Hammond's evidence to the Commons Treasury committee - Summary
- Philip Hammond, the chancellor, has told MPs that it will be necessary to have a post-Brexit “transitional deal” because it will not be possible to complete divorce negotiations within the timetable set out by article 50. (See 5.07pm.)
- Hammond has said that two sorts of transitional deal could be possible. One would cover the period between Brexit and a “clear and firm end state”, setting out the period of adjustment to reach that goal. And another could be put in place if the UK and the EU got to the end of the two-year article 50 withdrawal process without agreeing on a final “end state”, to allow time for further negotiations. David Davis, the Brexit secretary, has signalled that he might approve the first kind of transitional deal, but not the second. Michel Barnier, the European commission’s Brexit negotiator, has also indicated that he would be more in favour of a transitional deal if it was a bridge to a destination already agreed. But Hammond hinted that he might favour a transitional deal even if it were just a means of delaying to Brexit talks. He said:
In principle certainty is always preferable to uncertainty. But if it’s a certainty of something very unfavourable then that’s not quite so good.
- Hammond has said that “thoughtful politicians” agree with him about the need for a transition period. Some have interpreted this as a jibe against his Brexiteer colleagues like Liam Fox, the international trade secretary, or David Davis, but it is more likely that he was having a dig at hardline pro-Brexit Tory backbenchers and figures like Ukip’s Nigel Farage. (See 7.17pm.)
- Hammond has said that leaving the EU could require the UK to spend hundreds of millions of pounds erecting and operating new border controls. And there could be a five-fold increase in the paperwork required at the border, he said.
There could be quite significant physical infrastructure changes that need to be made at ports of entry and exit not only in the UK, but in continental Europe as well. There might be a need to train large numbers of people in anticipation of more intensive procedures at borders ...
It is true that in certain conceivable outcomes there would be a very substantial increase in the numbers of customs submissions and customs inspections. We are talking about - in EU trade - perhaps five times as many submissions and inspections being required. It could certainly add hundreds of millions of pounds to the cost of operating the customs services.
- He said he would like the UK to continue to participate in a number of cross-European programmes following Brexit.
Programmes like science, technology, research and development, academic exchange programmes are hugely beneficial to this country and countries across Europe. We would very much hope we will be able to agree a format which allows us to continue to participate in those programmes.
- He said the government had not yet decided whether to “aspire to remain in some form of customs union arrangement” after Brexit
- He said the government did not want to cut off the supply of high-skilled foreign workers after Brexit.
Just because you have a system of controlling immigration does not mean you have to use it to slam all doors shut. I can’t conceive of any circumstance in which we would want to impede or prevent the flow of highly-skilled, highly-paid people ... I don’t think it is highly-paid, highly-skilled people that cause concern among our own population about migration numbers.
- He said Brexit could encourage farmers to introduce more automation. He said that in the horticultural and agricultural sectors there were “steps of automation that can be taken” by investment in machines “that are not taken when access to low-cost labour is available”.
- He accepted that the most of the extra money going to councils for social care will be be available until nearer 2020, but he suggested they should use their reserves to fund care in the meantime. He also said money was not the only issue, echoing the line used by Number 10 earlier. (See 12.56pm.)
We recognise that the substantial increase in funding that social care will receive over this parliament is back-end loaded and we recognised that local authorities are challenged to deal with that pattern, that profile.
It is the case that local authorities in aggregate have been adding significantly to reserves. I think £9bn since the beginning of the last parliament. And local authorities will have to look at how they manage the situation to get from here to the very substantial increase in funding that will be available to them later in the parliament.
But it’s also clear, and it’s clear from looking at the UK at areas where social care is working well and areas where it is facing much bigger challenges, that money alone is not the issue. It is about effective cooperation and collaboration between the NHS and social services. And the key to this is getting the very best practice that we have seen in some areas rolled out much more widely across England to deliver the high-quality social services we want to see.
Absolutely, we think that coordination between the NHS and local authority social services is absolutely crucial and we think that in areas of the country where best practice is in evidence it is having a real and visible impact.
- He rejected a newspaper claim that Theresa May stopped him announcing more money for social care in the autumn statement. (See 9.08am.) That was “not true”, he said.
- He said he wanted to allow departments to manage their own problems, and not to always insist on the Treasury taking charge.
- He defended distributional impact assessments published by the Treasury at the time of the autumn statement showing that the poorest 30% are losing more from government tax and benefit changes than others apart from the richest 10%. He said that was a direct consequence of the government implementing the manifesto commitment it made to cut welfare spending. (In other words, it was almost as if he were blaming the voters.)
That’s all from me for today.
Thanks for the comments.
Updated
Farage says Hammond's transitional deal comments imply government 'backsliding' over Brexit
Nigel Farage, the former Ukip leader, has been on LBC this evening. Asked about Philip Hammond’s comments about a transitional deal, he has accused the government of “backsliding”. These are from LBC’s Matthew Harris.
Nigel Farage re Phillip Hammond's comments on an EU transitional deal: "More backsliding...I don't like the look of it one little bit" [LBC]
— Matthew Harris (@hattmarris84) December 12, 2016
Farage cont'd on Hammond's comments "Half Brexit is where they're going...I think theyre going to fudge & give us a Norwegian type deal" LBC
— Matthew Harris (@hattmarris84) December 12, 2016
Updated
It looks as if Philip Hammond might be treating himself to a pint after his committee appearance.
Phil Hammond and entourage making way from Commons to Number 11 via the Red Lion
— Eye Spy MP (@eyespymp) December 12, 2016
Correction: Earlier I said that Philip Hammond said a transitional deal might last longer than two years. (See 4.34pm.) Andrew Tyrie put it to him that two years was unlikely to be sufficient. I interpreted that as Tyrie meaning that a two-year transitional period would be insufficient, but, listening again to the exchange, it is clear that Tyrie was talking about the two-year article 50 period being insufficient.
Hammond said that “a longer period” would be necessary. But he was talking about a longer period than the article 50 two years, not a longer period than two years on top of that.
Tyrie did ask how long a transitional period might last. But Hammond did not answer. He said there would have to be compromises between “the political will to get things done and to move on and the bureaucratic and/or business desire to have the longest period possible to make any change”.
Updated
Andrew Tyrie wraps up the session. He says it has been an interesting one.
I will post a summary shortly.
Hammond says it is beyond doubt that some local authorities are facing challenges dealing with social care.
But he does not expect the Treasury to take charge of this, or issues like this. It will be for the relevant departments to take charge.
- Hammond says Treasury will let departments manage their own problems, and not always take charge itself.
Hammond says 'money alone' not the solution to the social care crisis
Back in the committee Streeting asks why Hammond did not mention health and social care in the autumn statement.
Hammond says the government has agreed to give the NHS the money it needs for its five-year plan.
He says we will have to get used to a world where chancellors do not do everything. The health secretary and the communities secretary are responsible for social care, he says.
He says the extra money going to social care is “back-end loaded” (ie, they don’t most of it until near the end of the parliament).
But it is also clear that “money alone is not the issue”, he says. It is about “effective cooperation and collaboration between the NHS and social services”.
It is important to get best practice rolled out, he says.
- Hammond says most of extra money for social care not being released until nearer the end of the parliament.
- He says “money alone” is not the solution to the social care crisis. Better cooperation is required too, he says.
Open Britain, which is campaigning for the UK to stay in the single market, has welcomed Philip Hammond’s comments about a transitional deal. It has released this statement from the Labour MP Stephen Kinnock.
It’s encouraging to see that Philip Hammond understands the need for a transitional deal to stop Britain falling into a hard, destructive Brexit that would take our economy over a cliff edge.
There is a growing consensus that agreeing a new trading relationship between Britain and Europe may take much longer than the two years specified by Article 50. Not signing a transitional arrangement would mean punishing tariffs which would hit British businesses and raise prices in the shops.
Labour’s Wes Streeting, echoing the point made by Andrew Tyrie earlier (see 4.28pm), thanks Philip Hammond for publishing the distributional impact information that George Osborne refused to release.
Hammond says he has been able to publish this information by decile because new information is now available that was not available earlier to Osborne.
The pound went up after Philip Hammond made his comments about a transitional deal, the FT reports.
The pound accelerates its gains after Philip Hammond repeats backing for transitional Brexit deal https://t.co/6gDcBSmd5v pic.twitter.com/y11Ag5eCqY
— fastFT (@fastFT) December 12, 2016
Q: Michel Barnier and his European commission colleagues seem to be more interested in defending the integrity of the EU, whereas EU governments seem more interested in jobs. Do you agree?
Hammond says the commission is in charge of the negotiation. But member states will expect to have considerable influence over it, and the European parliament too. He says he expects all parts of the EU structure to have a role.
Q: What might a transitional deal look like?
Hammond says during the two-year talks a clear end agreement could be agreed. But it could be decided to get there in stages.
Or it could be the case that after two years no agreement on a final end state has been reached. In that case a transitional deal could be put in place to allow both sides more time to get a final deal.
Chris Philp, a Conservative, is asking the questions now.
Q: The EU on average only spends 0.45% of GDP on international aid. France and Germany only spend 0.3%. The US only spends 0.2%. The OECD average is 0.28%. Could the government cut its aid spending.
Hammond says the 0.7% aid target is set out in statute. The government was elected on a mandate to keep that, and intends to do so, he says.
And here is Sky’s Faisal Islam on Philip Hammond’s transitional deal comments. (See 5.07pm.)
Strongest pro-transition words by UK minister, from Chancellor:
— Faisal Islam (@faisalislam) December 12, 2016
"Regulators" = @bankofengland.
"Thoughtful politicians" = most of Cabinet https://t.co/bAWt3r03FT
Also Hammond subtle shade over Brexiteer politicians who are anti-transition - apparently not "thoughtful" https://t.co/swvYiMBkdO
— Faisal Islam (@faisalislam) December 12, 2016
Hammond says the decision to say the budget will be balanced, but in the next parliament, is a compromise. But it is the right one, he says.
Here is the BBC’s Laura Kuenssberg on Philip Hammond’s transitional deal comments. (See 5.07pm.)
Also this avo Hammond near as dammit confirms there'll be transitional deal for leaving the EU cos article 50 can't do everything in 2 years
— Laura Kuenssberg (@bbclaurak) December 12, 2016
Q: You want to get net debt below 90% of GDP by 2020-21.
Hammond says the rule is to get it falling by the end of the parliament. It is due to peak at just over 90%.
He says the UK is exposed with debt as a percentage of GDP as high as it is.
The SNP’s George Kerevan is asking questions now. He is asking about the decision to increase the insurance premium tax.
Q: The OBR said there was a danger of this leading to people trying to avoid it through tax planning.
Hammond says he cannot comment on how they might do this.
Q: Should students be excluded from migration figures?
Hammond says they went over this the last time he was at the committee.
(At the last committee he indicated that he thought students should be excluded.)
The government’s policy is to include them, he says.
Q: Is that a good idea?
That is where we are, he says.
He says if the government were to change the system, people might feel the government was changing the rules.
But there might be arguments in favour of changing it too, he says.
Hammond's quote on the need for a transitional deal
Here is the key quote from Philip Hammond on the need for a transitional deal.
There is, I think, an emerging view among businesses, among regulators and among thoughtful politicians - as well as quite a universal view among civil servants on both sides of the English Channel - that having a longer period to manage the adjustment between where we are now as full members of the European Union and where we get to in the future as a result of the negotiations that we will be conducting would be generally helpful, would tend towards a smoother transition and would run less risks of disruption including, crucially, risks to financial stability which must be a fairly real concern ...
I don’t think we should approach this on the basis that we need transitional arrangements, because I think we can only get to a situation where we have a transition if there is a genuine meeting of minds on both sides of this negotiation ...
The further we go into this discussion, the more likely it is that we will mutually conclude that we need a longer period to deliver.
That line about “thoughtful politicians” is a clear dig at his Tory colleagues opposed to a transitional deal, although it is probably not aimed at David Davis, with whom Hammond has a good relationship and whose approach to a transitional deal is quite nuanced.
Hammond announces that the government will donate the money raised from the VAT on the sale of the charity single being released to raise money for the Jo Cox Foundation to the foundation.
UPDATE: The Treasury has tweeted this.
.@PHammondMP confirms VAT on the sales of the Christmas single in memory of Jo Cox will go to the @JoCoxFoundation https://t.co/UbAxHHIzM9 pic.twitter.com/PAVIQAjnVD
— HM Treasury (@hmtreasury) December 12, 2016
Updated
Rees-Mogg says that, although his mother-in-law was brought up in Wentworth Woodhouse, his family gains no personal benefit from Hammond’s decision to spend £7.6m on it in the autumn statement.
Hammond says he was not aware of the link when he made the announcement.
Updated
Q: Do you accept unilateral free trade is advantageous to the UK consumer?
Yes, says Hammond, because that would reduce the cost of imported goods.
But the consumer probably also has a job, and would want to know that he is keeping a job. Giving unilateral tariff-free access to the UK market might not be good for exporters, he says.
He says the UK would have “very little to offer” if it had already given tariff-free access to other countries.
Q: If the UK needed to spend more on border checks, would that be because of Britain’s decision to impose tariffs?
Hammond says it would not just be about tariffs. There would be other checks to be imposed.
Q; Couldn’t the government then decide to do without these checks?
Hammond says Rees-Mogg seems to be suggesting the removal of all tariffs. That would make negotiating trade deals harder, because if the UK had removed tariffs, other countries would have no incentive to remove tariffs on UK imports.
He says the government has not yet decided whether or not to stay in the customs union.
Back in the committee Jacob Rees-Mogg, the Conservative leave supporter, is asking questions now.
Q: What are your views on free trade?
Hammond says, in the long run, he thinks the more free trade you have, the more prosperity you will have.
Q: Is tariff-free access to the UK beneficial even without reciprocity?
Hammond says Rees-Mogg is asking him to comment on the Brexit negotiations.
What David Davis thinks of a transitional deal
Philip Hammond’s comments about wanting a transitional deal put him at odds with David Davis, the Brexit secretary, who has played down the need for one.
At the end of last week the Financial Times (subscription) published the memo of a meeting Davis had with City of London Corporation about Brexit on 15 November. The memo was written by a City of London Corporation representative. This is what it says about Davis’s views on a transitional deal.
Stated that he was “not really interested” in the discussion around the arrangements, did not foresee any benefits and could be perceived as a delay to the process that is not something the Government can abide.
However, expressed concern that there is an argument that the stability of the EU could be compromised by the UK’s “sudden” departure from the EU — the regulatory upheaval and potential for systemic risk could result in serious negative consequences for the whole of the EU. Davis emphasised the PM’s conference speech, in which it was stated that the UK Government wants a strong UK and a strong EU. He went on to say that if the EU, rather than UK stakeholders, want to have transitional arrangements he would be “more in favour. I will be kind”.
Hammond says not all EU funding is value for money.
He says he has committed to funding projects that get EU funding after Brexit. But he would want to know that they represent value for money, he says.
Hammond says new customs controls could cost hundreds of millions
Labour’s Helen Goodman asks if it is true that the government might have to spend hundreds of millions on beefing up customs arrangements after Brexit.
Hammond says it would depend on what the Brexit deal is, but he says it could end up costing the UK that much if new border controls have to be installed.
But the UK might get revenue from tariffs and charges, he says.
- Hammond says new customs controls could cost hundreds of millions.
Q: How long would it last?
Hammond says “quite significant” infrastructure changes might be needed at ports, in the UK and in the EU. And new staff might have to be hired. The more we go into this, the more we may conclude that the longer we need.
Q: So more than two years?
Hammond says a two-year deal would be “ambitious”.
UPDATE: Earlier I said here that Philip Hammond said a transitional deal might last longer than two years. (See 4.34pm.) Andrew Tyrie put it to him that two years was unlikely to be sufficient. I interpreted that as Tyrie meaning that a two-year transitional period would be insufficient, but, listening again to the exchange, it is clear that Tyrie was talking about the two-year article 50 period being insufficient. To correct the post, I have taken out the bullet point and the headline.
Hammond said that “a longer period” would be necessary. But he was talking about a longer period than the article 50 two years, not a longer period than two years on top of that.
Tyrie did ask how long a transitional period might last. But Hammond did not answer. He said there would have to be compromises between “the political will to get things done and to move on and the bureaucratic and/or business desire to have the longest period possible to make any change”.
Updated
Q: So this will be a key negotiating demand?
Hammond says he would not put it like that. He thinks it will be in the interests of both sides to reach an agreement on a transitional deal.
Hammond says he favours a transitional deal for when UK leaves EU to lesson disruption
Tyrie asks Hammond if he favours a transitional deal for when the UK leaves the EU.
Hammond says that would be “generally helpful” because there would be “less risk of disruption”.
So is that a yes, Tyrie asks. Hammond says it is.
Hammond rejects claim that May stopped him announcing extra social care spending in autumn statement
Philip Hammond, the chancellor, is giving evidence to the Treasury committee.
He starts by denying the claim in the Times that Theresa May stopped him from including a council tax increase to fund social care in the autumn statement. (See 9.08am.)
Chancellor Philip Hammond denies No.10 stopped him announcing more cash for social care in autumn statement: “No"
— Rob Merrick (@Rob_Merrick) December 12, 2016
Philip Hammond denies any feud/split/row with Theresa May over social care "No" truth to the claims
— steve hawkes (@steve_hawkes) December 12, 2016
Andrew Tyrie, the committee chair, praises Hammond for publishing a distributional impact analysis for the autumn statement in a form that shows the cumulative impact of changes. He says George Osborne was reluctant to do this.
Tyrie says the charts show that, if you look at all changes since the general election, people in the poorest three deciles lose more than anyone apart from the richest 10%.
Hammond says that is because the government was elected on a manifesto commitment saying welfare spending should be cut.
Afternoon summary
- Downing Street has said that under-performing councils are partly to blame for the social care crisis. (See 12.56pm.) As an example of the variation in performance, health sources point to figures showing that in Sunderland they lost less than one bed each day because of delayed discharges, but in Reading 18 beds were blocked every day. Goverment sources have also pointed to a Commons briefing paper (pdf) containing this chart.
In the Common the health minister David Mowat has been answering an urgent question on care funding. He told MPs that, although money was an issue, leadership and best practice were important too.
Now @mowat4ws is answering UQ on social care funding. Begins with tribute to 1.4m professional and 6m 'informal' carers
— PARLY (@ParlyApp) December 12, 2016
.@mowat4ws accepts and acknowledges social care system under pressure but points to different approaches by local councils
— PARLY (@ParlyApp) December 12, 2016
- A Guardian/ICM poll suggests the Conservatives have a 14-point lead over Labour. (See 2.13pm.)
Philip Hammond, the chancellor, will be giving evidence to the Commons Treasury committee shortly. I will be covering that in detail.
Conservative former cabinet minister Lord Prior has died, the Press Association reports. He was 89.
Jim Prior served for five years in Margaret Thatcher’s cabinet where he was regarded as one of the leading “wets” who opposed her monetarist economic policies.
Originally appointed employment secretary when she became prime minister in 1979, he was moved to the post of Northern Ireland secretary two years later.
The move was widely regarded as a sign of her frustration at his refusal to press ahead more quickly with her trade union reforms.
Dr Caroline Johnson has just been sworn in in the Commons as the new MP for Sleaford and North Hykeham.
May accuses Labour of 'turning a blind eye to antisemitism'
Theresa May gave a speech to a Conservative Friends of Israel lunch today. Here is the full text and here are the key points.
- May accused Labour of “turning a blind eye to antisemitism” in the party.
Let me be clear: it is unacceptable that there is anti-Semitism in this country.
It is even worse that incidents are reportedly on the rise.
And it is disgusting that these twisted views are being found in British politics.
Of course, I am talking mainly about the Labour Party and their hard-left allies.
In fact, I understand this lunch has a lot to live up to after the extraordinary scenes at the Labour Friends of Israel event.
It began, unusually, with Tom Watson giving a full-throated rendition of Am Yisrael Hai.
The audience joined in as his baritone voice carried across the hall.
“Am Yisrael Hai – the people of Israel live.” It is a sentiment that everybody in this room wholeheartedly agrees with.
But let me say this: no amount of karaoke can make up for turning a blind eye to anti-Semitism.
No matter what Labour say – or sing – they cannot ignore what has been happening in their party.
Labour, of course, does not accept that it turns a blind eye to antisemitism, as it made clear when it published the Shami Chakrabarti report into the issue in the summer.
- She praised Israel as “a thriving democracy, a beacon of tolerance, an engine of enterprise and an example to the rest of the world for overcoming adversity and defying disadvantages.”
- She said the government was strongly opposed anti-Israel boycotts, divestment and sanctions.
I couldn’t be clearer: the boycotts, divestment and sanctions movement is wrong, it is unacceptable, and this party and this government will have no truck with those who subscribe to it.
- She praised Priti Patel, the international development secretary, for reviewing the way UK aid is spent in the occupied territories.
Let me be clear: no British taxpayers’ money will be used to make payments to terrorists or their families.
It is right that Priti Patel has called for an examination of aid spending in the Occupied Palestinian Territories to ensure that every penny is spent in the right places and in the right way.
- She said Britain remained committed to the two-state solution.
- She criticised the building of “new, illegal settlements” in the occupied West Bank.
When talking about global obligations, we must be honest with our friends, like Israel, because that is what true friendship is about.
That is why we have been clear about building new, illegal settlements: it is wrong; it is not conducive to peace; and it must stop.
- She said Britain was proud of the 1917 Balfour declaration which called for the creation of Israel.
On the 2nd of November 1917, the then foreign secretary – a Conservative foreign secretary – Arthur James Balfour wrote: “His Majesty’s government view with favour the establishment in Palestine of a national home for the Jewish people, and will use their best endeavours to facilitate the achievement of this object, it being clearly understood that nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine, or the rights and political status enjoyed by Jews in any other country.”
It is one of the most important letters in history.
It demonstrates Britain’s vital role in creating a homeland for the Jewish people.
And it is an anniversary we will be marking with pride.
Prime Minister @theresa_may: Israel is "a thriving democracy, a beacon of tolerance, an engine of enterprise" pic.twitter.com/tY9bT4kOrE
— CFoI (@CFoI) December 12, 2016
Updated
ICM poll gives Tories 14-pt lead over Labour - and having Balls as Labour lead would make little difference
Yesterday Diane Abbott, the shadow home secretary and close ally of Jeremy Corbyn, predicted that Labour would improve its standing in the opinion polls in 2017. “I’m confident we’re going to close the gap in the coming 12 months,” she said. “We’ve had a pretty difficult 12 months, partly Jeremy’s enemies in the party, partly commentators, but we have the right policies and the right leader.”
In theory doing better shouldn’t be hard - because Labour’s current poll figures are terrible. Here are the latest Guardian/ICM figures which give the Conservatives a 14-point lead. (Admittedly that’s two points down on the ICM figures from two weeks ago.)
Conservatives: 41% (down 3 points from ICM two weeks ago)
Labour: 27% (down 1)
Ukip: 14% (up 2)
Lib Dems: 9% (up 2)
Greens: 3% (down 1)
Conservative lead: 14 points (down 2)
Ukip and the Lib Dems are both up two points over the last fortnight, no doubt reflecting the publicity Ukip has had from the election of a new leader, Paul Nuttall, and the Lib Dems have had from their byelection victory in Richmond Park.
Can anything help Labour? In the light of Ed Balls’ Strictly-inspired transformation into a national treasure, and hints from him that he is thinking of a political comeback, ICM also asked people how they would vote if Balls were leader of the Labour party, not Jeremy Corbyn. He makes a bit of a difference, but not much. Here are the state of the party figures for this scenario.
Conservatives: 41%
Labour: 30% (up 3 from with Corbyn as leader)
Ukip: 12%
Lib Dems: 8%
Greens: 4%
These figures may help to quash suggestions that a new leader alone would help to transform Labour’s fortunes, but Balls can take comfort from the results of another question asked in this ICM survey. ICM mentioned Balls and three other figures no longer active in frontline politics and asked people if their opinion of these figures was more favourable now than it was when they were “central to British politics” or less favourable. Balls is the only one of the four who has improved his image. Sir John Major and Paddy Ashdown have both seen their reputations take a hit, and Tony Blair’s has nosedived. Here are the net figures.
Ed Balls: +3 (20% more favourable now minus 17% less)
Paddy Ashdown: -10 (7% more now minus 17% less)
John Major: -12 (10% more now minus 22% less)
Tony Blair: -40 (6% more now minus 46%) less
This finding, of course, casts doubt on how valuable Blair will be to those he is supporting in the campaign for a soft Brexit.
ICM Unlimited interviewed an online sample of 2,049 adults aged 18+ on 9-11th December 2016. Interviews were conducted across the country and the results have been weighted to the profile of all GBadults. ICM is a member of the BPC and abides by its rules.
UPDATE: Here is the table with the figures (pdf).
Updated
There are three urgent questions in the Commons today.
3 UQs today - Care funding from @KeeleyMP 21st Century Fox bid for Sky from @KevinBrennanMP and UK policy in Yemen from Keith Vaz
— Labour Whips (@labourwhips) December 12, 2016
No 10 lobby briefing - Summary
Here is a full summary of the Number 10 lobby briefing.
- Downing Street suggested that under-performing councils were partly to blame for the social care crisis. Responding to questions about the Times’ splash (see 9.08am), the prime minister’s spokeswoman refused to comment on the claim that the government will raise the social care precept to allow councils to raise more money to fund care. She said an announcement about local government funding would be made shortly. But she also insisted that money was not the only issue, and that in some areas poor local authority management was contributing to social care problems. She told journalists:
More broadly, we know what money alone is not the solution ... It is not all about money. There are other issues to be addressed alongside that ... We do think there’s a significant variety in how councils manage social care services ... We think it’s to do with management.
The spokeswoman said that the worst 10% of councils had a “transfer of care” rate (ie, the time taken to discharge a patient needing care from hospital) that was 20 times worse than the best 10% of councils. And she said that just 20 local authorities account for half of all delayed discharges in England. (Delayed discharges occur when care is not available for patients who are ready to leave hospital.)
The spokeswoman also said that there were now 1m more people over the age of 65 than there were in 2010, and that this was putting pressure on the social care system. But the government had a “strong track record” of giving the health and social care system the money it needed, she said. She said that the social care precept would raise an extra £2bn a year by the end of this parliament, and that the government was also spending money on this through the better care fund and disabled facilities grants.
- May is happy about the fact that she is being excluded from a dinner of EU leaders on Thursday. The EU summit in Brussels will start in the morning, instead of in the afternoon as usual, and after it is over the leaders of the other 27 EU states will have a dinner without May. Asked if May minded not being invited to this, the spokeswoman said:
Our view on this is that the the UK is leaving the European Union. We have been taking the time to prepare for the negotiations because we want a smooth and orderly departure. Those remaining in the EU also need to have discussions about how they are going to handle the departure process. That is reasonable. We would expect that.
- Number 10 played down, but did not deny, a report saying the Home Office is considering cutting the number of international students coming to the UK by almost half. Asked about the Guardian’s story, the spokeswoman said: “I do not recognise it [the claim] at all.” The government wanted to continue to be able to attract “the brightest and the best” students to the UK after Brexit, she said.
- Downing Street criticised Aslef for the strike affecting Southern rail. The strike was unnecessary, the spokeswoman said:
The prime minister is extremely concerned about how this is affecting commuters. It is an unnecessary strike that will cause major disruption. No jobs are being lost and no pay is being cut and yet millions of commuters are being affected. The transport secretary [Chris Grayling] has offered to talk to the unions to try to understand what it will take to reach a resolution. This offer has not yet been taken up.
Grayling has offered to hold talks with Aslef, but only if they call off their strike first.
- Number 10 refused to back the call for legislation to reform the Football Association. Asked about this, the spokeswoman implied legislation was unnecessary. She said:
Government has already done work with a number of sports bodies on governance. That’s why a new code for sports governance has been agreed that comes into effect next April. It’s for the FA to decide how they respond to that. They themselves have been clear that there are improvements to make to governance and they are committed to doing that.
- The spokeswoman refused to comment on the news that Rupert Murdoch’s 21st Century Fox is making a bid for Sky, saying that this was “not something that it would be appropriate for the government to comment on”. That is because the culture secretary will have to decide in a quasi-judicial capacity whether to refer the bid to Ofcom.
- The spokesman refused to deny that Nicky Morgan had been excluded from a meeting with May because she criticised May for spending £995 on a pair of trousers. (See 10.49am.) Asked about this story, the spokeswoman just said she was not going to go into details of this meeting. The spokeswoman also refused to say whether May had used the Amanda Wakeley discount card that she declares in the register of members’ interests to purchase the trousers. In response to a question on this, the spokeswoman said she expected journalists to be asking about matters of national importance. But the BBC’s Nick Robinson says he thinks No 10 should be glad that the PM’s trousers are still making the news.
What could be making news - May v Boris rift, social care crisis & Brexit confusion.
— Nick Robinson (@bbcnickrobinson) December 12, 2016
What is - leather trousers
FI Hill deserves a pay rise
No 10 says under-performing councils partly responsible for care crisis
I’m just back from the Number 10 lobby briefing. Here are two of the key lines.
- Downing Street suggested that under-performing councils were partly to blame for the social care crisis.
- May is happy about the fact that she is being excluded from a dinner of EU leaders on Thursday.
UPDATE: I’ve cut this post because there is a full summary now here, at 12.56pm.
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Amber Rudd, the home secretary, has announced that she is banning National Action, a neo-Nazi group, under the Terrorism Act 2000. It is the first rightwing group to be banned as a terrorist organisation, the Press Association reports.
Rudd said in a statement:
As home secretary, I am clear that the safety and security of our families, communities and country comes first.
So today I am taking action to proscribe the neo-Nazi group National Action.
This will mean that being a member of, or inviting support for, this organisation will be a criminal offence.
National Action is a racist, anti-Semitic and homophobic organisation which stirs up hatred, glorifies violence and promotes a vile ideology, and I will not stand for it.
It has absolutely no place in a Britain that works for everyone.
I’m off to the Number 10 lobby briefing now. I will post again after 11.30am.
At the end of last week the Guardian revealed Nicky Morgan, the former education secretary, had been disinvited from a meeting with Theresa May after criticising May for wearing £995 trousers.Yesterday we learnt that Morgan’s comments triggered an angry response from Fiona Hill, May’s co-chief of staff.
Today the Daily Mail, which is probably the most pro-May of all the rightwing papers at the moment, has leapt to May’s defence with a two-page hatchet job on Morgan. It starts:
Nicky Morgan was under attack last night for criticising Theresa May over her expensive taste in trousers – despite having a £950 handbag herself.
The MP – nicknamed Ms U-turn for her frequent changes of policy when she was Education Secretary – has been pictured on numerous occasions carrying the luxury oxblood brown leather Bayswater bag from upmarket brand Mulberry.
The King’s Fund, the health thinktank, has published a blog arguing that giving councils the power to raise more money for social care by raising the care precept is “deeply flawed” as a solution to the care funding crisis. Here’s an excerpt.
Our analysis of how the precept has been used by councils this year (2016/17) shows that it is deeply flawed as a way of securing sustainable funding for adult social care. It was used by 95 per cent of councils, but raised just £382 million – less than 3 per cent of what councils plan to spend on adult social care. It will not even cover the £612 million estimated cost of the National Living Wage this year, let alone demographic and other cost pressures. There is some evidence of public willingness to pay more for good care, but £23 added to the average annual band D Council Tax bill will not sort the social care funding crisis. Increasing the precept from 2 to 3 per cent would barely make a dent in this, and many councils will be mindful of the impact of council tax rises on working families with low incomes.
A second, deeper problem is how extra money raised by the precept is distributed, as the places with the greatest need for extra funding will raise the least through the precept. A reasonable proxy measure of social care need is the extent of income deprivation among older people. On this measure, the 10 least deprived council areas this year will raise almost two-and-a-half times as much from the precept as the 10 most deprived. The amount raised per head of the adult population varies from £5 in Newham and Manchester, to £15 in Richmond on Thames (£10 in the Prime Minister’s Maidenhead constituency). If anything, more deprived areas have suffered bigger cuts in spending, so the precept will widen existing inequalities. The government says it tends to equalise these differences through the new ‘improved’ Better Care Fund, but it is not clear how this will work in practice. If social care is part of the Prime Minister’s promise of a more equal country that works for everyone, then the precept is a poor policy instrument to achieve it.
Stephen Dorrell, who was health secretary in John Major’s Conservative government in the 1990s and chair of the Commons health committee in the last parliament, was also on the Today programme talking about social care. Here are the key points he made.
- Dorrell called for a fundamental review of the funding of health and social care.
What we are talking about this morning is a cash shortage that is threatening the stability not just of local government but of the national health service. And unless we address this seriously we will simply see a developing failure of service across the range of local public services and people will suffer as a consequence of that failure ... People find they cannot have access to care homes so they end up in emergency departments, in A&E departments, in GP surgeries.
When it was put to him that the Tory attack on the supposed “death tax” killed Labour plans for a new tax to fund social care before the 2010 election, Dorrell said this was why a cross-party approach was necessary.
- He said that, although he favoured giving councils more flexibility in relation to the precept, a “more fundamental” reform was needed to raise the money needed.
Here is more from the Today programme’s interview with Izzi Seccombe, the Conservative leader of Warwickshire county council and chair of the Local Government Association’s community and wellbeing board.
- Seccombe said local authorities needed £1.3bn now to help them pay for social care.
We need £1.3bn now because there is a shortfall by the end of 2020 of £2.6bn.
- She said that, although the government has already let councils increase council tax by 2% to raise money for social care, this was not enough. She said most councils were using the new power and that this was raising £380m. But having to pay the new “national living wages” had put care costs for councils up by £600m, she said.
- She said using increases in the council tax precept to fund social care meant creating “a postcode lottery” because rich areas could raise more.
And the problem then is that you are trying to integrate health with social care, and yet your health system is based on national taxation.
The government has not actually denied the Times story. (See 9.08am.) “We’re not commenting on speculation,” a Number 10 source said. And, in response to a question about whether Sajid Javid, the communities secretary, would be announcing plans to let councils increase the social care precept, the communities department referred me to a statement the department of health issued overnight in response to the Times story. It just says:
We are giving local areas access to up to £3.5bn extra for social care by 2020. While many areas are already providing high quality services within existing budgets, the Better Care Fund, which brings together health and social care provision locally for the first time ever, will get additional funding in the next few months to raise standards further. This government is committed to ensuring those in old age throughout the country can get affordable and dignified care.
Yesterday the Observer published a big investigation highlighting the crisis in social care.
Here is the Observer splash.
And here is an excerpt.
The Observer’s investigation reveals that the landmark government scheme designed to relieve the strain on overcrowded hospitals – the Better Care Fund – is failing to deliver its aims of keeping older people healthy at home and so cutting “bedblocking”, despite £4bn a year being poured into it.
Theresa May and the health secretary, Jeremy Hunt, have repeatedly claimed that the fund, and a separate policy of allowing councils to raise more money for social care by increasing council tax, are jointly addressing the spiralling problems in social care.
Responses to freedom of information requests submitted to 151 local councils reveal that in England 58% of targets for improving care in people’s homes and local communities were missed.
And here is the inside write-through.
And here is an excerpt.
The government points to the introduction of the social care precept, a new measure allowing councils to charge an extra 2% on top of their council tax rates to pay for care services from this year. But new analysis by the King’s Fund exclusively for the Observer shows the precept will raise just 3% of what councils are already spending on social care this year. The 10 most affluent areas will raise more than twice as much as the 10 most deprived areas, further widening inequalities in older people’s access to care. Another source of extra funding, the Better Care Fund, will not kick in substantially for another few years.
The Times has a strong splash this morning (paywall). It says the government will this week announce plans to let councils put up council tax to fund social care. Its story starts:
Theresa May will back steep rises to council tax bills this week in an attempt to plug a gaping hole in social care funding.
Warnings of an “absolute crisis” in the industry have prompted the prime minister to drop her opposition to the increases, as the government strives to prove that it is facing up to the ballooning costs of caring for Britain’s ageing population.
The move comes after Mrs May prevented Philip Hammond, the chancellor, from addressing social care in his autumn statement last month. Mr Hammond had wanted to announce bigger rises in local authority precepts, but was ordered to delay because of fears that the change would add to the burden on low-income families — deemed “just about managing” — at a politically sensitive time.
TIMES: Social care forces Mayvto raise council tax #tomorrowspaperstoday #bbcpapers pic.twitter.com/zpsbKHaKH2
— Neil Henderson (@hendopolis) December 11, 2016
The government has not confirmed this yet, but on the Today programme this morning Izzi Seccombe, the Conservative leader of Warwickshire county council and chair of the Local Government Association’s community and wellbeing board, confirmed that ministers had been speaking to local authorities about this proposal. She said:
We’ve had some dialogue with ministers about this and the concern for us is the ability for this to actually fill the gap that we have for long now said that there is in social care.
As the Guardian reports, the government has been warned that this approach could exacerbate the “postcode lottery” in care, because letting councils raise the money through council tax would benefit rich areas much more than poor areas.
I will post more on this as the day goes on. And this afternoon Philip Hammond will doubtless be asked about this when he gives evidence to the Commons Treasury committee about the autumn statement. I will be covering that hearing in detail.
Here is the agenda for the day.
11am: Number 10 lobby briefing.
4.15pm: Philip Hammond, the chancellor, gives evidence to the Commons Treasury committee.
As usual, I will also be covering the breaking political news as it happens, as well as bringing you the best reaction, comment and analysis from the web. I plan to post a summary at lunchtime and another in the afternoon.
If you want to follow me or contact me on Twitter, I’m on@AndrewSparrow.
I try to monitor the comments BTL but normally I find it impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer direct questions, although sometimes I miss them or don’t have time. Alternatively you could post a question to me on Twitter.
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