small charity had its application rejected.
Apart from the fact that the bid was not innovative, Triple Line Consulting went on to say that it did not explain how poverty would be alleviated. As my hon.
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Friend just said, access to clean water means so much to communities' ability to move forward economically. The final reason why Triple Line was not prepared to approve the application was that poor WellFound did not provide evidence of how the work could be replicated on a larger scale. It seems to me that if one builds 25 wells, the way to replicate that is to build 50 and 75. I suspect that Triple Line just cut and pasted standard responses to that aid bid.
The decision came as a huge blow not just to the small team who run WellFound but to the villagers in Burkina Faso, where construction of the wells has had to be delayed. That experience, which is a microcosm of what seems to be going on in the world of international development, is far from unique.
The Sunday Telegraph, which I am not in the habit of quoting, did an analysis of DFID spending that showed that £29 million—take a deep breath—was paid in the past 12 months to Triple Line. It seems that the only thing that Triple Line triples is its own bottom line. Triple Line's main contract and the bulk of its work is to assess applications for grants from DFID's global poverty action fund. To be fair, the company passed on £27.1 million of this money to the aid providers that it vetted. However, it kept £1.9 million as a fee for its services. Had it been willing to shave a little bit off its fee, it could have handed the money to the little well project and the people of Burkina Faso could have had the wells.
The public will be baffled by DFID's outsourcing assessing a bid for aid to one mega-consultancy and then outsourcing it again to a different consultancy, a specialist branch of the accountants, KPMG. In the past 12 months, DFID has paid KPMG more than £35 million. Of course, KPMG says that a lot of that is passed on to aid providers, and perhaps it kept back £3.5 million as a fee. That will reassure the people of Burkina Faso.
Triple Line is typical of the sort of company that has emerged in recent years and is one of the lords of poverty that I am talking about. Triple Line is based in Putney in the UK and is owned by two directors who founded it in 1999: Lydia Richardson, a socio-economist—I do not know what that is—who lives with her husband in a £1 million house in Wimbledon, and David Smith, an economist, who lives just a few streets away. Triple Line's website says:
"We operate on the principles of openness, transparency, accountability and trust."
However, it registers as a small company, meaning that it is not required to publish its accounts. That is how open, accountable and transparent it is. The owners refuse to disclose what their income or profits were last year or how much they were paid in salary or dividends. Apart from working with DFID, Triple Line lists 37 other clients on its website and states that its annual turnover is £2 million. So the £1.9 million it creams off DFID represents the major part of its turnover, which apparently it gets from cutting and pasting standard replies to small charities that want relatively small sums to do practical work.
That is just one company. It is important to look at the bigger picture. We know that last year alone DFID spent £500 million on consultants. The data compiled by a national newspaper show that the vast majority of
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those contracts are going to UK-based companies. The share going to UK firms has risen in recent years. I will return to the point about how desirable it is to give an increasing proportion of our aid budget to UK-based firms.
Of the 117 major DFID contracts and procurement agreements worth nearly £750 million, as published on the Government's contracts portal since January 2011, only nine went to non-UK firms. Several of the best-paid consultants are former DFID officials, who appear to have gained substantial increases in their personal wealth since leaving the Department, even though they are still doing essentially the same work.
I am not the first person to notice this phenomenon. Earlier this year, a parliamentary report warned that the UK Government's drive to cut costs could make them over-reliant on contractors—like Triple Line—and could even put the effectiveness of their aid programmes at risk. Members of the Select Committee on International Development said that their concerns about DFID's use of contractors and other external partners were compounded by the lack of publicly available information on UK aid-funded contracts.
The Government have good intentions in seeking to maintain levels of and ring-fencing aid spending, but a public constituency for continuing high levels of aid cannot be built unless there is a measure of openness and transparency, which we have not seen to date.
The rise in the amount of money given to UK-based consultants is alarming, but before I speak a little bit more about that in general, let me mention another lord of poverty, creaming millions off the aid budget. Adam Smith International is the offspring of the think-tank, the Adam Smith Institute, which is probably better known to Government Members than to me. Adam Smith International has gone from strength to strength. It was paid a total of £37 million by DFID last year to promote the free market in the third world. Its total turnover that year was £53.6 million, with profits of £5 million, up 10% in 2010. Let us pause and think. We in this country, as a consequence of austerity, are seeing cuts in Government and at local government level. All hon. Members know that some measure of austerity would have had to happen, whoever was in government, but ordinary people are seeing cuts in their local government services and at Government level. Yet one of the lords of poverty is able to drive its profits up by 10% to £5 million.
It gets better. The managing director of Adam Smith International, which gets most of its money from DFID and therefore from the taxpayers—the same taxpayers who are seeing cuts to their local government services and cuts in Government—pays himself a salary with dividends that in 2010 totalled almost £1.3 million. The managing director of Adam Smith International trousers £1.3 million. Anything further removed from the public's idea of the kind of people who go abroad to help some of the poorest people in other countries could not be imagined. I repeat that if we are going to build a constituency for continuing high levels of aid—in my view, it should increase—we have to examine this sort of abusive business activity, with people running what are supposed to be aid organisations and paying themselves salaries in the millions.
William Morrison, another member of Adam Smith International, earned £200,000 from that firm and collected dividends worth £1.06 million from its parent company,
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Amphion Group, which is wholly owned by him and three of his fellow directors. Amphion Group's accounts state that its purpose is to act as a holding company for Adam Smith International. Mr Morrison's salary rose by a quarter last year, to £253,000. He and his three fellow directors shared dividends of £7.5 million—almost £1.9 million each—which they paid to the Amphion Group. The directors collected salaries averaging £125,000 each. A director of Adam Smith International and Amphion, Peter Young, justified the payments, saying,
"If you want to get a good job done, you have to get people who know what they're doing."
With the greatest respect to Adam Smith International, I must say, as someone who has travelled in Africa and travelled extensively in the Caribbean, where my family originate that the idea that one cannot get the skills to improve and strengthen the government and economic structures of third-world countries without paying UK-based directors £125,000 each is risible. There are so many people of Nigerian, Afghan, Caribbean or horn of Africa origin with the skills, ability and talent, but they are unable to break into this sort of work because companies such as Adam Smith International have a death grip on it. They use the size of their organisations to squeeze out smaller and aspirant organisations.
Sir Tony Cunningham: Does my hon. Friend agree that if we use, for example, African consultants in Africa, not only do they have a better idea of what is happening on the ground but the money that they receive is spent in their own country, so we achieve a double benefit for the people who live there?
Ms Abbott: I am grateful to my hon. Friend for that point, which I was coming to. I am concerned about aid as a British parliamentarian, on behalf of the British taxpayer, and as someone with an interest in global realities and the important role that aid can play in creating global stability, and as one who one wants to help the poorest people in the world. I am also concerned about aid because, having personal contacts in some of the countries where it is dished out, I know that it causes huge frustration to see UK-based consultants flying out for a week or a month, staying in four-star hotels, going around in 4x4 vehicles, sending a few e-mails, writing reports that simply regurgitate known facts and then flying back to the UK, when there are local people who have a better understanding of the conditions. Whether it is in Afghanistan, west Africa, the Caribbean or the horn of Africa, local people could do those jobs just as well.
Furthermore, as my hon. Friend pointed out, if we employ locally based consultants, first, we help to build the knowledge base and infrastructure of those countries and, secondly, we pump money into their economies. If the only hope that people in third-world countries have when faced with those bloated UK consultancies is to get a job as a driver, a cook or a nanny, and if in the 21st century we are not prepared to start to shift funding to the skills and talent that we know exist in some of those countries, it is no wonder that the question of aid has become a talking point not only in the UK—often among people who are opposed to the principle of aid in the first place—but in Africa. How much good has that aid really done? Part of the reason people query
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how much aid we give to Africa and the third world—we can all see the statistics—is that they see that the money is paid to UK-based consultants and has a minimum practical effect in the local economies.
To return to the lords of poverty, there are dozens of staff in UK-based development consultancies—substantially funded by DFID—who pay themselves six-figure salaries. At Hertfordshire-based HTSPE, which got a third of its turnover from DFID last year, the highest paid director is on £144,000. The company earned £12.1 million in 2010-11 and is currently involved in the Department's numerous programmes. GRM International received large sums of money from DFID but managed to pay only £47,000 in tax in Britain last year—possibly a debate for another time. GRM International was bought out by managers in 2009 and has since merged with another aid giant, Futures Group, and secured massive contracts from the US and Australian Governments. The firm was paid £67.7 million in management consultancy fees for aid delivery to the poorest communities in Zimbabwe in August 2011. Last year, the highest-paid director in Oxford Policy Management, which runs the DFID oil sector transparency initiative—I wonder if they have heard about that in the Nigerian delta—and several other programmes, earned £125,000, up 25% in a year.
No one says that people working for such companies should not get a living wage, to coin a phrase, or competitive rates. If we look at the absolute poverty in the countries that they are working in and recognise the possible effect on local economies if we were more willing to give money to local consultants, however, we have to query such massive salaries, profits and turnover, from DFID expenditure and with no real clarity about the outcomes.
The new Secretary of State for International Development has announced an inquiry into the use of such consultants, and we welcome that. Will the Minister tell us when to expect that inquiry to be completed and made available for public discussion? A review of Britain's multilateral aid programmes, to assess the effectiveness of 43 aid organisations receiving UK money, was concluded to have contributed significantly to improving transparency and achieving value for money. The internal review of the Department's spending on technical experts ought, therefore, to have similarly benign results, although when we want to review the use of consultants and technical experts we find ourselves in a hall of mirrors. The Independent Commission for Aid Impact, the UK aid watchdog, has also announced plans to examine DFID's use of contractors, but those plans have stalled because many of the people involved are themselves big aid consultancy organisations.
There is immense good will in this country for the concept of giving money, whether from an individual's pocket or from the Government, to help some of the poorest people in the world. That good will, however, is being strained by the rising amount that is going to British-based consultancies and by the difficulty of seeing their out-turn. I am concerned that, in DFID's efforts to cut staff, it has outsourced work such as assessing aid bids that properly ought to rest within DFID and could certainly be done a lot cheaper in
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DFID, rather than by KPMG with its profit margins—nor is there any reason to think that an international accountancy company knows more about aid than people who have worked in DFID on the matter for all of their careers. Yes, we are on the right track with the overall sums of money, which it is important to ring-fence, but the trend, since 2010 in particular, has been to give the money to UK-based consultants.
When I refer to UK-based consultants, let me be clear that some are expert in house building or malaria nets, for example. One of the most successful pieces of aid to the Caribbean was when Metropolitan Police officers were seconded to the police in Jamaica. Jamaicans appreciated that, because the police brought real expertise and it was a real skills transfer operation. Frankly, it also enabled the politicians of the time to bypass some of the alleged corruption in the Jamaican police department. That aid was valued, so I am not saying that in all times and in all places there is locally based expertise that DFID should pay for. What I am saying is that generalised management consultancies, such as Adam Smith International, to name but one, send young people with no background in aid or development to Nigeria. They fly business class and stay in four-star hotels, earn considerable sums, and then fly back, while Nigeria continues much as before.
Sir Tony Cunningham: Is my hon. Friend suggesting that the transformation to a huge increase in consultants is ideologically based?
Ms Abbott: My hon. Friend makes an important point. I was anxious to strike a non-partisan note, so I avoided that subject. However, any objective observer who sees the money going to generalised management consultancies with no specialist knowledge of the practical aspects of aid might think that there was an ideological motivation. We are discussing some of the poorest people in the world, and it is wrong that mere ideology should mitigate using money in the fairest and most effective way.
We need to know when the internal inquiry is due to report. The Department for International Development must consider whether some of the simple work of assessing bids for aid—there is a habit of sending out expensive management consultants—could be done more cost-effectively in-house. I urge the Government to look at some of the margins and massive profits that some organisations are making—the salaries that bosses pay themselves, and the millions of pounds of turnover—from DFID money. They must examine whether some of those margins can be shaved. Everyone else is practising austerity, so why should the lord of poverty not do so? Why is it necessary to pay people hundreds of thousands of pounds to prevail upon them to take up work to help some of the poorest people in the world?
Above all, we must consider using more local experts and consultants. Everyone who is concerned about aid agrees that that provides better value for money, and the people involved understand local conditions and are in it for the long term. If I were a young man working for Adam Smith International, I might fly out to Nigeria for a couple of months, and in 12 months' time I might be in Afghanistan or somewhere in eastern Europe. Would I have a long-term concern that people in Nigeria will be better off in the long run as a consequence of my
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activities? No, because I would get on a jet plane and leave it all behind. Local advisers, consultants and technical experts live in those countries and will do so for the foreseeable future, so they have a genuine interest, which UK-based consultants may not have, in ensuring that what they are doing will have a long-term effect and make their country a better place to live in.
Just this morning, we heard about the millions of pounds being spent on an education project in Nigeria. It sounds like an excellent project, but the report that was published this morning queries its effectiveness, and says that children leave the school without mastering basic educational skills. That brings the whole issue of aid and development into disrepute. In these times of austerity, British taxpayers are entitled to know that aid money is being well spent and not top-sliced by overpaid, UK-based management consultancies. The very poor people we want to help need to know that the UK Government are straining every sinew to ensure the best value for money from their expenditure.
I go to Jamaica most years, and apart from UK policemen on secondment, people there and in other Caribbean countries have no idea where aid money for the region goes to, because so much of it is spent on UK-based consultants who mix in an exclusive social circle in the capital. They train, and write reports and e-mails, but they do not interact with people.
Aid has a purpose, because in a 21st century global economy, I am my brother's keeper. It has a purpose, because it is the right thing to do, and promotes global stability. The aid we give to countries such as Afghanistan and Palestine should build general relationships with this country. If it is trousered by UK-based consultants, and people in those countries do not see its practical benefits and believe that the only beneficiaries are those consultants who jet in and out, far from helping to build relationships, that aid raises a question mark at the very least.
For the whole time I have been a Member of Parliament, this country has had one of the best records for aid, including individual donations, of any country in Europe. It has had a great record under some Conservative Ministers and some Labour Ministers. We have every reason to be proud of that. The new phenomenon of increasing amounts of money going to UK-based management consultancies—some people say it is an ideological move, but I would not—far from building a constituency in this country for high and continuing levels of aid, bids fair to undermine it. We are a better country because we meet our commitments on aid. The very least the Government can do is to ensure transparency and accountability, and to assure the British public that they are receiving the maximum value for every penny of that aid.
In a world where small, vulnerable island states are buffeted by climate change, small countries in Africa are at the mercy of the commodities markets, and China, sometimes unscrupulously, is moving into areas where Britain was once the most influential foreign donor and partner, ensuring that our aid budget is spent effectively could not be more important. I urge the Government to examine the issues, and to introduce an internal inquiry, and I assure the Minister that I will return to the subject over the course of this Parliament.
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3.8 pm
Sir Tony Cunningham (Workington) (Lab): Thank you, Mr Howarth for chairing the debate; it is a pleasure to serve under your chairmanship. I also thank my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) for introducing the subject and for the passion that she always brings to such debates. It is a pleasure to sit alongside her.
With our economy suffering, value for money has never been so important to taxpayers. Understandably, there was some confusion and great concern about the revelation that the Department for International Development had spent more than £500 million on UK consultants. It is hugely important to raise the issue here today.
I want to make a number of points about value for money, the use of the private sector and the use of UK companies, rather than companies from developing countries. Last March, the International Development Committee released its annual report. Even then, there were concerns about the effectiveness of aid and the possibility that it was being undermined by the use of UK consultants. In particular, the Chair of the Committee, the right hon. Member for Gordon (Sir Malcolm Bruce), highlighted plans to reduce DFID's operating costs to 2% and cut administrative costs by a third, from £128 million to £94 million. Does the Minister believe those plans are hampering our aid programme? We understand that the measures have been implemented to reflect similar cuts at other Departments, but it is concerning that, although the Department's budget is increasing, its capacity could be decreasing. We believe that that has led to an increase in the number of UK firms and consultancy agencies receiving money from the taxpayer.
I was not fully aware of all the figures my hon. Friend the Member for Hackney North and Stoke Newington referred to, but it seems that people are making salaries of £1 million and £1.5 million at the expense of some of the poorest people in the world.
Ms Abbott: The fact is that people who would regard themselves as middle income in the countries that these people are allegedly flying off to to help would not earn the sums we are talking about in a year. DFID should pause and think about whether it is right to drive a system that encourages people to cream off money in this way.
Sir Tony Cunningham: I totally agree. Does the Minister feel that that approach represents true value for money for the British taxpayer? Can she demonstrate that it is the most effective approach to reducing poverty? If DFID is about anything, it is about reducing poverty among some of the poorest people in the world.
The British public—my hon. Friend touched on this—are compassionate, caring and extremely generous, and we have only to witness some recent examples to see that that is true. I could cite Haiti, because of the disaster that struck it. It is not in the British Commonwealth, and it is not a country that DFID deals with; indeed, it was suggested that, because it was a French colony, France would lead the way in dealing with the disaster there. However, the British people showed huge generosity; they did not care whether Haiti was a French colony or a British colony—they cared for the people of Haiti and gave enormously generously.
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It is vital that we can show people that their money is going to help millions of families—women and children around the world—and that it is not being wasted by large consultancies in the UK. In the light of that and the Department's recent announcement that it will investigate where its money is spent, may I, in the spirit of transparency, pick up on my hon. Friend's comments and ask the Minister yet again when the internal report will be published in full? Interestingly, I asked that question at DFID questions recently. The Secretary of State—I appreciate that she is new to her post—gave me the longest answer in the whole Question Time, but did she tell me when the report will be produced? No. We need to know when it will be produced and whether it will be produced in full. We have a right to know where the money is being spent.
I hope the Department will be open and transparent about how British taxpayers' money is spent and where it is going. The Secretary of State is relatively new, but I hope she will get to grips—people keep using that term—with how money is being spent in her Department, because the £500 million given to UK consultants represents 8% of the DFID budget. We also hope that the report will shed light on other funding streams. What struck me about my hon. Friend's comments was the fact that a small non-governmental organisation that was digging wells for poor people was refused £250,000 when we are spending 8% of the budget on consultants.
The coalition Government have sought a different style of development. I do not want to get into an ideological argument, but there seems to be an increased emphasis on the private sector and on a more—I choose my words carefully, and I should when I am looking at my hon. Friend—paternalistic approach to the way we deal with the developing world. That approach ideologically favours the private sector, and we have seen examples of that.
I am not saying that I am against the private sector, which is hugely important. Let me give one example. Recently, I was in Nairobi, and I went to look at private schools. Now, private schools in Nairobi are not like the private schools we would imagine in other parts of the world. Kibera is the largest slum in Nairobi—one slum, one million people. There are a handful of schools on the outskirts. If local people want their children to have an education, they have no choice but to pay a relatively small amount to allow their children to go to school. The amount they pay for their child to go to school for a month is the same as the cost of a bottle of beer in one of the top-class hotels in Nairobi that some of the consultants we are talking about might stay at. People do not have a choice about making such payments, but this is more a social enterprise than anything else, so I am not against everything that is private.
Ms Abbott: Does my hon. Friend agree that, although no one in the 21st century objects in principle to money going to the private sector, being spent in-house by the Government or being spent by aid organisations, the watchword has to be whether it is spent effectively? Is the maximum benefit going to the recipients of aid? We do not take a position as between private, public, Oxfam or whatever; the issue is effectiveness and whether we are helping the people we seek to help.
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Sir Tony Cunningham: I totally agree. There are two things: effectiveness and value for money—value for money for the British taxpayer and for the developing country.
The aid process was supposed to encourage developing countries to be involved in their own development. Untied aid—we have a proud record on untying aid—offers an excellent example of partnership with developing countries. By hiring agencies in developing countries, we make development more accountable to local people, and I made that point very clearly earlier. That uses local expertise, builds capacity and provides job opportunities.
I want to make a little point about capacity. I was in Zambia not too long ago. One company—I am told it is British—owed £70 million in unpaid tax. Some £70 million should have been paid to the Exchequer in Zambia, but it was not, and part of the reason for that is that Departments there do not have the capacity—lawyers, accountants, tax experts and so on—to get the money. Surely aid could be used to help countries help themselves.
In using local expertise, we ensure that value for money and effectiveness are our criteria. That is an example of how the private sector can be used effectively alongside development. The Government have been vocal in their support of partnership over aid, but by not using consultants from developing countries they appear to be squandering an excellent opportunity to engage with developing countries on an equal footing.
There is, understandably, some resistance to aid in the press and some parts of society. It is therefore imperative that the Department is open about its spending. The public should understand why the Department has chosen to select 92% of contractors from Britain, rather than from the developing world. I want to give the Minister quite a bit of time to answer the questions we have raised.
My hon. Friend is absolutely right: aid is about our effectiveness in helping people in developing countries, and if we waste huge amounts on consultancies in this country, we have to ask whether that is value for money for the British taxpayer and right for the people of the developing world.
3.18 pm
The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone): It is a pleasure to serve under your chairmanship, Mr Howarth. I thank the hon. Member for Hackney North and Stoke Newington (Ms Abbott) for calling a debate on such an important topic. As she and the hon. Member for Workington (Sir Tony Cunningham) said, it is important that we deliver effective aid and get value for money—something the Government have made their watchword in relation to development aid. I was a little disappointed in a way to hear terms such as trousering money, creaming off the aid budget, lords of poverty and hardship tycoons.
I think that the hon. Lady did her case a disservice, because the real test is whether there is value for money. As to what those lords of poverty get, if the sum delivers the aid and it is effective, the quantity is not the issue. The issue is whether it is effective and whether we get value for money, as both Opposition Members who spoke said.
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Ms Abbott: The Minister may think that I sound a little harsh about the lords of poverty, but she needs to hear a rising class of intellectuals in Africa, the Caribbean and the far east talking about those same people. They are more than harsh; they are scathing. They query the value of aid altogether. If the Minister is concerned about my tone, she needs, on her travels abroad, to meet some of those rising young intellectuals and hear their critique.
Lynne Featherstone: I assure the hon. Lady that I do meet and will meet members of the rising intellectual classes, or whatever she termed them, and that I would give them the same answer: the point is whether aid is effective and whether the British taxpayer gets value for money. That is important.
The good part of what the hon. Lady said was that the Opposition are committed to the 0.7% aid target, or are glad that the coalition have made that commitment. We will be the first country to deliver that, as set out in our manifesto and the coalition agreement, in 2013. She is right in what she says, in the sense that that is the percentage that we as a first-world developed country should give, not just because it is right, but because it is smart. It is a wise and good thing to do because it helps us and others. I am glad that both sides agree about that. The hon. Lady spoke of safety for all, and that is part of it.
There have been political shenanigans to do with aid recently, and as the hon. Lady has taken to reading The Daily Telegraph, she will have noticed that it often levels a salvo or two at the 0.7% target, and not only at the consultants. However, the whole point of a percentage is that it is geared to the fortunes of the country as they go up or down. We can maintain our commitment to the figure, because it is geared to our economic fortunes.
I want to put the debate in context. When the coalition Government came to power in 2010 we made it clear that we would ensure maximum development impact on the ground, and full accountability to British taxpayers, so that their money would be well spent. We have done much to improve value for money for UK taxpayers, and for the poor people who receive our aid and development assistance. As the hon. Lady mentioned, that has included, through the bilateral and multilateral aid reviews—which are revered across the development spectrum throughout the world for the work they have done in examining value for money, a full assessment and analysis of where and how we spend the aid budget to ensure that it gives maximum value for money. That has adjusted the focus so that it is now on a smaller number of countries, and funding to some poorly performing international agencies has been cut, in a move that gets life-saving help to many more people.
I prefer the term "suppliers" for those to whom the hon. Lady refers as consultants, because, as she said, while a global figure is given to them, only a percentage of it is administration, and the vast majority of it is for delivering the programme in-country. It is important to recognise that the direct engagement of contractors, or suppliers, is only one of a number of channels that we use to deliver development assistance on the ground. We strengthened the business case process in January 2011, to ensure that there would be good decision making about when and how to use contractors in our programmes, and we must also acknowledge that the
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suppliers engaged by DFID undertake a wide range of activities to support the delivery of the development programme. The majority of those suppliers' contracts are managing the delivery of programmes, or managing the distribution of funds to deliver programmes on behalf of DFID. Those were some of the examples that the hon. Lady raised.
Sir Tony Cunningham: I understand the point that the Minister makes, but I wonder how she can justify salaries of £1 million or £1.5 million to some of those people.
Lynne Featherstone: The proof of the pudding is in the eating: it is a question of what they delivered, whether it was value for money, whether it could have been got cheaper elsewhere, what the processes were, whether they were rigorous and whether the arrangement delivered, on the ground, the enormous programmes that we are carrying out throughout the world, in-country, across Africa and Asia. As to the suppliers we use, yes, UK firms win a significant proportion of our work, and the vast majority—90%—of the larger contracts. Technical capacity is one of the major deficits in the poorest countries, and the market for professional services and technical assistance in developing countries runs to tens of billions of pounds a year. British firms have strong expertise in the area and compete effectively in that big, global market—including for contracts awarded by DFID, but also right across the world.
UK aid is, as the hon. Member for Workington said, untied, and almost all our contracts are subject to competitive tender. When UK firms win contracts from DFID it is because they have offered value-for-money solutions to the requirements in the contract. We encourage firms from developing countries to compete for DFID business. However, local markets often lack the capacity, especially for programmes where specialist skills and experience are required to maximise results. That is particularly relevant as we have increased our focus on working in fragile and conflict-affected states. However, it is important to note that local firms and staff benefit from DFID contracts when our suppliers establish local teams in-country to deliver the programmes and to advise, just as we employ members of the local community to work in DFID offices, for the very reasons that the hon. Lady gave: they have local knowledge and experience. However, often it is not possible for local firms to mount the sorts of applications that can deliver.
Ms Abbott: The reason the firms in question can compete is their size, which is due to the bloated DFID contracts. The Minister seems to imply that the work goes to UK-based consultancies because the skills and knowledge are not available locally. I remind her that there are in her constituency, as in mine, thousands of people from the same areas of the world to which she dispatches UK-based consultants, and that they have the relevant skills, knowledge and potential; but nothing in DFID policies encourages them to go home and set up the consultancies that could meaningfully bid for the contracts.
Lynne Featherstone:
The contracts and tenders are open and anyone can compete for them. If there is a fair process that encourages local employment I do not see how the hon. Lady can argue that it is not a fair and due
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process. However, it is true that 90% of the larger contracts go to UK contractors, who have a lot of experience in the field. That is not to say that others could not make a bid that would beat them; but the percentages are the way it is. That is the result of the tenders.
Suppliers such as Population Services International can deliver significant results and value for money. In the Democratic Republic of the Congo—and not everyone knows how to work and deliver in such fragile states—97% of the population live in areas with high rates of malaria, and the prevalence is as high as 80%. The hon. Lady raised the question of bed nets: a supplier contracted by DFID is providing and distributing bed nets. That will provide more than 4 million bed nets to people in remote locations and educate the recipients to ensure that they are used effectively. Such programmes, although a British company may contract them, will be delivered locally.
The challenge for us and our suppliers is to ensure that we maximise the results achieved and the overall return on investment from each contract, and on every programme. With that in mind, we want our suppliers, in some priority areas, to do more to support our goals. We want them to reflect our objective of building local capacity by ensuring that programmes develop sustainable solutions and encourage self-sufficiency, and we are looking for that in those bids. Given our change in focus towards fragile and conflict-affected states, we increasingly look to our contractors to develop the capability to deliver effectively in more challenging environments.
The hon. Lady raised the question of transparency. It is of course hugely important to us. We want contractors to operate transparently and to reflect that important principle in the programmes that they run for us.
Ms Abbott: The Minister has admitted, or confirmed, that 90% of the contracts go to UK-based consultancies.
Lynne Featherstone: The larger contracts.
Ms Abbott: To avoid doubt, is the Minister saying that she is happy with that high proportion, and that she has no plans over time to try to bring it down? I want to be clear about that.
Lynne Featherstone: I have the ambition of delivering value for British taxpayers' money. That is the objective. Within that, we want more of our contractors to show us how they will use local people, and we want that to be encouraged and embedded. DFID is a great skills educator, in terms of the work that it does in-country to educate and train people to take on roles and become more experienced, so that in time, they will be able to win a larger proportion of those contracts.
On improving value for money overall, we want our contractors to recognise more explicitly and to reflect more clearly our common objective of reducing poverty. We want them to take action to demonstrate that: for example, by focusing on value for money and by sharing with others their learning and knowledge of what works, in order to improve the effectiveness of our development work. It is an iterative process.
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I want to try to answer some of the hon. Lady's specific points. I agree that the British public are generous. They are proud of both our record on international aid and development and the work that we do, and they look to support us. That is why in DFID, and as a coalition Government, we make such strenuous efforts to deliver value for money and aid effectiveness. As she said, there are political and dark forces out there that might wish to destabilise that commitment, but only by delivering effectively and ensuring that we provide value for money for the British taxpayer can we defend ourselves and the work that we do.
The hon. Lady said that she was not going to raise issues about decisions being ideologically driven—I think she was implying that there was a switch to private contractors. I want to ask, however, whether she and perhaps more directly, the hon. Member for Workington, were ideologically opposed to the use of contractors, because in my book, it is about whoever delivers the best results.
The hon. Lady asked about Triple Line Consulting's assessment of the application for £250,000. Triple Line manages the global poverty action fund on behalf of DFID. Applications are reviewed in accordance with criteria set by DFID to maximise the effectiveness and value for money from the budget, in line with the Department's policy priority. Most of the money that goes to Triple Line is passed through to fund projects, as we have said. It was interesting that the hon. Member for Workington said, in questioning whether we have value for money, that poverty reduction should be looked at as one of the criteria. However, one reason for rejecting WellFound's application was that it made no mention of poverty reduction; it did not demonstrate to Triple Line's satisfaction that poverty reduction could be delivered.
I actually thought that the argument that clean water and sinking wells should be enough, and that we should not seek anything to do with innovation or new thinking, was quite poor. The sum of £250,000 is a lot of money, and in any contract that DFID lets, or that goes through any funds that are managed for us, we want to see how that thinking can develop and how it can be scaled up. It may not be a matter of just doubling wells, as the hon. Lady suggests. It is dangerous to go into the detail of how or why things were rejected and whether they should have been, when neither she nor I have the details of the bid in front of us. We cannot just look at the broad picture—"We will sink wells"—and then criticise the bid's rejection, because three things were asked for, one of which was how poverty demonstrably would be reduced. If that was not in the bid, I cannot see why that should not be a reason to reject it, when the hon. Gentleman made such a point of its being a critical criterion for DFID to consider.
Ms Abbott: For clarity, I am not saying that digging wells and innovation are mutually exclusive. My point was simply that DFID refused to dig the wells, which would have cost a mere £250,000, but the people who managed that refusal process took a profit of £1.9 million. The public cannot understand that.
Lynne Featherstone: As I said, Triple Line is in charge of the whole global poverty action fund, and an administration fee is not that unusual. The real question, as both Opposition Members said, is whether effective aid is delivered.
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The hon. Lady raised the issue of the scale and size of projects excluding small firms from competing, and asked whether we wanted to reduce the current 90% of large contracts that are contracted to the UK. We would like to use local staff and firms more, but we need to recognise that some of that will be achieved through contracts directly awarded by DFID. We also need our large suppliers to do that down their supply chain, and we are pressing them to do so. I shall move on to what we are looking at in future in due course.
The hon. Lady asked about transparency. Future contracts are all published on the Her Majesty's Government's Contracts Finder website to provide suppliers with the opportunity to bid. I asked about that the other day, as I was inquiring how people anywhere would know that a contract was out that could be bid for. They are all published on that website. All payments over £500 are published, as are business cases for the programmes and the details of the contracts awarded. We want to use it to improve the way we do things, and transparency is very important to us.
The hon. Lady also raised the issue of former DFID staff becoming contractors or suppliers. The Department's staff are loyal, passionate and committed, and they develop massive expertise, so it is not surprising that after five, 10, 15 or 20 years with DFID, they then move on within the industry or market. Some movement between staff and organisations is to be expected and salary levels are determined by the labour market. I do not seriously think that she would say that someone who worked in DFID for 10 or 20 years, and is committed and passionate, should not then go on to use that expertise in the industry. The Department has business rules in place covering the appointment of civil servants when they leave, and there are controls on conflicts of interest. New controls have been introduced to ensure the appropriate tax treatment of interim staff, and the new PEAKS framework—professional evidence and applied knowledge services—will strengthen controls on the engagement of short-term specialist contractors. If I have misinterpreted what the hon. Lady said, I am sure that she will tell me.
Ms Abbott: I do not doubt that many people in DFID are committed and passionate. Years ago, when I was a graduate trainee with the civil service, the most committed and passionate people chose DFID, for example, over the Treasury. I would argue, however, that in the countries that we are trying to help, there are committed, passionate and knowledgeable people, some of whom have to migrate overseas in order to gain employment opportunities. We could do so much more for those countries if we were committed to a policy of developing the capacity of local people, rather than shovelling money at Adam Smith International.
I have listened carefully to what the Minister said about transparency, but how does she explain that the International Development Committee raised concerns about DFID's use of contractors and external partners and that it has complained about the lack of publicly available information? If the information is available, clearly the Committee does not know about it.
Lynne Featherstone:
I will return to that issue in due course. The hon. Lady keeps returning to the point about local employment and local opportunities, but we
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agree about that. It is a question of making it happen and encouraging that, but I have explained to her how that is being done.
On the implication that somehow a tsunami of contracts is now going to management consultants, there is an increase, but there is an increase to what we are doing in all our areas. There is an increase in what we are doing through budget support. There is an increase through sector support. There is an increase to NGOs and there is an increase in the use of suppliers. That is because, as we build towards the 0.7% figure, we are having to scale up and ensure that we deliver. Having different channels through which we deliver is probably the best way forward. A mixed economy of development assistance ensures that we are working and firing on all guns.
Of course DFID's use of suppliers has grown in recent years. That is because our overall programme has grown and because we are doing more in fragile and conflict-affected states, where the risks are such that we have to retain more control ourselves, rather than channelling money through Governments. In some places, it is just not possible to work through the Government system, and NGOs are not always in place, so we have to work through those with specialist expertise, who can work in these very difficult circumstances. We do that by using suppliers who are accountable to us; it is to us that they are accountable.
We have asked ICAI to review the use of consultants. It is in the early stages of conducting a review of DFID's use of suppliers to deliver programmes. The report is due in May 2013. The scope of the review is such that it will examine how DFID uses contractors. I am referring to the make-or-buy decision in relation to the business case: how do we decide whether we are going to do something ourselves or whether we need to buy in the service? The review will examine how we select contractors and secure value for money in the procurement process and how we hold them accountable—the contract and supplier management. The ICAI methodology for the study is to select and review a sample of five or six contracts as case studies to identify whether DFID is achieving impact and value for money in its use of contractors.
Sir Tony Cunningham: Will the Minister commit to publishing the report in full?
Lynne Featherstone: I am coming back to that report. The ICAI report will be published in May 2013.
In terms of the response to the IDC, I do not have the information to hand. I shall have to write to the hon. Member for Hackney North and Stoke Newington on that point.
The hon. Lady referred to the lack of clarity about outputs from DFID programmes. In terms of how we ensure that UK aid money is spent effectively, the main tools are the new business case process, which has brought value for money and results up front in the design of all programmes; annual reviews, which enable us to monitor the value for money of programmes during implementation; and research and evaluation to identify what works best and to learn lessons both from our own projects and from those of others.
In terms of measuring value for money, the value-for-money framework ensures that the value for money of a programme is assessed at various stages of the programme cycle, from business case to DFID's annual review
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process, and projects are then scored on whether they are achieving value for money. DFID has also invested heavily in building the evidence base and conducting research and evaluations of programmes to learn lessons about impact and drive greater value for money in future programmes. That is one of the biggest changes in aid and development assistance since the days of the Government whom the hon. Lady supported. There has been a shift in focus on to the evidence base and an insistence that almost everything can be measured and we can look to outputs. The evidence base is critical to evaluating what works, so that when we spend more money, we ensure that we spend it in the most effective way.
There was an assertion from the hon. Lady that consultants add little real value and do not do real work. Contractors actually perform a very wide role. Most of the supplier contracts are buying people and services that support delivery, either by managing the implementation of programmes or by managing the distribution of funds. Sometimes that includes in-kind aid distributed by suppliers. Examples include bed nets and cash—the 40p or 50p a week given to extremely poor people by suppliers contracted by DFID. We also use contractors to provide technical assistance to country Governments to support them in the development of local capacity. Others are used to undertake monitoring and evaluation of programmes or to conduct research to help to improve the effectiveness of our aid. Many of these suppliers play a key role in DFID delivering tangible development outcomes in the world's poorest countries. I have made clear the importance that we attach to value for money, but also the importance of delivering for the poorest.
I do not have a date for when the report commissioned by the Secretary of State will be finished. I know that the Secretary of State has announced the details of the actions being taken as a result of the review. The recommendations of the report—so it must have been finished—are still being considered, and work is ongoing to plan for implementation. The reason why the report is not in the public domain is that it comes under advice for Ministers and it includes commercially sensitive information, but what the Secretary of State is doing as a result of the report will be published; in fact, I think it has been published already.
The hon. Member for Hackney North and Stoke Newington asked why some of the suppliers working for DFID do not appear to pay enough UK tax.
Sir Tony Cunningham: The hon. Lady suggests that the report cannot be published because it contains sensitive material. Is she prepared to produce and provide this information? She can redact the delicate, sensitive information. We want information that is as full as it can be in order to prove that the Department is as transparent as it should be.
Lynne Featherstone: I am afraid I have forgotten the point that I was addressing to the hon. Member for Hackney North and Stoke Newington, because the intervention came then.