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Mr Russell Brown (Dumfries and Galloway) (Lab)
1. What recent discussions he has had with the Scottish Executive on future electricity generation in Scotland.
The Secretary of State for Scotland (Michael Moore)
The first person I spoke to after my appointment was the First Minister. I have since had further discussions with him and Scottish Ministers, including on the subject of the fossil fuel levy and transmission charging. I remain committed to having constructive discussions with Scottish Ministers.
Mr Brown
I welcome the Secretary of State and the Under-Secretary to their new posts. For the Under-Secretary it will be déjà vu, recalling his initial days as a Social Democratic party councillor sitting with the Liberals. On future nuclear electricity generation, can the Secretary of State explain to the House how his position and that of the Energy Secretary squares with the stance taken by the Under-Secretary?
Michael Moore
I thank the hon. Gentleman for his warm welcome. I am sure that as a fellow south of Scotland MP, he is delighted to see the region so well represented in the Scotland Office.
On energy policy and particularly electricity supply, my right hon. Friend the Secretary of State for Energy and Climate Change and the Government have set out clearly in the coalition programme our commitment to ensuring that under our policy we tackle the twin issues of climate change and a secure, clean and affordable supply of energy. We have set out how we intend to go about that in respect of all forms of energy, and I am sure the hon. Gentleman will support us in developing that programme to ensure a successful and productive future for Britain’s energy and Scotland’s energy within it.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
In those discussions with the First Minister, did my right hon. Friend take on board the great potential that Scotland has for marine renewable electricity generation? In that context, will he make a commitment to an early visit to the north-east of Scotland to see the sub-sea engineering skills that have been developed in the oil and gas industry, which have so much to offer that marine renewable industry?
Michael Moore
I thank my hon. Friend for that question. Yes, indeed we discussed marine and other renewables—briefly, it must be said. There are many areas in which, under the new arrangement whereby we will engage constructively with one another under the respect agenda, we can work productively together. I have already had discussions with representatives of the oil and gas industry, who made the very point to me that my hon. Friend makes about the skills and how those may apply to marine renewables. I would be delighted to come to the north-east of Scotland to further my understanding of those issues and discuss them with him and others in due course.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Is the Secretary of State aware that Peterhead power station pays £29 million every year in transmission charges, whereas a similar facility in London would attract subsidy of about £3 million per annum, and that as a consequence Scottish and Southern Energy is planning up to 50 job losses at the Peterhead plant? Does he accept that the transmission charges regime is discriminatory and is discouraging investment in renewable energy in the very parts of Scotland best equipped to produce it? When he comes to the north-east of Scotland, as he has just pledged to do, will he agree to meet me and representatives of the management and work force at Peterhead power station to discuss the transmission charges regime and the future of the Peterhead plant?
Michael Moore
As the hon. Lady knows, the transmission charging regime is primarily a matter for the National Grid. It is an issue that others have raised with me and Ofgem. I shall be keen to talk further about it with her and others from the Scottish Government. There have been representations from all sides of the House already—it has been a busy few days—and I look forward to taking forward those discussions in the most appropriate form in the future.
Jo Swinson (East Dunbartonshire) (LD)
I welcome my right hon. Friend to his position. I am pleased to hear what he said about marine renewables, for which Scotland clearly has a massive potential, yet six years after it was set up, the marine renewables development fund still has £42 million lying unclaimed and unused because of the criteria attached to it. Will my right hon. Friend look into the matter and ensure that under this Government the support announced for green energy becomes reality?
Michael Moore
I thank my hon. Friend for her kind welcome. I take on board her observations about the criteria that have been used, and I look forward to having further discussions with her and my right hon. Friend the Secretary of State for Energy and Climate Change.
Mr David Hamilton (Midlothian) (Lab)
2. What assessment he has made of the likely effect on economic growth in Scotland of the programme of expenditure reduction announced on 24 May 2010.
The Parliamentary Under-Secretary of State for Scotland (David Mundell)
Dealing with the deficit and continuing to ensure the economic recovery is the most urgent issue we face. We must tackle the deficit to restore confidence in our economy and support the recovery.
Mr Hamilton
Next week the Under-Secretary and his Liberal colleagues will be making massive cuts throughout the United Kingdom. When he has his first meeting with the First Minister of Scotland, could he explain why, when the Scottish Government have got a substantial increase in the amount of money they are receiving this year, they are overseeing thousands of cuts throughout Scotland? Will he do what I think he will do, which is to roll over whenever the First Minister wants him to?
David Mundell
I thank the hon. Gentleman for his, as usual, spirited question. I am sure he will be in agreement with the Scottish Parliament Finance Committee, which called on the Scottish Government to show far greater leadership by discussing in more open and realistic terms the impact that the cuts will have and the options that are available to deal with those cuts.
Mr Alan Reid (Argyll and Bute) (LD)
I warmly welcome the Minister to his new post.
It is really important for economic growth in remote and rural areas to ensure that businesses, particularly small businesses, in such areas have access to broadband. What will the Government be doing to ensure that broadband is rolled out to the whole country, including remote and rural parts of Scotland?
David Mundell
I thank the hon. Gentleman for his warm welcome. He will already know that the Secretary of State for Culture, Olympics, Media and Sport has set out his clear objective of turning Britain into a digital economy. The hon. Gentleman specified with clarity the needs of rural areas, for which the Secretary of State and I will continue to fight within Government.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
I congratulate the new Ministers on taking office. However, I draw to the House’s attention the fact that they are huddled together in one section of the country; I hope that they will, at times, travel out to look at other parts of the country, including my own constituency.
What actions have been taken so far to ensure that any expenditure reduction does not result in a cut or a delay in the aircraft carriers upon which so much of the economy of the west of Scotland, and Scotland as a whole, depends?
David Mundell
I congratulate the hon. Gentleman on his elevation to the chairmanship of the Scottish Affairs Committee, on which I was pleased to serve with him. I am sure that he will bring his own distinct style to the Committee’s proceedings.
As the hon. Gentleman will know, this Government’s position on the aircraft carriers is, despite attempts to suggest otherwise, no different from that of the previous Government. There is to be a strategic defence review. The nuclear deterrent is excluded from that review, and it would be wrong to prejudge the review in any other way, other than to say that sea-borne defence is obviously very important to this country.
Richard Ottaway (Croydon South) (Con)
3. What recent discussions he has had with the First Minister on implementation of the recommendations of the final report of the Commission on Scottish Devolution.
Miss Anne Begg (Aberdeen South) (Lab)
5. When he expects to bring forward proposals to implement the recommendations of the final report of the Commission on Scottish Devolution.
The Secretary of State for Scotland (Michael Moore)
I have had a positive dialogue with the First Minister on a number of subjects, including the Government’s commitment to implementing the recommendations of the Commission on Scottish Devolution. On the question of timing, I have asked officials to work for the autumn introduction of a Bill to take forward legislative proposals, with non-legislative recommendations taken forward on a similar timetable.
Richard Ottaway
Is my right hon. Friend aware of the growing concern at the disparity in public services between England and Scotland? If he wants to retain support for the Union in England, he will have to address this sooner rather than later. Will he set out a timetable to deal with these financial disparities now?
Michael Moore
May I congratulate the hon. Gentleman on his new position as Chair of the Foreign Affairs Committee? I am sure that that will be a very interesting and challenging role for him to fulfil, and I wish him all the best with it.
The Commission on Scottish Devolution was set up with the remit of ensuring that it reviewed how devolution was working for Scotland, and particularly whether it was serving the interests of the people of Scotland. It was designed to increase the financial accountability of the Scottish Parliament, and thereby the Scottish Government, and also to secure the Union. On two of those three counts, I am sure that the hon. Gentleman would agree that it is a very well-focused commission. I look forward, later this year, to introducing the proposals that I have set out; we are determined to get on with that as quickly as possible.
Michael Moore
I congratulate the hon. Lady on her new position as Chair of the Select Committee on Work and Pensions and wish her all the best. Clearly, that will be an important part of Government policy and the Committee will be an important place for debate.
The Calman proposals envisage that at some point in future, a Secretary of State for Scotland will no longer be required. The hon. Lady knows that that was a part of Liberal Democrat policy for a long time, but right here and now the position is important, particularly in delivering that legislation and in focusing on the economy, so it holds.
Iain Stewart (Milton Keynes South) (Con)
Does the Secretary of State agree that the fiscal relationship between Scotland and the United Kingdom as a whole is more complex than just the Barnett formula or crude overall spending-per-head figures, and that great care should be taken in any review to consider all aspects of the fiscal relationships between all parts of the UK?
Michael Moore
I agree with my hon. Friend, and that is perhaps a broader discussion we can have with some of our colleagues over the next little while. The Commission on Scottish Devolution looked exhaustively at fiscal relationships and the need to ensure not only greater financial accountability but the ongoing equity and stability of finances. All those strands together mean that we have a good package which, under the proposals in the Bill, will improve Scotland’s accountability and the devolution settlement.
Mr Jim Murphy (East Renfrewshire) (Lab)
I welcome the Secretary of State to his first Scotland Office questions. Of course, it is a very big day for him: it is his 16th day in office, which is exactly the length of time his predecessor survived in the job. I hope the rest of today goes well for him and that he is still here tomorrow. I have always got on very well with him. In fact, I was delighted, just before the election, to meet a delegation that he led, pleading for the extension of the future jobs fund in his constituency.
On the Calman commission, the right hon. Gentleman has previously argued for the abolition of the Scotland Office. When did he change his mind?
Michael Moore
I thank the right hon. Gentleman for his typically generous welcome. I am happy to confirm that we were able to work very productively across party lines in the last Parliament, but may I just correct him on a matter of fact? When I went to see him with that delegation, the focus was on bank lending, on which the previous Government, frankly, did not have a good record. If he wishes me to remind him of the specific issues that were raised by those four companies, I would be happy to do so, but I shall not detain the House on that now.
On the position of Secretary of State for Scotland, I am not changing Liberal Democrat policy one bit—it is eventually to see the position abolished. However, in the course of getting the coalition agreement together, and recognising the exciting opportunity to get this settlement through and deliver improvements to Scottish devolution, I was very happy to support the continuation of the office, not least because the economic legacy of the previous Government, of whom he was a member, is something that we seriously need to tackle.
Mr Murphy
I again welcome the right hon. Gentleman to his position. It is clear that he is one of a minority in the Cabinet and may from time to time find it difficult to have his voice heard—he is, of course, one of the few non-millionaires sitting around the Cabinet table.
Turning to the success of the Calman commission, should there not be an independent commission to look into the abolition of the future jobs fund? Will the right hon. Gentleman support an independent commission, perhaps to be chaired by Sir Ken Calman, on the impact of the shameful decision of a gang of millionaires to turn their backs on the unemployed of Scotland?
Michael Moore
Mr Speaker, you will not be surprised that I reject the right hon. Gentleman’s analysis of the situation. Like him, I care very deeply about unemployment, not least among young people, in Scotland and anywhere else in the United Kingdom. The reality, however, is that the future jobs fund was set up on an unsustainable basis. We need to ensure that we get a sustainable basis for the future of youth unemployment support. Those proposals will come forward in very close order. In the meantime, before he sets up too many scare stories, let us remember that existing bids will be honoured under the future jobs fund.
Mr Speaker
Order. We really do need a bit of order in the House. There are far too many private conversations taking place. It is a very unattractive spectacle so far as those outside the Chamber are concerned.
Thomas Docherty (Dunfermline and West Fife) (Lab)
4. If he will discuss with the Scottish Executive the merits of a review of firearms legislation applicable to Scotland.
The Parliamentary Under-Secretary of State for Scotland (David Mundell)
All Members of this House share the sense of shock and disbelief at the tragic events that unfolded in Cumbria on 2 June. The hon. Gentleman must have felt this more than most given his close personal associations with Whitehaven, and I personally offer my condolences to him and to the families that have been so cruelly affected.
In Prime Minister’s questions on 3 June, the Prime Minister confirmed that the Association of Chief Police Officers would be supporting a peer review, to be conducted by national police experts, on firearms licensing, the police firearms response and firearms tactics. Firearms legislation is a reserved matter. As the Home Secretary told the House in her statement on 3 June, we will await the police report before we embark on and lead a debate about the gun laws across Great Britain.
Mr Speaker
Order. We must now speed up. Some of these answers are simply too long and it will not do.
Thomas Docherty
I thank the Minister for his kind words and welcome him to his new post. The House may wish to note the support given by Scottish police forces to the Cumbria constabulary in the immediate aftermath of the incident. Will he agree to meet a cross-party delegation from Scotland once ACPO and its counterparts in England and Wales have made their submission to the Home Office, so that we can convey the very strong feelings of the people of Scotland about firearms legislation?
David Mundell
We are all proud of the efforts of officers from the Dumfries and Galloway police force and others in Scotland after the events in Cumbria. I will meet the hon. Gentleman’s delegation.
Sir Menzies Campbell (North East Fife) (LD)
Perhaps I should declare an interest as the holder of a shotgun licence, for sporting purposes only.
If any question were to arise of separate legislation for Scotland, would the Minister undertake to consider the difference between the sufficiency of existing legislation and the extent to which it is properly enforced? Further, in view of the geographical position of his constituency and that of his colleagues, will he take account of the considerable cross-border traffic in sporting activities involving firearms?
David Mundell
I shall most certainly take into account the issues that the right hon. and learned Gentleman has raised. He will, however, be aware that the Calman commission has recommended that the regulation of air guns be transferred to the responsibility of the Scottish Parliament, and the Government are committed to doing that in the Bill that we will bring forward in the autumn.
Mary Macleod (Brentford and Isleworth) (Con)
6. What steps he plans to take to ensure a stable economic environment for businesses in Scotland.
John Howell (Henley) (Con)
7. What steps he plans to take to ensure a stable economic environment for businesses in Scotland.
The Secretary of State for Scotland (Michael Moore)
Tackling the budget deficit and creating a fairer and more balanced economy will ensure a stable economic environment for businesses in Scotland.
Mary Macleod
Under the last Government, the Scotland Office’s attempts to help to maintain a strong economic environment in Scotland had something of a credibility problem. What is my right hon. Friend doing to dispel the myth promoted by his predecessors that the level of Government borrowing is somehow unconnected to the level of interest rates and taxation?
Michael Moore
The hon. Lady makes an important point. We must not lose sight of the fact that the deficit left behind by the previous Government was £155,000 million. We have to establish our credibility not just with the people of Britain, but with the international financial markets. If we do not, we will see higher interest charges that will bear down on the level of public services that we can afford and affect the pockets of everyone in Scotland, both businesses and individuals. We have to tackle that urgently, and I am determined that we will do so.
John Howell
I am sure the Secretary of State would agree that the crisis in the financial sector was especially detrimental to the economic stability of Scotland. Will he now confirm that the Scotland Office will no longer issue press releases saying that it is taking advice from Sir Fred Goodwin, and will take advice from a more representative group of Scottish financiers?
Michael Moore
The hon. Gentleman is correct to highlight the important place that financial institutions play in the Scottish and United Kingdom economy. I assure him that I will be taking as broad a range of advice on these subjects as necessary. Indeed, I am already making early contact with some of the largest financial institutions in the country, including RBS and HBOS.
Stewart Hosie (Dundee East) (SNP)
I welcome the Secretary of State to his new job. On a stable economic environment, one of the key issues is business cost stability, and the area that businesses find most difficult is that of fuel and haulage costs. Can he confirm, therefore, that it remains the policy of at least the Conservative side of the coalition to introduce a fair fuel stabiliser or fuel duty regulator to smooth out the spikes in the cost of fuel and bring some cost stability to haulage for businesses throughout Scotland?
Michael Moore
I thank the hon. Gentleman for his opening remarks. He will understand, I am sure, that I am not in a position to pre-empt, and have no intention of pre-empting, the Chancellor’s statement introducing the Budget next week. The hon. Gentleman’s representations, and those of others, are among the many being received by the Treasury and the Scotland Office, and I am sure that he will pay attention when the Budget is announced next week.
Ann McKechin (Glasgow North) (Lab)
I welcome both right hon. Gentlemen to their new positions in the Scotland Office. Given the unique position of the Scottish media and the Government’s disastrous cancellation of the tendering process for provision of local news on Scottish television, despite the winners having already been announced, what discussions has the Secretary of State had with the Secretary of State for Culture, Olympics, Media and Sport about the threat now posed to news on STV?
Michael Moore
I thank the hon. Lady for her initial comments. An independently financed news consortium was another idea that on closer scrutiny did not have the financial backing to make it sustainable, either through the pilot stage or in a more general process. I have spoken to members of the consortium, and my right hon. Friend the Under-Secretary has spoken to representatives from STV. We will work with them and others in Scotland to ensure that we get the right local news across the country.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
8. What recent discussions he has had with ministerial colleagues on the support available for manufacturing in Scotland.
The Parliamentary Under-Secretary of State for Scotland (David Mundell)
My right hon. Friend the Secretary of State has made it a priority to speak to a number of key individuals in the business sector in Scotland to get an update on the main issues affecting them.
Jim Sheridan
The Minister will be aware of the Dyson report commissioned by the Conservative party in March. It contained many important ideas, such as building esteem for science, engineering, and research and development, and investing in high-tech start-ups. It also highlighted the importance of projects such as those for nuclear and offshore wind power, and, from a Scottish perspective, high-speed rail. Will the coalition Government be implementing any of those proposals, and if so, when?
David Mundell
The hon. Gentleman was a strong supporter of Lord Myners and will know therefore that the latter said:
“The Government cannot create jobs. The Government can create an environment that is conducive to the creation of jobs”.—[Official Report, House of Lords, 8 June 2010; Vol. 719, c. 625.]
That is the priority of this coalition Government.
Mr Adam Holloway (Gravesham) (Con)
9. What recent discussions he has had with ministerial colleagues on Scotland’s future energy needs.
The Secretary of State for Scotland (Michael Moore)
My colleagues and I are fully committed to ensuring that Scotland is able to continue to play an important role in meeting the UK’s aspirations for climate change and security of supply.
Mr Holloway
Can my right hon. Friend give us an assurance that Scotland’s energy capacity will remain at the forefront of global renewable advances?
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
My constituency has three of the five biggest users of energy. Does the Secretary of State agree that the only solution is nuclear power?
Michael Moore
As I said earlier, the Government have set out a clear policy on their energy strategy, and arrangements are in place to ensure that we have diverse sources of supply and security for the future.
Andrew Rosindell (Romford) (Con)
10. What recent discussions he has had with ministerial colleagues on measures to reduce the level of economic inactivity in Scotland.
The Parliamentary Under-Secretary of State for Scotland (David Mundell)
The Government have already announced their plans for a radical reform of the welfare-to-work system and the implementation of the programme, which among other things will tackle the issue of economic inactivity.
Andrew Rosindell
The Minister will have noted the comments of Lord Myners, who said that it was wrong for the previous Government to create jobs themselves, rather than creating the conditions for business to create those jobs. Will he encourage the Scottish trade unions to take the same attitude?
David Mundell
I am sure that trade unions in Scotland will share the Chancellor’s view that we are all in this together.
Jim McGovern (Dundee West) (Lab)
May I, too, welcome the Secretary of State to his new post? I am sure he is aware that his predecessor in the previous Government visited my constituency on a number of occasions to see at first hand the importance of the computer games industry in Dundee. The former Chancellor gave a commitment in his Budget to tax breaks for that industry. Can the Minister guarantee that the Government of whom he is now a member will honour that commitment?
Mr Speaker
Order. If the Minister could hear that, he has very good hearing. May I make an appeal to the House? I know that it is in a state of eager anticipation of Prime Minister’s questions, but it is very unfair to the Member on his or her feet, and to the Minister. Let us have a bit of order. That is what the public expect.
David Mundell
Like the Secretary of State, I do not want to pre-empt next week’s Budget, but I am sure that the Chancellor will have heard the hon. Gentleman’s representations.
Philip Davies (Shipley) (Con)
Q1. If he will list his official engagements for Wednesday 16 June.
The Prime Minister (Mr David Cameron)
I am sure that the whole House will wish to join me in paying tribute to the Royal Marine of 40 Commando who died at the Queen Elizabeth hospital in Birmingham on Monday from wounds sustained in Afghanistan, and to the two soldiers from the 1st Battalion the Duke of Lancaster’s Regiment who died yesterday. We should send our sincere condolences to their families and their friends. We should also pay tribute to the exceptional work of our armed forces serving in Afghanistan and, perhaps today in particular, to the highly skilled doctors and nurses who work alongside them, as well as to those who treat the injured personnel back in the UK.
This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.
Philip Davies
Does my right hon. Friend accept that the millions of people who voted Conservative at the last election in order to make him Prime Minister did not do so in order to see a reduction in the number of people sent to prison or to see those criminals given softer sentences? If he really wants to reduce the budget of the Prison Service, may I suggest that he starts by taking Sky TV away from the 4,000 prisoners who enjoy that luxury in their cells?
The Prime Minister
May I thank my hon. Friend for that helpful suggestion? He knows that I share his views about the need for a tough response to crime. The challenge is going to be delivering that tough response at a time when the last Government left us absolutely no money. What I would say to him is that we have to address the failures in the system: the fact that half of all prisoners are on drugs; the fact that more than one in 10 are foreign nationals who should not be here in the first place; and the fact that 40% commit another crime within one year of leaving prison. That is the record of failure that we have inherited, and it is the record of failure that we have to reform.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
I join the Prime Minister in paying tribute to the Royal Marine of 40 Commando who died on Monday and to the two soldiers from the 1st Battalion the Duke of Lancaster’s Regiment who died yesterday. We honour their sacrifice, and we remember all our servicemen and women who are fighting so bravely for our country.
Although this morning saw the unemployment claimant count fall, unemployment is still too high. Behind the figures are real people and real concerns. Can the Prime Minister promise that none of the policies that he will put in his Budget next week will put more people out of work?
The Prime Minister
First, I agree with the right hon. and learned Lady that any rise in unemployment is a tragedy, not least for those people desperately looking for work who want to put food on the table for their families. The figures this morning give a mixed picture. On the one hand, the claimant count is down; on the other hand, the International Labour Organisation measure of unemployment is up by 23,000. What I can say to her is that we will bring in our Work programme as soon as we can, which will be the biggest, boldest scheme for getting people back to work, and everything that will be—[Interruption.] Hon. Members should remember why we have had record unemployment in this country: because of the record of failure that we inherited. What I can tell the right hon. and learned Lady is that everything that we do in the forthcoming Budget will be about giving this country a strong economy with sustainable public finances and clearing up the mess left by the person sitting next to her, the right hon. Member for Edinburgh South West (Mr Darling).
Ms Harman
In fact, ILO unemployment is down on last month, and the Prime Minister should welcome that. He has criticised our plans, but the Office for Budget Responsibility says this week that, under Labour’s plans, unemployment is set to fall. Will he promise that he will not do anything in his Budget next week that will cause unemployment to rise? We are talking about his policies in his Budget.
The Prime Minister
First, the right hon. and learned Lady is just wrong about the figures. The ILO figures are up, and the claimant count is down—
The Prime Minister
Yes, they are; if she looks at the figures, she will discover that. She asked about the Budget. I have to say that I am still waiting for the Budget submission from the Labour party—[Interruption.] Let me tell hon. Members why. Before the last election, Labour set out £50 billion of spending reductions, including £18 billion of reductions in capital spending, but it did not set out where one penny piece of that money was coming from. So, while Labour Members are looking forward to the Budget next week and asking what we are going to do, perhaps they could have the decency to tell us what they would have done.
Ms Harman
The Prime Minister did not listen to what I said about ILO unemployment, which is that it is down on last month, and he did not answer the question either. He has already cut the future jobs fund, and he will not guarantee to drop policies that would push unemployment up. He talks about the deficit, but how does putting more people on the dole help to get the deficit down?
The Prime Minister
Perhaps the right hon. and learned Lady should consider this statement about the importance of sorting out the budget deficit—[Interruption.] Hon. Members ought to listen to this:
“Public finances must be sustainable…If they are not, the poor, the elderly, and those on fixed incomes who depend on public services will suffer most.”—[Official Report, 2 July 1997; Vol. 315, c. 303.]
Who said that? It was the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), when he used to talk some sense, in the old days.
Ms Harman
As the Prime Minister is talking about new politics and transparency, will he confirm that the Office for Budget Responsibility has forecast that, under the plans that we put in place, unemployment and borrowing will be lower than we forecast in our Budget, not only this year but next year and the year after? Will he confirm that, and will he welcome it?
The Prime Minister
First, should the right hon. and learned Lady not welcome the fact that these things are now independently determined, rather than fiddled in the Treasury? What the Office for Budget Responsibility shows is that the structural deficit is going to be £12 billion higher, and that the growth forecast that the Chancellor of the Exchequer produced at the time of the Budget was a complete fiction.
Ms Harman
I can answer the Prime Minister’s question, although, to be fair, he is supposed to be answering mine. Yes, I do support the OBR, but he will not say whether he welcomes the forecast that I set out earlier. It is clear what he is doing: he is talking down the economy and the public finances in order to soften up the public for the cuts that he wants to make. Does he not realise that, in doing that, he is also undermining business confidence? How can that be right?
The Prime Minister
What the right hon. and learned Lady and other Labour Members need to remember is this: never mind talking the economy down, they did the economy down. They left this country with a £155 billion deficit—the biggest deficit in our peacetime history. They are the ones who let the banks go rip. They told us that they had abolished boom and bust, yet they gave us the biggest boom and the biggest bust. They were the ones who told us we were going to lead the world out of recession; our recession was longer and deeper than others. They have not told us about one single penny of the £50 billion that they were going to cut—not one penny. Do you know where they ought to start? Why not start with an apology?
Ms Harman
If the Prime Minister thought that our spending plans were so bad, why did he back them right up until the end of 2008, praising them as “tough”? One minute he is praising them, then he is calling them reckless. This is not so much magic numbers as the magic roundabout that he has been on. We all agree that the deficit needs to come down, but will he promise that in the Budget next week he will not hit the poorest and he will not throw people out of work? Does he agree with us that unemployment is never a price worth paying?
The Prime Minister
The figures were wrong, and the jokes were not much good either. Never mind the magic roundabout, what we are all enjoying on the Government Benches is the Labour leadership election, although it is by day beginning to look more like a Star Trek convention—beam me up! What the right hon. and learned Lady has to answer is this: before the election, her Government set out £50 billion of cuts, but not a single penny was aligned to a single programme—not one pence of the £18 billion they were cutting from capital spending was aligned to one single bit of capital expenditure. Before she starts challenging us about cuts, they should first of all apologise for the mess they have left; second of all, tell us where the cuts were going to come to under their Government; and third of all, recognise that the responsible party, in coalition, is dealing with the deficit and the mess that they left behind.
Sir Alan Haselhurst (Saffron Walden) (Con)
Despite the huge satisfaction felt in my constituency at the Government’s decision not to proceed with the second runway at Stansted airport, is my right hon. Friend aware that blight and uncertainty still overhang the communities closest to the airport? Will he look to see if other measures can be taken to provide them with longer-term assurance?
The Prime Minister
First, may I say what a pleasure it is to see my right hon. Friend being able to speak about these issues for the first time in many years. I am sure he will do so often and with great power from the Back Benches. He is right to say that we are very clear in the coalition agreement about Stansted airport. I hope that removes some of the blight and uncertainty; I will certainly bear in mind what he had to say.
Andrew Miller (Ellesmere Port and Neston) (Lab)
Q2. During the general election, the Conservative party distanced itself from remarks made by the right hon. and learned Member for Rushcliffe (Mr Clarke) when he spoke about Government aid and said that it had nothing to do with Vauxhall. Will the Prime Minister take this opportunity to remove the uncertainty not only for Vauxhall but for Sheffield Forgemasters and all the other companies that are waiting for support in properly constructed agreements?
The Prime Minister
Everyone wants to see Vauxhall succeed; it is a very important company, employing many people in this country, not least in the hon. Gentleman’s own constituency. As he knows, a £270 million Government loan guarantee to support GM Europe was announced on 12 March 2010. We are reviewing commitments made since 1 January 2010. Projects that are good value for money and consistent with the Government’s priorities will go ahead. [Interruption.] Let me say to Labour Members who are shouting that we have to be clear that there were spending announcements made by the previous Government before the election that need to be reviewed. To take just one example of one scheme operated by Lord Mandelson’s Department—the so-called strategic investment fund: when we looked at the money provided for specific projects, we found that over two thirds of the constituencies involved were marginal Labour seats. So it is right to examine these, but I say to the hon. Gentleman that proper grants properly made for proper reasons will go ahead; fiddled grants for political reasons should not.
Stuart Andrew (Pudsey) (Con)
The 16-year-old son of my constituent, Lorraine Fraser, died after a vicious multiple knife attack incident six years ago. One of the murderers is trying to use the law to reduce his tariff after serving only five years, and another avoided conviction altogether by fleeing the country. Will the Prime Minister agree to look into this case on behalf of my constituent and meet her to hear about her plight and about the excellent work she is doing to defeat knife crime in this country?
The Prime Minister
I hear what my hon. Friend says, and I would be happy to meet him and his constituent. We need to take knife crimes in this country incredibly seriously: there has been a huge increase in the carrying of knives, and we must put a stop to that. On lenient sentences, I am not convinced that the power introduced some 20 years ago to allow the Attorney-General to appeal against lenient sentences is used enough. We need to look at that again and ensure that in cases in which people feel that a lenient sentence has been put in place, there is an opportunity to increase it.
John Woodcock (Barrow and Furness) (Lab/ Co-op)
Q3. The defence contracts for Astute class submarines signed in March were long negotiated and are essential for our security and for thousands of manufacturing jobs in my constituency and across the UK. Will the Prime Minister honour them?
The Prime Minister
First, may I welcome the hon. Gentleman and say that I know how much his constituency depends on the work going on in the submarine yards in Barrow, which I have visited and where I have seen the building of Astute class submarines and the submarines carrying our nuclear deterrent? I know how important that is, but a defence review is under way, and it must include the Astute class submarines—[Interruption]. To those Labour Members who are calling out, let me say that the Labour party was itself committed to a defence review. We asked whether it included everything—even aircraft carriers—and the answer came back yes. It is no good Labour Members bickering now that they are in opposition; it is right to have a defence review and that we consider such matters. I know how important submarine building is to Barrow and to the defence of the nation.
Mr David Evennett (Bexleyheath and Crayford) (Con)
Q4. Labour Members might revere regional development agencies, but is my right hon. Friend aware of the considerable amount of money wasted by some RDAs, especially on unnecessary expenditure on entertainment? Will he confirm that, to get better value for taxpayers’ money, he will take action on RDAs?
The Prime Minister
My hon. Friend is right, and I know that a lot of argument and discussion is going on about regional development agencies. The figures about how much money has been wasted, however, should be more widely shared. The East Midlands Development Agency paid more than £300,000 for offices in north America. The Northwest Development Agency shared an office in Newport Beach. One NorthEast spent money on offices in China, Japan, Korea and Australia. The chairman of the South East England Development Agency spent £51,000 on taxis and executive cars in one year alone. We need proper control of costs and spending—there has not been any for the past 13 years, and there sure is going to be under this Government.
Margaret Hodge (Barking) (Lab)
May I tell the Prime Minister about my constituent, Nikki Blunden, who is 37, has a son aged four and is dying of cancer. Her consultant wants to prescribe the new drug Lapatinib, which could prolong her life. Last week, the National Institute for Health and Clinical Excellence deemed the treatment not to be cost-effective. Will the Prime Minister stick to his promise not to hide behind NICE, and ensure that the primary care trust funds forthwith this NHS treatment? Nikki Blunden cannot wait; I ask the Prime Minister to act.
The Prime Minister
I am grateful to the right hon. Lady for asking that question. My heart goes out to her constituent, Nikki Blunden. We want to see these cancer drugs get to patients more quickly, without the bureaucratic wheels taking so long to turn. That is why we are establishing the cancer drugs fund, and I will discuss with my right hon. Friend the Secretary of State for Health how quickly that can be done. If possible, I want it to be done this year rather than next year. If it can be done, it will be, and if drugs can be got to people like the right hon. Lady’s constituent—we all have constituents in such a position—I will do everything that I can to make that happen.
Mr Douglas Carswell (Clacton) (Con)
Q5. The Prime Minister knows that I am always and everywhere for referendums. However, will he tell the House why he is planning a referendum on the alternative vote, which was not in the manifesto of either coalition party, but not a referendum on European integration, which all three main parties were recently promising?
The Prime Minister
What I can promise my hon. Friend is that we will have such legislation on the referendum lock, so that it will not be possible in future for a British Government to pass powers from Westminster to Brussels without asking the British people first. That is absolutely right. The referendum on the alternative vote was part of the coalition agreement, and he will be free to campaign on whatever side of the referendum he wants. However, the referendum was part of the agreement that put together this Government, who, I believe, are rolling up their sleeves and sorting out the country’s problems.
Jim Dobbin (Heywood and Middleton) (Lab/ Co-op)
Q6. About 1.5 million people suffer from involuntary tranquilliser addiction as a result of medical prescribing, and it completely ruins their lives. Will the Government consider investing in cost-effective, supportive, long-term withdrawal treatment programmes to enable them to lead normal lives, come off benefits, and go back to work?
The Prime Minister
Let me praise the hon. Gentleman for his interest in the work that is being done. I know that he is chairman of the all-party group that deals with this extremely difficult issue. The last Government set up a review of addiction to prescription and over-the-counter medicines. We are waiting for the report to be published, and will study it carefully when it is.
Let me make two points. First, I think that there is a problem in our national health service more generally, in that we spend too much time treating the symptoms rather than necessarily dealing with the causes. We could probably reduce the level of painkillers and tranquillisers if we did more—through physiotherapy and other therapies—to deal with the problem in the first place. Secondly, all addictions need proper attention, and proper treatment and therapy, to rid people of their addictions, whatever they happen to be. I am sure that the report will mention that.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Q7. Will the Prime Minister respond positively to the uplands inquiry by the Commission for Rural Communities—which reveals the great value and potential of magnificent hill areas such as ours in Northumberland—by stressing the need to ensure that hill farmers have an adequate income, and that there are rented homes, apprenticeships, and services such as broadband to enable young people to stay in those areas?
The Prime Minister
I will certainly look carefully at the report. I have every sympathy with what the right hon. Gentleman has said. Upland landscape is as beautiful as it is because it has been farmed for centuries, and we need to recognise the connection between beautiful landscape and active farming. We want our countryside to be a living, working countryside, not a museum.
The right hon. Gentleman mentioned housing. We must also recognise that the top-down target system was not working. Our plans in the coalition agreement to increase the ability of communities, including villages, to decide whether they want to put in extra homes is a good way of helping to keep the pub, the post office, and the local shops and schools open, and I hope we can proceed with that work.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
I am sure that, even as we speak, the Prime Minister and his team are seeking to make savings and possibly cuts, hopefully without affecting front-line services. May I commend to him one way of saving £7.2 million a day? Bring the troops home from Afghanistan.
The Prime Minister
I have to say to the hon. Gentleman that I just do not agree with him. I think that if we brought the troops home precipitately—if we did it straight away—not only would we let down our NATO allies, not only would we let down the Afghan people, but we would create circumstances in which the Taliban would return, and the danger of terrorist training camps in Afghanistan would come straight back.
I know that what we are doing is dangerous and difficult, and that it is costing us dearly. I am, of course, acutely aware of that. However, I think that we must put our effort and our shoulder behind the wheel of the Obama-McChrystal plan to ensure that it works as well as it can, and accompany that military surge with a political surge. We need to seek a political settlement to get Taliban fighters to put down their arms and reintegrate into Afghan society. That is the way in which to create some stability in Afghanistan—never a perfect democracy, but some stability—in which event our troops can come home with their heads held high.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Q8. Will the Prime Minister join me in paying tribute to all who work for the health service, but will he also examine the circumstances in which patients are often discharged from hospital only to be readmitted very soon afterwards? The assessment for continuous health care has become something of a postcode lottery. Will the Prime Minister examine that as well, to ensure that such care is paid for on the basis of clinical need?
The Prime Minister
Thank you, Mr. Speaker; the one answer that I will give is this. I know that there is a big problem with hospitals discharging patients, sometimes to meet their own targets—including financial targets—without thinking of the longer-term consequences if those patients have to return. That is why my right hon. Friend the Secretary of State for Health has announced that hospitals will be responsible for patients not just during their treatment but for the 30 days following their discharge, so that we can better link health and social care to ensure that people leave hospital at the right time, in the right way, and for good.
Mr Stephen Hepburn (Jarrow) (Lab)
Q9. Siemens is proposing to close Trench UK in my constituency and to transfer its production to France and Germany, despite the fact that Trench UK has a full order book, healthy profits and is exporting all over the world. It is a first-class product. Would the Prime Minister meet me so that we can discuss that illogical decision which could lose the UK a jewel in manufacturing?
The Prime Minister
I would certainly meet the hon. Gentleman. I know how frustrating this can be; Siemens is a big investor in my constituency, too. The jobs that he is speaking about are exactly the sort of high-tech, high-skill jobs that we want to keep in this country. Therefore, I will certainly meet him, and we will do what we can in the Budget to ensure that we have in this country a tax regime, support for apprenticeships and support for training that will want to make businesses locate, stay and invest in Britain.
Mr Adam Holloway (Gravesham) (Con)
Q10. Every household in Gravesham has inherited a sort of second mortgage of debt. Can the Prime Minister give us some idea of the level of debt per household across the country?
The Prime Minister
My hon. Friend is entirely right that every single person in this country is now carrying £22,000 of debt because of the mess that the last Labour Government left us. The fact is this: if we do not do something about it, by the end of this Parliament, we will be paying £70 billion in debt interest. That is more than we spend on schools and more than we spend on defence. It would be a tragic waste of money. That is why, however painful it is, we have to get to grips with the deficit that we were left by the last Labour Government.
Barry Gardiner (Brent North) (Lab)
Can the Prime Minister explain why the changes to local government funding last week mean that, in Witney in Oxfordshire, people will see an uplift of 1.7%, while children in Brent will see a loss from their education budget of £1.88 million? Can it have anything to do with last week’s statement by the Minister with responsibility for local government, the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who said:
“Those in greatest need ultimately bear the burden of paying off the debt”?—[Official Report, 10 June 2010; Vol. 511, c. 450.]
The Prime Minister
I am sure that the hon. Gentleman will welcome the fact that we are going to introduce the pupil premium, so that the money follows our country’s poorest children to the schools that they go to. That is what is going to happen. That is what he should support and I will look forward to him supporting it when it comes.
Mr Graham Brady (Altrincham and Sale West) (Con)
Q11. As the Prime Minister strives to restore sanity to our national finances, will he give a word of reassurance that the Budget next week will seek to encourage and support those who save and provide for their own future?
The Prime Minister
My hon. Friend is entirely right. We have got to make sure that, in what we do, we help those who try to do the right thing, to save and to look after themselves and their families. The first thing that we have to do is keep control of inflation, keep the Bank of England independent and ensure that the Budget supports the tough approach on inflation, which is the worst thing for savers. The second thing that we can do is ensure that we do not discourage saving by having so many people reliant on a means test. That is why we are committed to linking the state pension back to earnings.
There are no easy ways of reducing the deficit. Some people believe that it can be got all from one area or all from another. I am afraid that it is going to be a difficult task. We will do everything we can to take the whole country with us. We will need to have a responsible debate about how we do it, but it has to be done for the good of our country.
Luciana Berger (Liverpool, Wavertree) (Lab/ Co-op)
Q15. In the past week, I have been contacted by students and parents in my constituency who are devastated to have been told that geography and politics courses at Liverpool John Moores university have been cancelled from September, giving them less than three months to make alternative arrangements. What assurances can the Prime Minister give my constituents that cuts to higher education will not affect students?
The Prime Minister
I welcome the hon. Lady to her place. The assurance I can give her is that we are going to increase the number of university places by 10,000 in the coming year, because we want to see higher education expand. The other assurance I can give her is that we are committed to the Browne review that the previous Government set up, on an all-party basis, to look at how we can ensure that higher education is affordable both for the young people going into higher education and for our country as a whole.
Harriett Baldwin (West Worcestershire) (Con)
Q12. Can I praise the Prime Minister for his staunch support of the NHS and its budget, and use this opportunity to invite him to Malvern to open, some time at his convenience this autumn, our brand-new community hospital?
Mr Speaker
Order. It is not against the rules of the House for a Government Back Bencher to support the Government; it is not that odd.
The Prime Minister
Mr Speaker, we all remember you doing that very well. My hon. Friend’s invitation is a kind one. The commitment that we have made to maintain health spending is very important. I want to see community hospitals and district general hospitals thrive under this Government.
Mr David Lammy (Tottenham) (Lab)
May I invite the Prime Minister to take a trip with me next season from Seven Sisters tube station up to the Spurs ground at White Hart Lane? On that journey he will see a proliferation of betting shops. Will he give local authorities the power to deal with the saturation of betting shops, which are preying on working and poor people?
The Prime Minister
That is another great invitation this afternoon. I say to the right hon. Gentleman that there is a balance to strike. Some of the deregulation that took place was necessary in order not to have over-regulation of these sectors, but yes I think that there is a case for allowing local authorities greater latitude to decide on some of these things. We made that point in opposition, particularly on the issue of lap-dancing clubs, over which local authorities should be given more power and influence. The issue now seems to be being taken up more broadly by Labour Members.
Financial Services Regulation
(13 years, 10 months ago)
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Mr Alistair Darling (Edinburgh South West) (Lab)
(Urgent Question): To ask the Chancellor of the Exchequer to set out his proposals for the future of financial services regulation and for the role of the Bank of England.
The Chancellor of the Exchequer (Mr George Osborne)
In 1997, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), as Chancellor, established, without any consultation and without telling Parliament, the tripartite system to regulate the financial system. In doing so, he removed from the Bank of England its historical role in monitoring overall levels of debt in the economy. It is well known that the late Eddie George was deeply unhappy with that decision. It is also well known that the tripartite system that the right hon. Gentleman created, and that his successor as Chancellor sustained, failed spectacularly in its mission to ensure stability in the financial markets, and the failure of certain banks cost the taxpayer a vast amount of money. Indeed, British taxpayers funded the largest bank bail-out in the world, and it was only in Britain that depositors queued in the high street to get their money back.
The British people rightly ask how this new coalition Government will learn from the mistakes of their predecessor. The coalition agreement commits us to reforming the regulatory system for financial services in order to avoid a repeat of the financial crisis, and that is precisely what we will do. First, on the structure of regulation, our plan is to hand over to the Bank of England the responsibility for macro-prudential supervision, which should never have been taken away from it. The tools for macro-prudential supervision are the subject of ongoing international discussions. We are playing a full part in that process at European and G20 level, along with the Governor of the Bank and the chairman of the Financial Services Authority. It is already clear that the tools will include capital requirements that work against the cycle, rather than with it.
The coalition Government are also committed to handing to the Bank of England responsibility for the oversight of micro-prudential regulation. It is clear that the central bank needs to have a deeper understanding of what is going on in individual firms. My hon. Friend the Financial Secretary to the Treasury will give further details of the institutional arrangements in a parliamentary statement tomorrow. It is important that the institutions involved correctly follow their own internal procedures before those arrangements are made public, and the Governor of the Bank will be talking to the court of the Bank this afternoon.
The coalition Government will also deliver on their promise to establish an independent commission on banking. The previous Government would brook no debate about the future structure of the banks, the relationship between retail and investment banking, and the questions of how best to protect taxpayers and how to ensure greater competition in an industry that they actively sought to consolidate. The previous Prime Minister did not want anyone to challenge his opinions, but we cannot ignore this debate about the future of banking—indeed, I want Britain to lead it. We will therefore establish the commission on banking to investigate those issues. It will be chaired by Sir John Vickers, who is a former chief economist at the Bank of England, was one of the first members of the Monetary Policy Committee and is a former chairman of the Office of Fair Trading. He is a man of unquestioned experience, integrity and independence who approaches this issue with an open mind. I am today placing in the Libraries of both Houses the terms of reference and we await the conclusions of the commission.
Unlike the last Government, this Government are prepared to confront the difficult challenges of the regulation and structure of the banks. We are prepared to learn the lessons of what went wrong, even if they were not.
Mr Darling
I am grateful to the Chancellor for that answer, and I wonder whether I might press him on a number of points. First, he says that the Bank of England will have responsibility for macro-prudential supervision, but he also says that the debate as to what macro-prudential supervision consists of is still up for grabs as it is still being debated internationally. When does he expect those discussions to be concluded?
The Chancellor also says that the Bank of England will have some responsibility for micro-supervision. It has been suggested in some quarters, for example, that the Bank of England, rather than the FSA, might have dealt with whether the Royal Bank of Scotland could take over ABN AMRO. Does he not realise that far from clarifying the situation, this is adding another complication? The risk is that we will have a dog’s breakfast of a regulatory system in which no one knows who is making decisions and no one knows who is in charge. Does he not accept that at a time when there is still a great deal of uncertainty in the banking world and a great deal of turbulence, the last thing that we want is a situation in which it is not clear which organisation is responsible for precisely which activity? If both the Bank and the FSA are responsible for regulating institutions, that is bound to lead to confusion and inevitably runs the risk that mistakes will be made.
Will the Chancellor also tell us whether, in relation to the Bank of England’s responsibility, he is planning any reform to the financial stability committee or any internal reforms so that a committee will advise the Governor? If that is the case, will the Governor be making those decisions or will a committee do so, perhaps on a wider basis? Will he also tell us whether or not Lord Turner, the chairman of the FSA, agrees with his proposals and whether he is now prepared to serve, in effect, as a deputy under the Governor of the Bank of England?
In relation to the proposal to break up banks, will the Chancellor explain how Northern Rock, which was a very simple retail bank on the face of it, would have been saved from collapse simply by virtue of the fact that it was a retail bank and not an investment bank? Will he also explain how his proposal would have made any difference to Lehman Brothers, which did not take a single retail deposit but was a complex investment bank that collapsed with calamitous consequences? Will he tell us, too, whether the commission that he proposes to set up will consider the break-up of British banks such as Barclays or HSBC? Will he tell us how the uncertainty that will inevitably be caused by the work of the commission will help to rebuild the financial stability that we want? At a time when there is that instability, does he not think that it would be far better to keep the FSA working on what it is supposed to be doing—that is, the day-to-day supervision and regulation—bearing in mind that some small minor decisions are sometimes very important, especially if they are the wrong ones?
Is it not the case that the proposal was made in the first place because the right hon. Gentleman was looking before the election for a dividing line between him and the then Government? What we have today is something that has been cobbled together, that is ill thought out, that will add to uncertainty and that runs a grave risk that further mistakes will be made with catastrophic consequences in the future.
Mr Osborne
The dividing line is between a Government who want to learn the lessons of what went wrong and an Opposition who have no intention of learning from all the mistakes that they made in office. I find that striking.
The right hon. Gentleman talks about a dog’s breakfast. What about the dog’s breakfast of the tripartite system that allowed the Royal Bank of Scotland to fail and that allowed Northern Rock to fail? He was the Chancellor at the time and he completely failed to see the growing levels of debt in the economy. He and the institutions that were created by his predecessor completely failed to see what had gone wrong in individual institutions. The thing I find extraordinary—perhaps Opposition Members will reflect on this—is that their shadow Chancellor is setting them against reform of the regulation of banks and reform of the structure of the banking industry. That is what he has just done. What we are going to do is to have an open debate about the structure of banks. That debate is happening in the United States of America, in the newspapers of this country and in parliamentary debates here. The only place it was not happening was in the last Government under his chancellorship.
We think that the sensible approach, in order to resolve these issues—[Hon. Members: “Answer the question.”] I am answering the questions—every single one of them. We think that the sensible approach is to set up an independent commission under Sir John Vickers to examine these issues and to take into account the different, strongly held views. For example, John McFall, who was the Chair of the Treasury Committee in the last Parliament, has in recent days put his name to a report that calls for structural reform of the banks. The shadow Chancellor might want to ignore his views, but I want to listen to them and to take them on board as part of an independent commission, and that is exactly what we are going to do.
When it comes to the international context, I think that all of that will enable us to lead the debate. Of course, we have to agree this at an international level, where some of the macro-prudential tools are. As the shadow Chancellor knows, there is a debate taking place in the G20. We hope, in the Seoul summit in November, to have come to firm conclusions on the capital, liquidity and leverage requirements. When we have come to those agreements and when we have international agreement on what those standards should be, we will need a regulatory system here, at home, that is fit for purpose, so that they can be implemented.
Sir Peter Tapsell (Louth and Horncastle) (Con)
As one of those who strongly opposed the introduction of the tripartite regulation of our financial institutions as soon as it was announced in 1997, may I congratulate the Chancellor on getting rid of the FSA, which has been a major contributor to the disasters in the economic sphere in recent years and which was regarded in the City, throughout the whole of its lifetime, as a thoroughly inefficient organisation?
Mr Osborne
To be fair to the FSA, it has been rather candid about the mistakes that were made when the shadow Chancellor was the Chancellor and when the former Prime Minister was the Chancellor. We have to learn from those mistakes. As I have told the House, we will set out the details of the institutional arrangements in a parliamentary statement tomorrow.
Rachel Reeves (Leeds West) (Lab)
The Chancellor talks about breaking up the retail and investment banks, but the immediate challenge for the Government is the future of the nationalised banks. Will he consider turning the failed banks into mutuals that focus on long-term returns and not on short-term profits?
Mr Osborne
We need to take some time before coming to decisions on how to dispose of the bank shares that we own in the Royal Bank of Scotland and Lloyds, and the banks we own, such as Northern Rock, not least because at the moment the British taxpayer would make a substantial loss on many of those share purchases. However, we are prepared to consider lots of options. Sir John Vickers’ commission is going to look at competition in the banking industry. It has become incredibly consolidated in the past couple of years and that is not necessarily the best thing for bank customers, as many of us will know from representing businesses that cannot get access to credit. It is sensible to look at what Sir John Vickers and his commission have to say about this.
Mr Andrew Tyrie (Chichester) (Con)
Why was so much of this announced on this morning’s “Today” programme rather than here? Who will chair the financial stability committee in a crisis? Will it be, as it should be, the Chancellor of the Exchequer?
Mr Osborne
There has been quite a lot of speculation, and as we will see in the coming days not all of it has been very accurate. I cannot account for the speculation, because it certainly has not been coming from my office. I am discovering that it is a feature of being in government that lots of people anticipate one’s views before one expresses them.
I congratulate my hon. Friend on becoming Chair of the Treasury Committee and I hope to have the engagement of his Committee in this important debate over the next year. When it comes to the commitment of taxpayers’ money, the elected Government, who are accountable to the House, will remain in charge.
Keith Vaz (Leicester East) (Lab)
The Chancellor will know that the FSA was created following the closure of BCCI on 5 July 1991, and the publication of the Bingham report. Nineteen years later, some of my constituents are still waiting for all their money back. I think the Chancellor knows that I am about to ask the same question I have asked every Treasury Minister over the last 19 years, so in the spirit of open government, will he do something that the former Chancellor would not do and please publish the confidential parts of the Bingham report so that we can have a proper debate about the issue?
Mr Osborne
I think everyone would acknowledge the work the right hon. Gentleman has done on the issue, over many years, on behalf of his constituents and other people who were so badly affected by that scandal. I was of course present at the exchange between him and the shadow Chancellor about the publication of the secret Bingham report—if I can put it like that—and I have asked for urgent advice about that and for a copy of the report so that I, too, can read it.
Matthew Hancock (West Suffolk) (Con)
In a similar exchange in a debate last week, did my right hon. Friend hear the shadow Chancellor say that the former Government did not understand the systemic risks in the banking system? Does he share my surprise that Members on the Labour Front Bench are no longer willing to engage in an argument about putting right the system of banking regulation that so spectacularly failed?
Mr Osborne
I am surprised, and I am not sure whether the shadow Chancellor is committing his party for the rest of this Parliament to be against reform of the structure of banking. I see quite a lot of heads shaking, so perhaps he is not. We shall wait and see. It is worth noting that on 8 June Lord Young of Norwood Green, a Minister at the Department for Business, Innovation and Skills in the last Government, referred to
“the tripartite relationship that was supposed to identify and regulate the systemic risk in British banking—a relationship that we all know failed somewhat spectacularly.”—[Official Report, House of Lords, 8 June 2010; Vol. 719, c. 630.]
Mr Andrew Love (Edmonton) (Lab/Co-op)
Given the continuing difficulties in the banking sector, does the right hon. Gentleman accept that the proposals he is putting to the House today will lead to greater uncertainty and greater blight in the financial services sector, and make it more difficult for banks and financial institutions to recover?
Mr Osborne
No, I do not accept that. We cannot ignore in this House that a debate is raging not just in our country but across the world about the structure of the banking industry and the best way to regulate it. The hon. Gentleman may have decided that he has all the answers and the Labour party may have decided that the system it established 13 years ago was the right system and we should stick with it, but I think we should be more open. We should have a process that brings that debate to a conclusion. Tonight I am going to the Mansion House dinner, as I believe the shadow Chancellor is too. I have sat at Mansion House dinners as shadow Chancellor and listened as the Governor of the Bank of England said something completely different from what the Chancellor of the Exchequer said on the same occasion. We have to resolve the debate, so we have to set up a process that resolves it, and I believe that an independent commission in which everyone can engage, including Members of the House, is the right approach.
Malcolm Bruce (Gordon) (LD)
I welcome my right hon. Friend’s approach. Does he acknowledge that it is not just the architecture of the regulation but its quality that has conspicuously failed? It may be understandable that the Labour party wants to defend its creation of the FSA, but do Labour Members not acknowledge that it actually failed? For many people, it too often protected the providers of services and not the consumers who were actually investing in them.
Mr Osborne
My right hon. Friend is absolutely right. The overall objective is to move away from a process of regulation that is simply about ticking boxes to one where more judgment is exercised and people start to ask those such as Sir Fred Goodwin, “What are you doing with your bank? Is it right that you are taking over ABN AMRO?”, instead of asking him whether he wants a knighthood.
Chris Leslie (Nottingham East) (Lab/Co-op)
Can the Chancellor explain who will be responsible under these reformed arrangements for the regulation of derivatives—financial instruments that are obviously sometimes very opaque and complex and could present a major risk to our financial system? Is it the Bank of England, the FSA or the Treasury?
Mr Osborne
The details of the institutional arrangements will be set out in a parliamentary statement tomorrow. As I said, it is right to allow the institutions involved to conduct their internal procedures, such as speaking to the court of the Bank. I know it is a completely novel idea not to bounce every institution in the country into the decisions the Government take, and actually to allow a proper process to take place, but I happen to believe that that is the right approach. The serious issue of the regulation of derivatives is the subject of intense international debate to try to create a better regulated system—or indeed to provide regulation where none existed—and to provide some central clearing operations for derivatives so that we can avoid some of the systemic risks that built up in recent years.
Nadhim Zahawi (Stratford-on-Avon) (Con)
Does the Chancellor agree that the previous Government’s idea of regulating our banks was to have a midnight cocktail party, where they twisted the arm of the chairman of Lloyds Banking Group to take over HBOS?
Mr Osborne
Indeed, my hon. Friend is right: certainly, if the accounts are true, that was the approach taken by the former Prime Minister. I am not sure whether he did so with the knowledge of the former Chancellor, but I guess that we have to wait for the flurry of memoirs to find out.
Mary Creagh (Wakefield) (Lab)
This weekend, there was an advertisement for a pay-day cheque service that had an interest rate at the bottom of the screen of 236%. Given that the Chancellor is about to make changes to the FSA’s consumer protection function, does he think that 236% interest is fair, and if it is not, what will he do about it?
Mr Osborne
The OFT will shortly publish a report on high-cost credit that will address some of these issues, and the hon. Lady is absolutely right to be concerned about them. One of the things that I hope will flow from the institutional arrangements that we are putting in place is a stronger voice for the consumer to ensure that particularly the most vulnerable people in our society are protected from exploitation.
Claire Perry (Devizes) (Con)
Will the Chancellor assure the House and the country that he will never display the sort of complacency so aptly demonstrated by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who said in 2007 that we were entering a golden age of prosperity in the City of London?
Mr Osborne
My hon. Friend is right. I was sitting in the Mansion House when the former Prime Minister, with great prophecy, announced that we were embarking in the summer of 2007 on a new golden age for the City of London. Unfortunately, as with everything else that was golden that the previous Prime Minister touched, that turned to lead.
John Mann (Bassetlaw) (Lab)
What systemic risks specifically created the collapse of Lehman Brothers, and how does the Chancellor intend to regulate the top 10 large investment banks and protect the British economy against such collapses?
Mr Osborne
Suddenly, the hon. Gentleman is interested in the regulation of Lehman Brothers, but there we go.
The risks were pretty clear. No arrangements were in place for winding up a large and complex financial firm. That was one concern. No arrangement was in place that would allow a global firm to avoid dying nationally in the way that it did. It was heavily exposed to, for example, the derivatives markets and other things. That had not been spotted either by the British regulator or, of course, the American regulator, which was in the lead. We need to investigate precisely that kind of issue, not just here in Britain, but across the world. That is being done in the international councils on which we sit. But surely, whether with Lehman Brothers, the Royal Bank of Scotland, HBOS or Northern Rock, we must learn the lesson of what went wrong. Again, I find it breathtaking that, at the beginning of the Parliament, the Labour party has set itself against changing the system of regulation. [Hon. Members: “No we haven’t.”] Labour Members may say that, but that is exactly what the shadow Chancellor did about 53 minutes ago.
Mr Chuka Umunna (Streatham) (Lab)
My understanding is that the credit rating agencies are not subject to any proper UK regulation at the moment and that some action is being taken at EU level in that regard. Does the Chancellor see any place in the new arrangements for UK regulation of the credit rating agencies, which, of course, bear a large responsibility for what happened in the sub-prime crisis?
Mr Osborne
The hon. Gentleman is right to draw attention to the role of the credit rating agencies. Of course, all sorts of organisations and products received triple A ratings that they should never have received. That triple A wrapper basically made them immune to investigation by the firms that were buying those products. Certainly, we need to improve the regulation in the domestic sense—here in Britain—but that is also the subject of decision at a European level, and the la Rosière proposals on European supervisory agencies will consider in particular the role and regulation of credit rating agencies.
Sajid Javid (Bromsgrove) (Con)
Will my right hon. Friend commit to ensuring far greater scrutiny of EU regulation concerning financial matters than the previous Administration ever did, to make sure that it helps, rather than hinders, our banking system?
Mr Osborne
My hon. Friend makes a very good point that we must get the European regulation right, and the United Kingdom has a particular role as the location of most of the wholesale financial services in Europe. We therefore bring some insights to the table, which not all other members of the European Union can do. I am clear that we must do that. It will be under discussion at the European Council later this week and, I suspect, in pretty much every ECOFIN meeting for the rest of the year.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
As a part of these reforms, will the Bank of England consider unemployment when determining interest rates?
Mr Osborne
The Bank of England has an inflation target, and I am not proposing to change the inflation-targeting regime.
George Freeman (Mid Norfolk) (Con)
Thank you, Mr Speaker, for calling me before I have made my maiden speech. For the record, this is not it. [Laughter.]
Given the gravity of the situation in which the last Government have left the finances, does my right hon. Friend the Chancellor agree that it behoves all parties to work together on this? Will he confirm whether he has received any positive contributions from Opposition Members, or whether, as it appears to Conservative Back Benchers, they are now reclined into abject criticism?
Mr Osborne
Well, it was a very good maiden intervention by my hon. Friend. I find it strange that the Labour party does not want to engage in this debate. One would have thought that the Labour party was interested in how banks will be regulated, in how we learn from the mistakes and what went wrong, and in the structure of banking in the future, but the shadow Chancellor has set it against that. However, individual Back-Bench Members of the Labour party will probably be more interested in this than their Front Benchers. Of course, by setting up an independent commission and, indeed, by having the debate in the Treasury Committee and on the Floor of the House, those contributions will be heard.
Toby Perkins (Chesterfield) (Lab)
The Chancellor says that he is keen to learn the lessons from the economic problems that happened. Is one of those lessons that he was wrong to say that the Government should have let Northern Rock fold?
Mr Osborne
What I said about Northern Rock was that we should have found a way to have a Bank of England-led reconstruction of that firm. The previous Government then introduced legislation in Parliament that would have allowed that to happen in the future. That is exactly how they proposed to handle future bank failures. [Interruption.] The shadow Chancellor says that we voted against it. We did not vote against the Banking Act 2009, by which he introduced the procedures for a Bank-led reconstruction. He continues to shake his head. I seem to remember that I went to his office in the autumn of 2008, pledged my support and delivered on that support.
Nicky Morgan (Loughborough) (Con)
As someone who worked with the FSA before I was elected and had to plough through many long consultation papers and then try to help business to understand them, may I perhaps suggest to the Chancellor that the people who are working at the FSA are not the right people to be transferred to the Bank of England and that, in fact, we need people who understand the risks and working in the City of London, rather than those who have just read textbooks about that, as many of the people in the FSA appear to be?
Mr Osborne
Of course, it is important that we have the right people doing regulation. The FSA made mistakes, and it has been very candid about them. Lots of institutions made mistakes in the build-up to the crisis—including, of course, the British Government. The people at the FSA have worked incredibly hard in the past couple of years, and I should put on record my tribute to the work that they have done. As for the institutional arrangements that we will put in place, there will be a parliamentary statement tomorrow.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Will the changes that the Chancellor envisages have any impact on the bonus culture at the FSA? I understand that it cost us a record £22 million and reached 84% of its staff last year, at the very time when it was calling for curbs on bank bonuses.
Mr Osborne
I remember that at the time I, too, was surprised by the FSA’s decision. If the hon. Gentleman will allow me to say this, those questions are best asked once we have made clear what the new institutional arrangements are. Then we can get on to the pay and rations.
Harriett Baldwin (West Worcestershire) (Con)
Does the Chancellor agree that it is surprising to hear Opposition Members talk about Northern Rock as a shining example of micro-regulation, when the FSA’s own report into Northern Rock said that the ARROW process gave it far too low a ranking and that that such decisions would have been better taken in the home of the lender of last resort?
Mr Osborne
My hon. Friend makes a very good observation. Let me make a broader observation, if I may. She has enormous experience of the financial services. There are Members on the Opposition Benches with real experience as well, including the hon. Member for Leeds West (Rachel Reeves), who used to work in the Bank of England. I would like that experience to be brought to bear in the process over the next year. We have decided not to resolve the issues in the Treasury, in the Department for Business, Innovation and Skills and in No. 10 Downing street, as we could have done. We have decided to have an open commission to which all Members can contribute and with which they can all engage. I think that is a better way to make policy.
Barry Gardiner (Brent North) (Lab)
Has the Chancellor taken the opportunity to review the Official Report of the Committee stages of the Financial Services and Markets Act 2000 when the FSA was being set up? If so, does he recall that the constant cry from the Conservative Benches in those days was for lighter-touch regulation? Will he take the opportunity to say unequivocally to the City that, as far as his party is concerned, the era of lighter-touch regulation is over?
Mr Osborne
My right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) was clear about the risks of creating the tripartite system when he was the shadow Chancellor who opposed that legislation. When it comes to light-touch regulation, let me quote what the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath, said in 2006:
“I will be honest with you, many who advised me, including not a few newspapers, favoured a regulatory crackdown. I believe that we were right not to go down that road”.
I am afraid that the regulatory approach taken by the Labour Government when they were in office completely failed, and we will learn the lessons of their mistakes.
Guy Opperman (Hexham) (Con)
Does the Chancellor agree that the Opposition, who sold the gold so wisely and then bought euros, prophesied a golden age and then brought the economy, like a ship, on to the rocks, are not qualified to give us financial advice and seem to have such a poor memory?
Jacob Rees-Mogg (North East Somerset) (Con)
May I declare an interest, as I am regulated by the Financial Services Authority? Does the Chancellor agree that boom and bust is part of the human condition, we will never get away from it, and the best that regulation can do is ameliorate extremes, not stop boom and bust altogether?
Mr Osborne
I am not sure whether the Labour party in opposition will keep its promise to abolish boom and bust, but it proved pretty disastrous in government. All of us welcome the fact that my hon. Friend will no longer be regulated by the FSA, and instead will be regulated by the Whips Office.
Jeremy Lefroy (Stafford) (Con)
Despite some high-profile casualties, does my right hon. Friend recognise the importance of building societies and mutuals to the financial services sector? What steps does he propose to take to encourage that sector to increase?
Mr Osborne
My hon. Friend is right that building societies and mutuals have an important role to play in the future. We want to strengthen them and support those who want to create mutuals. We will set out the details of how we will do that in the next few weeks.
Speaker’s Statement
(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Speaker
In accordance with the Order of the House of yesterday, I will now announce the arrangements for the ballots for the Chair and members of the Backbench Business Committee.
The ballot for the election of the Chair will be held in the Division Lobbies from 9 am to 11 am on Tuesday 22 June. Nominations may be submitted in the Lower Table Office from 10 am to 5 pm on the day before the ballot, Monday 21 June.
The ballot for the election of the members of the Committee will be held in the Division Lobbies from 10 am to 12 noon on Tuesday 29 June. Nominations may be submitted in the Lower Table Office from 10 am to 5 pm on the day before the ballot, Monday 28 June.
A briefing note with more details about the elections will be made available to Members in the Vote Office and published on the intranet.
Opposition Day
(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Industry (Government Support)
(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:59 - The House having divided: - Ayes: 238 / Noes: 322 - Jeremy Wright
19:16 - The House divided: - Ayes: 319 / Noes: 243 - Question accordingly agreed to.
Mr Speaker
I inform the House that I have selected the amendment in the name of the Prime Minister.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I beg to move,
That this House notes the need for a clear deficit reduction plan, and that such a plan must have at its heart measures to foster growth and create the conditions for a strong business-led recovery; believes Government has a crucial role to play in fostering economic growth and in creating a better-balanced economy; supports strategic decisions to back key sectors such as digital, life sciences, low carbon manufacturing and civil nuclear power; congratulates the previous Government for supporting businesses through the downturn and laying the foundations for the UK to be globally competitive as the country makes the transition to a low carbon economy; expresses serious concern that the Government’s decisions risk removing key support for business and industry at a critical moment in the economic cycle; further believes that cutting investment allowances will pull away vital support for manufacturers seeking to invest and grow; further notes that the Government’s scaling back of the regional development agencies at a time when recovery is fragile will impact on investment vital for regional economies; and regrets the coalition Government’s decision to place a question mark over a number of vital industrial support decisions taken by the previous Government.
Let me make it clear at the beginning of the debate what I said during our initial exchanges at oral questions a couple of weeks ago—deficit reduction is important and I do not say that every decision to reduce expenditure is wrong. The Secretary of State and I both fought the recent election on policies to reduce the deficit. But the Opposition believe that this must be done in a way that supports economic growth, and not in a way that undermines it. It is critical to our future that fiscal consolidation is done in a way that supports rather than undermines growth.
On the timing of deficit reduction, I am still saying what the Secretary of State and I were both saying back at the time of the election, but he is now saying something very different. Just a week before polling day he said that
“it would be foolish to rush into significant cuts now which take the economy down even further, which lead to an even bigger deficit problem”.
Yet just days later, the Secretary of State was signing up to his part of £6 billion of cuts in this financial year—cuts that mean 10,000 fewer students going to university than under the published plans, and £300 million being taken out of the regional development agencies this year.
Robert Flello (Stoke-on-Trent South) (Lab)
Such cuts will hit my constituency and those of my hon. Friends the Members for Stoke-on-Trent North (Joan Walley) and for Stoke-on-Trent Central (Tristram Hunt). The cuts will hit places such as Stoke-on-Trent particularly hard—areas that have struggled to come forward from the 1980s. The impact will be devastating.
Mr McFadden
My hon. Friend makes an important point. Before the election we were told that £6 billion could be taken out in efficiencies, but the announcement proved that that was not the case, and that the cuts will have a real effect on constituencies such as his, mine and many others around the country.
What could be the reason for the volte-face on the timing of deficit reduction? There may be cynics on the Opposition Benches who might think it had something to do with the election result or with the fact that the Liberal Democrats were in coalition talks with the Conservatives, but the Secretary of State leads us to believe that that was not the case at all. He said it was all about events in euroland, but to paraphrase Frankie Valli, “Greece” was the word, although I have a feeling that in the present coalition the Secretary of State does not go into work in the morning singing, “We can be who we are”.
Mr Jim Cunningham (Coventry South) (Lab)
Does my right hon. Friend agree that the uncertainty about the future of Advantage West Midlands, for example, is creating problems for small businesses locally? Does he also agree that if the Government set up a green investment bank—the sooner, the better—that could go a long way to helping industry in the west midlands?
Mr McFadden
That policy was in our manifesto, and we believe it would make an important contribution to economic growth.
Our argument today is that if we want a successful economy in the future and if we want to rebalance our economy and support strong manufacturing and powerful regions, a focus on deficit reduction alone is not enough. It is not enough just to have a plan for the deficit. The Government also need a plan for growth; and for that to work, we have to understand that they have an important role to play in supporting industry and creating the right environment for success.
Mr David Hanson (Delyn) (Lab)
Does my right hon. Friend agree that a potential blight is being put on companies such as Airbus and Vauxhall near my constituency, where grants signed by the previous Government to help to support the growth of manufacturing industry are now being reviewed by this Government? That is damaging the long-term potential for growth, and decisions should be reached urgently so that we end that blight and get a move on in creating jobs.
Mr McFadden
The review of industrial support decisions has indeed created damaging uncertainty that should be brought to an end in a positive way as soon as possible.
The Labour Government knew that we had to play our part if rhetoric about rebalancing the economy and making the most of the shift to low carbon was to lead to new industries and new jobs. That was not, as some Government Members have sought to portray it, some kind of irresponsible bail-out plan concentrated on failing companies. It was a strategy about supporting key national capabilities in the industries and jobs of the future, ensuring that we had strong regional economies, and having the right tax measures in place to foster investment in new plant and machinery and to support research and development here in the UK.
Jim McGovern (Dundee West) (Lab)
I am sure that my right hon. Friend is aware of how crucial the computer games industry is in my constituency, not only for the number of people the industry employs but for the students who study at the university of Abertay. The previous Government made a commitment to tax breaks for the computer games industry; does he agree that that commitment should be honoured?
Mr McFadden
The creative industries, including those that my hon. Friend mentions, are absolutely critical for our future economy. As with other areas, I believe that Government have a role in play in ensuring that the creativity of those industries flourishes here in the UK.
Of course, our future economy will be market-driven, and success depends on motivated individuals, great ideas, and enterprising and thriving companies. Our point, however, is that there is a critical role for Government when market gaps occur—a job to do in supporting investment that can pay dividends many times over in future. Let us remember that this is something that many Governments around the world are doing. Do we really believe that if the new Government elected here turn their back on this approach, other Governments who are also trying to attract new industries and new jobs will do the same? I do not think so.
Alex Cunningham (Stockton North) (Lab)
This week, One NorthEast, the regional development agency in the north-east of England, confirmed a grant of £7.3 million to INEOS Bio to construct Europe’s first advanced bioethanol—ethanol from waste—plant in my constituency. That will create 350 construction jobs and 40 permanent skilled jobs, and I am sure that my right hon. Friend agrees that that is another fine example of why One NorthEast should continue its good work with the level of funding that has given it the power to help the north-east’s economy to diversify so successfully.
Mr McFadden
I absolutely agree. That sounds like exactly the kind of project where Government, through the RDA, and business can come together for the benefit of the local area.
Our concern is that the new Government do not understand the role of Government in fostering new industries or may even be ideologically opposed to it, believing, as the Secretary of State has said, that
“one of the most important jobs of Government...is actually to get out of the way”.
Getting out of the way would have done us little good when we were trying to get Nissan to build its battery plant and LEAF electric car in the north-east. It would not have helped us when were extending a loan guarantee to Ford to make the next generation of low-carbon diesel engines here in the UK. It would not have helped us when we were trying to support world-class aerospace at Airbus and Rolls-Royce. It would not have assisted in our ambition for the UK to move into the world premier league in the nuclear supply chain through the loan for Sheffield Forgemasters. Nor would it have done any good when we were trying to attract manufacturers of the next generation of off-shore wind turbines to make their products here in Britain.
Mark Tami (Alyn and Deeside) (Lab)
Is not Airbus a perfect example not only of how hundreds of millions of pounds have secured and created thousands of jobs, but of the fact that that money is repayable, and has been repaid, and that royalties are paid on every aircraft sold, which means that this is also a very sound investment for the Government?
Mr McFadden
My hon. Friend makes a good point. A lot of industrial support is in the form of loans or loan guarantees. The depiction that the new Government have attempted to create of the indiscriminate giving of grants that were not in the public interest is absolutely not true.
Richard Graham (Gloucester) (Con)
Is the right hon. Gentleman aware of last week’s Centre for Cities report, which highlighted the growth, or lack of growth, in the private and public sectors over the past 10 years? Some 69% of the 1.2 million jobs added to city economies over the past 10 years were public sector positions. In my constituency, the growth rate in the private sector fell by 10% over that period, which meant the loss of 4,600 jobs from the private sector while the public sector grew by 7,600 jobs. My city was the fourth worst in the country; the city of Stoke, represented by the hon. Member for Stoke-on-Trent South (Robert Flello), was the worst. May I put it to the right hon. Gentleman that if that is the result of 10 years of massive spending in the public sector, it is simply unsustainable to carry on losing that number of private sector jobs, and that our job is to re-stimulate the economy and the framework for growth in the business sector?
Mr McFadden
The answer will be shorter than the question. I am aware of that report. However, my point is that if we want to stimulate private sector investment through some of the companies that I have mentioned, Government have a role to play. Simply walking away will lead to fewer, not more, private sector jobs.
Robert Flello
Returning to the subject of RDAs, a firm in my constituency wishes to bring the manufacture of ceramic products back into Stoke-on-Trent from abroad, but it is unlikely to be able to pursue that ambition because Advantage West Midlands is now unable to confirm its support. The ceramics industry is trying to bring jobs back into Stoke-on-Trent, and it is quite capable of doing so, but not without a little extra support.
Mr McFadden
My hon. Friend makes a good point. Sometimes a bit of investment from the public sector can lever in significant extra investment from the private sector.
I want to turn to the criticisms of the approach that I have set out that have been made by the Secretary of State and the Prime Minister in recent weeks. They have made specific accusations, saying that the projects were agreed in a hurry and were politically motivated. Indeed, the Prime Minister repeated that allegation a short time ago at Prime Minister’s questions, when he spoke of fiddled grants for political reasons. Last week, he alleged that we had spent tens of billions of pounds on industrial support. I have to say that it is no wonder that he is sharpening his public spending axe if that is his grasp of the amount of money that we were spending on industrial support.
Let me deal head-on with the accusation about rushed and politically motivated largesse. These projects were not agreed in a hurry. We negotiated for months with the car companies, with the wind turbine suppliers and with Sheffield Forgemasters. All those projects were subject to careful scrutiny by officials and to the usual value-for-money criteria used in decisions of this kind. In the last Parliament, time after time, I stood at the Dispatch Box opposite and was criticised by some of those who are now Ministers sitting in front of me—not for going too quickly on industrial aid or for being rash about it, but for dragging my feet.
In a report published as long ago as July 2009, the Business, Innovation and Skills Committee, which was chaired at the time by the hon. Member for Mid Worcestershire (Peter Luff), who is now an Under-Secretary of State for Defence and a ministerial colleague of the Business Secretary, said that it was
“profoundly disappointed that to date not one single penny has been advanced through the scheme”—
the automotive assistance scheme—and added:
“We hope that this will change rapidly.”
That is the same scheme that has funded Ford and General Motors, so let us have fewer accusations that there was a huge rush in the run-up to the election to spend money profligately.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
My right hon. Friend quoted what I intended to say. I was a member of the Committee that produced that report, and when I represented it in a debate on local radio, I repeated the accusations that appeared in our report.
Mr McFadden
I am pleased to hear from my hon. Friend and I wish him well in his new role as the new Chairman of that Committee.
Gordon Birtwistle (Burnley) (LD)
May I welcome the former Minister’s conversion to a balanced economy? In that past 13 years, the previous Government virtually destroyed manufacturing industry and hung their coats on the financial industry, so this country went down. My constituency has lost hundreds of jobs in manufacturing industry because of the economic policies of the previous Government.
Mr Speaker
Order. So that I do not interrupt the flow of the right hon. Gentleman, I should say now that there have been a number of interventions whose eloquence—this is the fairest that can be said of them—has been matched only by their length. Interventions do need to be a bit shorter.
Mr McFadden
The hon. Gentleman sums up the problem with the attitude of the Liberal Democrats. They are determined to say that we are no longer a strong manufacturing country, but I have news for him: we are the sixth biggest manufacturing economy in the world.
Matthew Hancock (West Suffolk) (Con)
Will the right hon. Gentleman give way?
Mr McFadden
I am going to make some progress but I will give way later.
I was speaking about the timing of the previous Government’s decisions, but I also want to address the accusation that the political representation of this or that area was a motivation for our decisions. Not only is that complete and utter nonsense, but the fact that the new Government see it that way speaks volumes about how they see the Government’s role in supporting industry. Our country was faced with a choice of Rolls-Royce manufacturing here or in Singapore, Nissan could have gone to Portugal, and nuclear components could have been made in Japan or Korea. Are the Government really saying that when faced with those alternatives, their first reaction would be not to ask how to secure the investment and the jobs for Britain, but to reach for the electoral map to see who the local MP is? What a dismal view of the Government’s role in supporting UK industry.
Mr Denis MacShane (Rotherham) (Lab)
I am grateful for my right hon. Friend’s robust point. The Prime Minister said that all that money was sent to Labour marginals, but that did not work, did it? If we want a strong manufacturing sector, will the three and a half pro-Europeans in the DBIS ministerial team—the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Wantage (Mr Vaizey) is the half—keep British manufacturing ahead of that of France? That is their responsibility.
Mr McFadden
My right hon. Friend makes a strong point, but I want to make progress.
The previous Government’s decisions were neither rushed nor politically motivated, and our manufacturing industries deserve a better future. The Government say that they are reviewing the projects to which I referred. We have already had a welcome confirmation of the Nissan decision, and I pay tribute to my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) for pressing the Government so effectively on that, but damaging uncertainty still exists, so let me ask the Secretary of State some specific questions.
What is the position on the loan guarantees to GM and Ford? What is the position on the loan to Sheffield Forgemasters? The director general of the CBI visited that plant the other day and said:
“It is hugely exciting to see such impressive technology and innovation being developed on this scale, here in the UK. The size and quality of the products being developed at Forgemasters is outstanding and this expansion programme builds on that by making a real investment for the future.”
That was the verdict of the CBI. The previous Government decided to back the expansion of Sheffield Forgemasters not because we wanted to give aid to one company, but because we wanted a greater national capability in the nuclear supply chain, which is critical for Britain when many countries are building more nuclear power stations.
The Secretary of State must confirm the Government’s position on that, because I must tell him that there are a lot of rumours going around about their attitude and response, and that if the loan does not go ahead, it will mean he is behaving exactly like the banks that he criticises for not supporting industry. We said that we would support industry, and it is time that the Government’s position on that loan is cleared up.
Matthew Hancock
The right hon. Gentleman has talked a lot about growth and the need for a growth strategy. Is it still the Labour party’s position to put a tax on jobs in the middle of the recovery?
Mr McFadden
The proposals we made on the tax to which the hon. Gentleman refers would have kicked in next year. If I were him, I would not be so cocky about tax just a week before his Chancellor comes to the Dispatch Box to tell us his tax proposals.
To return to my specific questions, will the new Government go ahead with the port development competition that was so pivotal in attracting offshore wind suppliers to the United Kingdom? Will the new Government stand by the support to Airbus and Rolls-Royce, which was mentioned by my hon. Friends? The Government have already caused damaging uncertainty by placing a question mark over those projects. If they abandon them, all their words about manufacturing and rebalancing the economy will rightly be seen as worthless.
Mr McFadden
No—I have already given way to my hon. Friend and I want to make progress.
Support for industry is not just about specific interventions, but about having the right measures in place to foster investment and innovation, and I want to ask the Secretary of State where we stand on some of the key measures in that area, such as capital allowances, which the Government provide to encourage investment in new plant and machinery. The allowances are vital to manufacturing companies, particularly when we want them to be moving to lower carbon production. For those reasons, we doubled investment allowances in our last Budget, which meant that the new allowance—of £100,000—covers some 99% of capital investments made by companies every year.
The new Government, however, are pledged to cut those allowances to pay for their planned cut in corporation tax, a move described by the Engineering Employers Federation as “a disaster”. It has said that if those plans went ahead:
“Any business would have to think twice about investing in the UK.”
Before the election, the Chancellor said that that plan would involve the removal of allowances amounting to £3.5 billion, which would otherwise support manufacturing. Can the Secretary of State confirm that it remains the Government’s policy to cut investment allowances for manufacturing industry?
Another issue is supporting research and development. We are all agreed that we want research and development, and the manufacturing associated with it, to take place here in the UK. For that reason, the previous Government introduced the idea of a patent box—a corporation tax rate of just 10% on future profits made from patents. When we announced that policy, Andrew Witty, chief executive of GlaxoSmithKline said:
“The patent box is exactly the sort of active, long-term and creative support that we need from the government to ensure that the UK remains an attractive place for highly skilled sectors such as pharmaceuticals.”
When the Secretary of State was asked about that a couple of weeks ago, he did not answer, but I want to give him another chance to do so today. If the new Government believe so much in a lower rate of corporation tax, will he now tell the House whether they support that proposal for an extra-low corporation tax rate for that part of the economy engaged in research and development here in the UK?
On innovation, can the Secretary of State tell us where we stand on the Hauser report and Labour’s plans for innovation centres to help the crossover of ideas between academia and industry?
Let me say a word about the regional development agencies. These were introduced by the Labour Government a decade ago because we had seen the success of the Scottish and Welsh development agencies. They have, for the most part, performed well, with independent evaluation showing that for every £1 spent, regional economies benefited on average by £4.50. I know that the Secretary of State agrees that every part of the country should share in future economic growth. Before the election, he said that
“efficiency has become the new politically correct word for sacking people and cutting services”.
But one of his first acts, together with other Departments, was to take £300 million out of the RDAs, so I know that he will not claim that that was about efficiency. Will he admit that that will have a real impact, with business support cut, projects cancelled and delayed, and—as my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) said, less private investment levered in to those projects?
Tony Baldry (Banbury) (Con)
Earlier, the right hon. Gentleman accepted the need to control the budget deficit. Is there any area in which he thinks public spending should be reduced? Can he share just one such area with the House?
Mr McFadden
The previous Government set out many proposals, including some £900 million over the next few years in the expenditure of the Department in which I was a Minister. We also said that we would save billions more than that on public sector pay and pensions, and we set out many other proposals. I do not stand here as someone who says that there should never be cuts. My point today is that cuts must be made in a way that supports a strategy for growth, not in a way that militates against it. That is why I raised the issue of industrial support and regional development.
Apart from the Budget, what about the future of the RDAs themselves? Government policy on this is in a total mess. We have had statements that they will be abolished, that they will be replaced, and that their replacements will both be different and look the same. Can the Secretary of State tell the House today exactly what the position is and how he is going to make a judgment on this? He talks of business and local authorities deciding in particular regions. How will that be done? Will it be one vote per council or one vote per business? Will it need a 55% majority? If it will be up to the region, how will he make the judgment on this important issue?
Lorely Burt (Solihull) (LD)
RDAs are important, but does the right hon. Gentleman concede that the performance of some RDAs has been patchy—to put it kindly? Does he agree that we can still deliver support for business in a cost-effective way, but more flexibly using local enterprise partnerships? One size does not fit all in all areas of the UK.
Mr McFadden
I know that the hon. Lady cares about these issues, but I have to disagree with that point. Until the situation is clarified, businesses in various regions do not know with whom they will be working, and a damaging lack of confidence is emerging about how projects that cross local authority boundaries are to be managed in the future.
David Simpson (Upper Bann) (DUP)
The right hon. Gentleman has mentioned research and development, but one of the pressing issues in industry today is apprenticeships. We have been promised 50,000 new apprenticeships, but does he agree that they must lead to relevant qualifications at the end of them, so that apprentices are not just going through the process for the sake of it? They need to be relevant to the industry and to the companies involved.
Mr McFadden
When we were in government we brought apprenticeships back from the near-death state that they were in and made them once more a mainstream part of the labour market. They are valuable, and we increased the number available many times in our time in government. I agree that they are very important in providing opportunities for young people.
We sought this debate because we believe that while it is right to cut the deficit, it is not possible to go forward, as we come out of the recession, on the basis of tax and spending plans alone. Since the election, the Government have been determined to paint a picture of unremitting doom and gloom about the next few years in an effort to manage public expectations about the cuts that they are planning. Of course the situation we face is challenging—I do not deny that—but we do not believe that Britain is broken. We believe that we can have a strong industrial future if we have a clear plan for growth alongside the plan for deficit reduction.
Austerity alone will not shape our economic future. The Government should see their role as being ambitious for Britain, as well as one of managing public expectation about the cuts with which they have seemed to be obsessed in recent weeks. The Government should be ambitious to make the most of the transition to low carbon; to make the most of our excellence in creative industries and the information economy; and to build on what we have done in education and science and ensure that our economy benefits from it. As an MP who represents a manufacturing constituency, I also think that we should be ambitious to ensure that Britain makes things as well as provides excellent services. The Government are fond of talking about manufacturing in terms of decline. The truth is that the output and value of manufacturing have remained constant over the last decade up to the period of the recession, which is a tremendous achievement for our manufacturers as it was achieved in the face of the greatest wave of globalisation that the world economy has ever seen. We are in a stronger position than the Government make out.
The new Government have shown much about how they see things by making inaccurate statements about the amount of money that we spent on support for business, the speed at which the decisions were taken and the political motivation behind them—as I say, it had nothing to do with who represents the constituencies in which our manufacturing is located. The country and the economy deserve better than that. We are clear about the Government’s role in shaping the economy of the future. We have an opportunity before us, because we stand on the brink of a second industrial revolution as we move from a high-carbon economy to a low-carbon economy. We should be ambitious about seizing the opportunities that that represents, and that requires an active role for Government and a proper plan for growth. That is why we have tabled this motion today and that is why we raise these issues today. I commend this motion to the House.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
I beg to move an amendment, to leave out from “power” to the end of the Question and add:
“welcomes the Government’s £150 million investment in a further 50,000 apprenticeships and their £50 million to support the college building programme that was in chaos under the last Government; further welcomes the extra 10,000 university places on offer for 2010-11; notes with concern the wasteful, ineffective policies pursued by the last Government regarding industrial support, and commends the Government’s plans for local enterprise partnerships that will deliver better value for money and support long-term growth objectives; recognises the need for a review of all projects approved since 1 January 2010 to evaluate their worth to the economy and taxpayer; welcomes Government support for entrepreneurs by reducing bureaucracy and increasing flexibility for both employees and employers; and believes the Government has made a strong early start in providing the conditions for long-term low-carbon economic growth and rebalancing the economy.”.
I have introduced many Opposition day debates and it is a pleasure to be able to respond to one. I know that hon. Members attend such debates for different reasons. Some come to make party points, and that is quite right—it is an Opposition day. Some come for constituency reasons, and I will have something to say later about some of the very specific projects that have been mentioned. I want to put those in context, so hon. Members need not feel that they have to intervene at any moment—
Joan Walley (Stoke-on-Trent North) (Lab)
Will the Secretary of State give way?
Vince Cable
Let me finish my introduction; I will come to specific projects later.
In relation to taxation, the right hon. Member for Wolverhampton South East (Mr McFadden) knows that I am not in a position to pre-empt the Budget, but if he reads the Chancellor’s speech to the CBI a few weeks ago, he will see that it fully acknowledges that not only do we wish to see lower rates of business tax overall, but we understand the importance of capital allowances in manufacturing.
In my days in opposition, I tried to engage constructively and find common ground, and we have approached today’s motion in that spirit. It includes some excellent statements, to which we are happy to subscribe. I shall start by working through some of those areas that appear to be common ground. The motion states that the
“Government has a crucial role to play in fostering economic growth and in creating a better-balanced economy”.
That is absolutely right, and we totally sign up to it—it is exactly what the Government are about—but it pre-empts the obvious question: why is the economy so unbalanced to start with, and who was running the Government who led it to be so unbalanced? By unbalanced, most of us mean that one sector, and one part of the financial services industry—the City and big banks—became too dominant, while the rest of the economy, including trade in goods and services, and in particular manufacturing, was allowed to decline relatively. That is the imbalance we are talking about.
It is worth putting that in context, however. My hon. Friend the Member for Burnley (Gordon Birtwistle) made this point from a local context a few moments ago. The share of manufacturing in the British economy shrank from just over 20% in 1997 to just under 12% in 2009. Of course, that is a historical trend, but I remember in the 1980s when people were concerned about deindustrialisation. It is worth noting that the rate of decline in manufacturing over the past decade was three times as fast as it was in the 1980s. Manufacturing employment during the period of the Labour Government, when this imbalance grew, fell by 1.7 million—that is the population of Leeds, Sheffield and Glasgow combined. That demonstrates the decline in manufacturing. Furthermore, the number of manufacturing companies fell by 12% over that period. That was the imbalance created when the right hon. Member for Wolverhampton South East and his colleagues were in government.
Mr MacShane
I welcome the Secretary of State to his job, and he will recall that I reviewed his memoirs very positively, which added considerably to sales. He is right about the decline, but the same decline is reflected in America, Spain, France and Italy. However, one part of manufacturing as important as the rest is steel, which is an industry that I represent in Rotherham. May I bring steel industry employers and workers to talk with him? Steel requires a complex matrix to do with energy, electricity prices and trade. We had a very good relationship with the right hon. Gentleman’s predecessors, and I ask him whether, at his own convenience—there is no great hurry—I and some steel people could meet him to talk about these issues.
Vince Cable
That was a very constructive intervention, and I would be delighted to meet the right hon. Gentleman’s constituents. I met steelworkers before the election—indeed, I went to Redcar, which is now represented by a Liberal Democrat, and met the Corus workers there—and I would be very happy to meet any steelworkers whom the right hon. Gentleman wishes to bring.
Joan Walley
I congratulate the right hon. Gentleman on his new post. My intervention, along with that of my hon. Friend the Member for Stoke-on-Trent South (Robert Flello), is made in the spirit of trying to find a constructive way forward. In his speech, will the Secretary of State take account of the existence of heartland areas that have been over-reliant on manufacturing? One such area is Stoke-on-Trent, where we have large inequalities and where we need to do all that we can for manufacturing. Someone in his Department needs to be answerable purely for the ceramics area. We are desperate to meet with him to ensure that we can go forward with the regional development funding, irrespective of who administers it, in partnership with the Government in order to get what Stoke-on-Trent needs.
Vince Cable
I would be very happy to meet the hon. Lady and her colleagues. Her colleague the hon. Member for Stoke-on-Trent South (Robert Flello) spoke up a few moments ago on behalf of the black country—
Vince Cable
Indeed. It is part of a conglomeration, but he spoke up for Stoke-on-Trent in particular. I met the chamber of commerce from that area; it came up with some excellent ideas, and I would be happy to meet it and the hon. Lady again. Clearly, this part of the country is deprived and needs special attention, and I am happy to give it.
I return to the question of how the imbalances arose. Of course, there is a trend, but it was aggravated by bad policy. I shall remind Labour Members, not all of whom were here during the period, of some of the big developments that occurred and which produced this excessive decline in manufacturing and the excessive dependence on the banking sector. Five or six years ago, I and other colleagues were warning from the Opposition Benches about the bubble that was developing in the property market, the reckless bank lending that was fuelling it and the instability that it was going to create. We were dismissed at the time as scaremongers, but of course the bubble did burst, with the disastrous consequences that we are now paying for.
Going further back in time—probably to before the right hon. Member for Wolverhampton South East was a Member of the House—a very important report was commissioned by the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). The Cruickshank report set out graphically how the British banking industry simultaneously was pursuing short-term profits while being dependent on a Government guarantee, and was also severely damaging British small-scale business because of the lending practices being adopted. At the time, we urged the Government to act on that report, but nothing was ever done.
John Woodcock (Barrow and Furness) (Lab/Co-op)
The right hon. Gentleman talks about the past, but does he agree with the chief executive of the Cumbria chamber of commerce who said it would take the region back to the economic dark ages if we were to scrap the Northwest Regional Development Agency?
Vince Cable
I am happy to come to RDAs shortly. We have a view on them, and I have been asked specific questions by the right hon. Member for Wolverhampton South East about them. The hon. Gentleman will also have heard me speak specifically about the north-west at Business, Innovation and Skills questions a couple of weeks ago—but I shall return to that.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
The right hon. Gentleman said that, when on the Opposition Benches, he urged the Government to take action against the banks. What were his friends in the Conservative party asking for back then?
Vince Cable
The Chancellor of the Exchequer made a very good statement earlier, setting up the commission that will look at the structure of banking. Indeed, we are working together on improving the very poor performance of the banking sector in terms of credit to small and medium-sized lending. The record of the Labour party is terrible in that respect, and we will improve on it.
It is clear that the last Government had an industrial policy. I cede that point. We have to go back to the seminal moment when the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath, made one of his famous factory visits—to the headquarters of Lehman Brothers in London—and announced:
“I would like to pay tribute to the contribution you and your company make to the prosperity of Britain”.
The consequences of that policy are with us today, in the costs of the collapse, the recession that followed and the enormous problems that we have inherited. That was the industrial policy; that was the imbalance of which hon. Members complain.
Richard Burden (Birmingham, Northfield) (Lab)
I welcome the activist approach towards banks that the Secretary of State is outlining. He will be aware that the House has debated the situation of former workers at Longbridge who are still waiting for money from a trust fund promised to them in 2005. At the moment, that seems to be being held up by an argument between Lloyds Banking Group and the Phoenix Four. Will he get involved to try to ensure that they finally receive the money that they deserve and which they were promised so long ago?
Vince Cable
I was in Birmingham last week, and people affected by that problem have approached me—indeed, the city council also raised the matter with me—and I have asked for it to be investigated. It is a complex legal problem, but clearly it needs looking at.
I shall proceed to the second statement in the motion with which we agree. The Labour spokesman was explicit, forthcoming and realistic about cuts. The motion reads:
“That this House notes the need for a clear deficit reduction plan”.
It is now going to get one, because on Monday we launched the Office for Budget Responsibility. We now have believable and independent growth numbers on which to construct a budget strategy, and next week the Budget will spell that out in more detail.
Toby Perkins (Chesterfield) (Lab)
The Secretary of State will know that he is viewed, in his own party at least, as an economic Nostradamus. Does he seriously expect us to believe that the Office for Budget Responsibility report told him something of which, even with that huge brain of his, he was previously unaware? Most serious financial journalists are saying that the report showed that the previous Government’s forecasts were accurate, so is he seriously telling the House that it led him to a policy so totally different from the one he had been campaigning on for all those months?
Vince Cable
That was starting to morph from an intervention into a speech. It did not require a great genius to see the fallacies in the bubble economy that was being created, and I was one of many people who saw the problem. However, the hon. Gentleman is getting to the issue of my position, which was also raised from the Opposition Front Bench, so let me deal with the question of cuts, the timing and what the sensible response is. The motion refers to a
“critical moment in the…cycle,”
and talks about recovery being fragile, and it is fragile. There are risks in both directions. If there are rapid cuts in public spending, they of course run the risk of having an impact on growth; we all understand that, but there is the risk on the other side that if we did nothing or delayed taking action, there would be a serious crisis of confidence in the economy because of the sovereign risk crisis that is rolling around Europe.
I was specifically challenged to say why I had changed my mind on the subject, and I will tell the hon. Gentleman when I changed my mind. Before I entered this Government, I spoke at some length to some of the key decision makers in the UK, including the head of the Treasury, and we also had advice from the Governor of the Bank of England. Their advice was unequivocal: in the circumstances that we entered, we had absolutely no alternative but to act decisively and quickly. I always made it clear in opposition that we had to act rationally. We had to take account of growth on the one hand and sovereign risk on the other. Those factors had to be balanced. We have balanced them, and we came to the decision that early action was essential in the light of the circumstances that exist. That was objectively based on the evidence in the economy.
Rachel Reeves (Leeds West) (Lab)
The right hon. Gentleman also met the permanent secretary at the Treasury and the Governor of the Bank of England before the election, so I am still not clear how his mind was changed between the election campaign and when he became the Secretary of State. Can he clarify what it was between those dates that made him change his mind?
Vince Cable
I do not know whether the hon. Lady was reading the newspapers when she was campaigning for election to this House, but there was a major sovereign debt crisis emerging in Europe. [Hon. Members: “Oh, come on!”] Well, I am sorry, but the gasps from Opposition Members suggest how utterly and completely out of touch they are with the realities of financial markets. We are talking about a very serious crisis, and the Government had to respond to it, as other Governments are doing now.
I congratulate the Opposition spokesman on being honest enough to acknowledge, in a rare departure from tradition, that he had been forward in accepting the need for cuts. Those on the Benches behind him who are so anxious about early cuts need to be aware—the Institute for Fiscal Studies pointed this out—that the previous Government were already engaged in a fiscal tightening of £23 billion for this financial year. We are now being accused of making cuts in the current circumstances, but the previous Government were planning that too.
That was on the record, and it was not just a theoretical abstraction; rather, many of us saw it happening. It happened in the Department for Business, Innovation and Skills, which the right hon. Member for Wolverhampton South East was responsible for. Lord Mandelson was the first Minister to put his Department forward for early cuts, which was why, in the run-up to the election, I attended a meeting of further education college lecturers in my constituency, 70 of whom were going to be made redundant. The reason for that was that those early cuts, introduced by the right hon. Gentleman, were working their way through to the front line of teaching. I then went to one of the leading science laboratories in my constituency, where 40 members of staff were being made redundant because of cuts made by the right hon. Gentleman and Lord Mandelson this financial year, so please let us not have any more of this pious nonsense about early cuts.
Mr Hanson
Whatever may or may not be the case with regard to early cuts, one decision that the previous Government did make was on contracts signed between 1 January and the election involving Vauxhall at Ellesmere Port, Airbus, Sheffield Forgemasters and many others. Will the right hon. Gentleman tell the House when he is going to decide whether those grants can proceed, in order to end the blight on those industries?
Vince Cable
If I get fewer interventions, I will be able to get to that point shortly. I am trying to develop the argument and respond to the perfectly valid points that the Labour spokesman made.
Andrew George
I am grateful to my right hon. Friend. I appreciate that he is concerned about interventions, but given that he is saying that his response has been rational, as I believe it has been, he will be aware that my part of the world—Cornwall—is the poorest region in the UK. By the Government’s own admission, it receives less than the Government say it deserves in health funding and for many other public services. The Government rightly propose to abolish the RDAs, but what impact will that have on the poorest regions in the UK, if match money is not available for the convergence programme, for example, and those regions—the most impoverished and the most in need of investment—carry a disproportionate burden of the cuts?
Vince Cable
I am heartily relieved that my hon. Friend did not ask me an awkward question about the retail ombudsman, but he is right about Cornwall: it has special problems. As it happens, it has not been well served by the RDA. The South West of England Regional Development Agency covered areas such as Bristol and more prosperous parts of the country, which received an undue share of its attention. In the new structure, which I shall describe shortly, his county, and its county council and businesses, will be in a much better position to advance their cause.
Vince Cable
I have taken a lot of interventions. I am always generous, but may I come back to the hon. Gentleman?
I want to pursue the issue of cuts. I have dealt with the issue of immediate cuts; however, the question is where they were going to lead. I know that we have gone quite far in the modernisation of the House, but we have not got as far as PowerPoint projections, so I am a bit limited in what I can show. However, the right hon. Member for Wolverhampton South East will be familiar with the work that the IFS did before the election showing where cuts were going to appear in different Departments, had the Labour party been returned to power. I have here one of its charts, which shows what would have happened to the Department that I now lead. It shows a projection of cuts in the order of £4.4 billion, or 20%. That is what the right hon. Gentleman and his colleagues were planning.
Vince Cable
Indeed they were, although I do not think that the right hon. Gentleman can quite make up his mind whether to apologise or deny.
The IFS is an independent body—it has nothing to do with the Government—and I am talking about what it anticipated. It would be useful to contrast the scale of the cuts that the right hon. Gentleman and Lord Mandelson and his friends were planning to make in their area of government with what we have already done. In the first week of office we had to find cuts, and we found £830 million—we got £200 million back in recycled money and we have made a cut of £630 million. That is a large sum of money, but it is about an eighth of what we know a Labour Government would have taken out of my Department’s spending. [Interruption.] We can quibble about the number, but very large cuts were being planned by the Labour Government, had they been returned to office. Let us be clear about that.
It would be useful to know what Labour was planning to do. The right hon. Gentleman objects to cuts in RDAs and cuts in industrial support, and he objects to the fact that student numbers are not rising by as much as he wanted, but where are the cuts going to come from? All from the science budget? All from FE colleges? I do not know. Perhaps he is too embarrassed to stand up and tell his colleagues on the Benches behind him what he was planning to do, but I would like to know, because we are in the middle of a very difficult spending exercise. I would like his advice, so perhaps I can set up a private meeting with him and Lord Mandelson, so that they can tell me what they were going to do. I would find that instructive.
Mr Mudie
Many of us have admired the right hon. Gentleman’s pragmatism and judgment over the years, yet we remember what he said during the election campaign about the danger of clearing the structural deficit within the lifetime of this Parliament, which is a policy of his coalition partners. The Office for Budget Responsibility has now indicated that the structural deficit is much worse, yet the Chancellor is sticking to the same timetable. If the Secretary of State worried about that approach during the election, will he share with the House his worries about the deeper and worse situation that we now face, and the effect that it will have in pushing us back into another recession and increasing unemployment steeply?
Vince Cable
Of course there are dangers, and I spelled out earlier the twin dangers that we have to balance very carefully. Lest the hon. Gentleman imagine that I have suddenly developed an enthusiasm for strict public sector discipline, I suggest that he read the pamphlet that I wrote the best part of a year ago, in which I made the case for dealing with the structural deficit rapidly and in a radical way. That is entirely compatible with the strategy that we are now adopting.
Geraint Davies (Swansea West) (Lab/Co-op)
Will the right hon. Gentleman give way?
Vince Cable
May I just finish this point?
It is clear that the Opposition’s response in the motion to the budget cuts and to the issue of imbalance is really not very serious. Let us examine a couple of other fragments from it. It talks about the “business-led recovery” that they seem to want. I wonder how many people are aware that 21,000 new regulations affecting British companies were introduced in the past 10 years—that is six per working day. How on earth were the previous Government hoping to achieve a business-led recovery when businesses were being prevented from growing? A survey published today by Infotec shows that one in 10 British entrepreneurs were contemplating leaving the country for tax and regulatory reasons. That is the legacy that we now have to address.
The motion also states that the previous Government were
“laying the foundations for the UK to be globally competitive”.
During their period in office, the competitiveness league tables—which are generally accepted—showed that this country fell from seventh to 13th. So that is what they meant by laying the foundations for us to be competitive.
Let me now turn to the vital industrial decisions about which several Labour Members are quite rightly exercised. A significant number of projects were signed up to before the election. Some were good; some were questionable. Many of them raised issues regarding value for money, affordability and other factors. Quite rightly and prudently, we are carrying out due diligence on those projects; we are working our way through them.
I can make one announcement today, however. It is right and proper that we should examine the decisions taken by the previous Government since 1 January, to ensure that they offer good value for money and are in line with the Government’s priorities. That is entirely legitimate. This need for re-examination is something that the automotive industry, in particular, understands and accepts. Equally, however, it has urged us to reach our decisions quickly, given the time that has already elapsed in considering the loan guarantee projects.
The Prime Minister confirmed this week that the Government’s support for the Nissan electric vehicle and associated battery plants would go ahead, and I am today able to announce that the Government have confirmed that a loan guarantee of £360 million will be offered to Ford, and one of £270 million to General Motors Vauxhall. This confirmation is, of course, subject to appropriate pre-conditions for our support being met, and to final decisions by the companies. We understand that GM is considering its next steps in the light of progress in obtaining funding from Germany, and I believe that it might not wish to proceed with our offer. However, the offer has been made and it is now confirmed. That is all I can say today. Decisions will be announced shortly on other specific projects.
Ian Mearns (Gateshead) (Lab)
The Secretary of State mentioned the due diligence being conducted on particular projects. The Prime Minister has referred to Lord Mandelson going round the country with a massive cheque book, handing out hundreds of millions of pounds, two thirds of which he said went into Labour marginal constituencies. Will the due diligence also involve taking a close look at where that money is being spent, particularly where those Labour marginal seats are now held by members of the coalition parties?
Vince Cable
Yes, indeed; we are looking at all the projects in a completely practical way. As I said, some of them are good, and some of them are not. It is as simple as that.
Mark Tami
The Government are obviously fond of reviews. We are about to have a defence review, which will involve the 400M military transport aircraft project. That will have an important effect on all wing production in the UK. How long does the right hon. Gentleman’s Department think that review will take? Clearly, those companies could make the choice to site the work elsewhere, which would have a dramatic impact on the work force in this country.
Vince Cable
That was not part of this exercise. The A400M is clearly a very important project, and we are looking at it using the same kind of criteria—value for money, affordability—and decisions will be made on that, but it was not part of this review.
Andrew Miller (Ellesmere Port and Neston) (Lab)
I, too, have received the news from General Motors that it might choose not to proceed, because of the current situation. However, if GM is to succeed as a business—as the Prime Minister said he wanted it to—it is important that we should have confirmation from the Government here and now that they will be ready to come back to the table and talk to the company, especially in relation to the next-generation vehicles such as the Ampera.
Vince Cable
Of course we are happy to talk to the company any time, and my door is open, but if the hon. Gentleman is saying “Can we have more money?”—
Vince Cable
Well, the hon. Gentleman said that he wanted to support a new-generation project—
Vince Cable
The hon. Gentleman is showing some indignation. I am so used to hon. Members asking for more money, and I am sorry if I have underestimated him—[Interruption.] Okay, if it is simply a question of encouraging a valuable new project, I would be delighted to do that, and I hope that he will arrange an appointment.
Andrew Miller
The company is to make a statement in three quarters of an hour. Will the Secretary of State retain his current position and confirm that, should General Motors want that loan guarantee, it will remain open to the company to pursue it?
Vince Cable
I cannot negotiate across the debating Chamber on the basis of announcements that are being made outside this place. It would be ridiculous to ask me to do so. I am, however, happy to keep in close contact with that project and with the people involved. It is clearly an important one, and we have confirmed today that we were willing to support the continuation of the loan. That is all I can say, but I am happy to talk to the hon. Gentleman and others about how we can take this forward constructively.
Gavin Shuker (Luton South) (Lab/Co-op)
Will the Secretary of State give way?
Vince Cable
I have taken an enormous number of interventions; I will take one from the hon. Gentleman later.
Before I leave the car industry, I must point out that these projects were part of an assistance scheme for the industry, and I think that the Opposition Front-Bench spokesman would acknowledge that they were time limited. Other projects have already made applications, which are being properly considered, but we cannot have a situation in which the car industry, or any other, assumes that it can come to the Government for money, just because it has an interesting project.
It is worth underlining the point that, in large parts of the British car industry, brilliant companies have got through the recession without Government support. My first visit as a Minister was to the Bentley factory in Crewe—[Laughter.] Hon. Members might laugh, but that factory provides thousands of highly skilled jobs and a high-quality product. It is a subsidiary of BMW. It was very badly hit by the recession—it lost half its output—but it kept going. The management took a big pay cut, and the workers joined them, accepting that they had joint responsibility for the company. The company survived; it is now flourishing—it has some of the most sophisticated technology in Britain—and it did all that without a Government guarantee.
Lorely Burt
Land Rover, in my constituency, is another brilliant example of a company that has weathered the economic storm. It is now surging forward, and it is investing in research and development. I welcome the decision on GM and Ford, and we should all be concerned about having a level playing field in relation to the UK economy and those in other parts of the world. Can we use R and D investment and capital investment in advanced manufacturing plants such as these to provide at least a level playing field in relation to other countries, and to secure investment for the United Kingdom?
Vince Cable
I know that my colleague takes a close interest in these matters. She has represented the interests of Solihull and the factory extremely well over the past few years. I am very happy to talk about her proposal, but I want to emphasise the fact that the automotive assistance scheme does not have a permanently open door. Applications have been made, and they will be dealt with on their merits.
I was giving examples of car companies that have flourished and coped with the recession without coming for Government support. Before I went to visit Bentley, I went to another factory, Cosworth—one of several Formula 1 manufacturers in this country, using very high technology. It was flourishing, providing highly skilled manufacturing employment and was not dependent on Government support, like many others. It is not just the specialist producers either, as mass producers—Honda, for example—are also relevant. Honda took a big hit during the recession and the work force accepted part-time working and cuts in pay in order to keep the company together. They did so, and the company did not come forward asking for specific Government assistance. That will now be the pattern.
We have made it very clear—I made it clear in a speech—that we are willing to do what we can to support growth in the British economy, and we will do it by helping build up competences, skills, research and development and so forth, but we are not in the business of handing out money to individual companies. Quite apart from the merits of the proposal, there is an issue of affordability in the financial climate in which we now operate.
Let me start to conclude by clarifying some things that we want to do. We believe, like the right hon. Member for Wolverhampton South East, that the Government have a role. I do not believe in laissez-faire. The Government have a role; there are many market failures; there is, of course, an important role for Government in this field. It has to be cost-effective, however, and it has to be affordable. Let me summarise some of the things we are starting to do, having been in office for only a month.
The first element is skills. One of the first decisions made by the Government when they came into power was to fund 50,000 apprenticeships. That compares with the 200,000 built up under the last Government over 10 years.
Vince Cable
I am sorry, 250,000. We introduced 50,000 within three weeks. There is a very strong commitment—[Interruption.] We have introduced the funding to support those apprenticeships, which is now being taken up through the National Apprenticeship Service.
Vince Cable
Let me finish the point. A very rapid move was taken to introduce high-quality apprenticeships —exactly the kind of thing that manufacturing industry requires—from a low base, which we have inherited.
Vince Cable
The money has been made available; that is the key point. We know from the National Apprenticeship Service that there is a great deal of interest in this programme and those places will be taken. It is a big advance on the level we inherited. Let me emphasise that, unlike the previous Government, we do not believe that we can fund these things out of thin air. We have funded it by changing our priorities. We have made a decision to cut back on the Train to Gain programme in order to fund these additional apprenticeships. That was based on priorities and on a critical review by the National Audit Office of how the Train to Gain programme operated under the last Government. We discovered that a quarter of all training places would have been funded by the companies anyway, that the programme was paying for the accreditation of skills where those skills already existed and that it was paying for expensive middlemen rather than establishing direct links between businesses and colleges. We now have not just more apprenticeships, but a better mechanism.
Secondly, we want to support further education colleges, which are the basis for post-16 education and training among those who do not go to university. One of the Government’s initial steps was to create a £50 million capital fund, more details of which will be announced tomorrow by the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes). It is worth remembering the Labour Government’s record in respect of FE capital—
Vince Cable
The hon. Gentleman says huge investment. I do not know what Department he served in, but the responsible Minister had to make a profound apology to the House for the complete catastrophe created by the Learning and Skills Council when it invited colleges to come forward with capital works projects. Bids were put in and then approvals followed for 10 times the value of the money available, so that many of those projects had to be cancelled. Colleges across the country are now living with the legacy costs of that. We are now putting in place a firm programme, properly costed, which will deliver serious capital investment to the FE sector.
I was asked what would happen to the regional development agencies. It is very clear from the coalition agreement that RDAs will be replaced by local enterprise partnerships. The right hon. Member for Wolverhampton South East asked perfectly valid questions about how that transition will be managed and how the enterprises and local councils will work together. My colleague, the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), will come forward in due course with proposals explaining how that will happen.
Lest we fall into the idea of believing that all RDAs made a remarkable contribution to the British economy, it is worth reflecting on some of the comments made by the Public Accounts Committee and then the National Audit Office. What we learned from that analysis is that the RDAs absorbed something like £10.6 billion in their lifetime. They did create some employment, that is for sure—at £60,000 per job. That was the cost—much more than twice the average wage, and at a time when there was a labour shortage in the economy and people were coming in from overseas. I repeat that £60,000 was being paid through the RDAs into creating employment. I do not deny that many of their activities were useful, but equally many were not. At Prime Minister’s Questions, the Prime Minister detailed some of the more absurd excesses, and I could have added a few more—the £50,000 party for the South West of England RDA in Center Parcs, champagne receptions in Cannes and many others. Some serious work was done, but it was very costly, raising very serious questions of cost-effectiveness. We now want to create a structure that reflects the real interest of enterprise and local councils.
Phil Wilson (Sedgefield) (Lab)
For clarification, the right hon. Gentleman is saying that the regional development agencies are going, so does that mean One NorthEast will be abolished?
Vince Cable
Well, it will certainly change. We are leaving it to local people to decide. This is a very original concept for Labour Members, who are used to everything being centrally driven. We believe that very often the best initiatives come from the bottom rather than the top—I know the hon. Gentleman may distrust that, but we do not know what is going to come out of the north-east consultation. It may be—
Vince Cable
Let me finish my point. The north-east councils and local businesses might prefer a structure like the one they already have—it is for them to decide—and there will be a process by which any proposals can be evaluated. In other parts of the country, a different route will be chosen. As I have said, the Minister of State will set out in due course how that transition will be managed.
Mr McFadden
I genuinely seek clarification because I am confused by what the Secretary of State is saying. A few minutes ago, he said that the RDAs would be replaced, yet in response to my hon. Friend the Member for Sedgefield (Phil Wilson), he seemed to say that it was a kind of maybe rather than a certainty. This is a really important issue to get clear. Is it true that all RDAs will be replaced, or could that be affected by the consultation that the right hon. Gentleman talks about? To take the example of One NorthEast, if it were the view of business and local authorities—I would like to hear how that will be determined—to retain that RDA, would the Government accept that? It is important to clarify this matter.
Vince Cable
For the avoidance of all doubt, they will be replaced, but the structures that emerge could have a regional scope if that is what local people want. That is the answer. The process will be set out in due course. All that needs to be said for the moment in clarifying our position is that the RDAs will be replaced. They did not give consistently good value for money. We need another approach, another structure, and partnerships of local business and councils. That is what this Government will now put in place.
Vince Cable
I will move on. [Interruption.] The hon. Gentleman appears to be grumbling from a sedentary position. If he feels passionately about the particular structure that operates in his area, there will be plenty of opportunity for him to talk to his local councils and his local businesses. This has to be enterprise-led, not bureaucrat-led or politician-led; it is an enterprise-led initiative. He has to get together with those people and come up with constructive initiatives for his own area.
Andrew Percy (Brigg and Goole) (Con)
As someone who represents a constituency in Yorkshire and Humber, may I welcome the moves to abolish the RDAs, which in my area have been driven by the interests of West Yorkshire at the expense of East Yorkshire and north Lincolnshire? As we move towards whatever replaces them, will the Secretary of State confirm that local, sub-regional identities and economies will be respected, and that local people will have a real input?
Vince Cable
That is exactly the point. In parts of the country, the sub-regional approach may be more sensible, and we want to create a framework in which that will happen.
Vince Cable
I will take one more intervention, from the right hon. Member for Tottenham (Mr Lammy), and then conclude.
Vince Cable
The right hon. Gentleman misunderstands completely. [Hon. Members: “Oh.”] He is confusing two different things: one is function, and the other is geography. They are different things. The RDAs will not continue, under any definition of our policy as it emerges through consultation—they will not perform the same range of functions as they do currently. If local people wish it, they might have a regional form, and that will emerge in due course. I think that enough has been said about the matter. I know that the right hon. Gentleman has struggled to take it in, but I think that where we are heading is abundantly clear.
John Hemming (Birmingham, Yardley) (LD)
To explain the point to the Opposition, geography varies around the country. The west midlands has a number of city regions, and it would be positive development if each had a local enterprise partnership. We do not know whether Coventry is in or out of greater Birmingham, but we want a city regional basis. The north-east, however, might like a regional approach. My right hon. Friend will agree that the Opposition do not understand the concept of geography and boundaries, and believe in enforcing the same rules across the country, rather than leaving such matters to local people.
Vince Cable
That is absolutely right. The basic problem—and the reason that it is taking some time to explain the matter to the Opposition—is that the Opposition believe that the status quo must be protected because they invented it. There will, however, be fundamental changes.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Will the Secretary of State give way?
Vince Cable
I have taken enough interventions.
To conclude as I started, we need private sector-led growth to offset the very difficult cuts that will have to be made in the public sector to restore financial sanity. Some initiatives will require direct Government intervention, but many will not. For example, we are committed to removing the burden of regulation, which mushroomed to alarming proportions. One key step that must happen, and that failed miserably under the previous Government, is to ensure an adequate supply of credit for small and medium-sized businesses. We must have a tax system that is friendly to business, that encourages companies to come here and that is simple. Most fundamentally, however, business wants the Government to clear up the mess in the public finances, as all the business associations make absolutely clear. I do not know how many of the business associations the right hon. Member for Tottenham has talked to, but, with regard to his comments about a business recovery, the business associations make it absolutely clear that they cannot develop business in Britain unless the mess in the public finances is sorted out. They need confidence, certainty and an assurance that the cost of capital will not escalate because of the crisis in finance. That is the priority, that is what we are working on, and that is how the recovery will take place.
Madam Deputy Speaker (Dawn Primarolo)
Order. I remind hon. Members that Mr Speaker has put an eight-minute limit on contributions to this afternoon’s debate. A very large number of Members want to take part in the debate, so it would help them all to get in if hon. Members were able to make their contributions in less than eight minutes.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I welcome the right hon. Gentleman to his new post. I know that he is committed to industry and manufacturing, even if that did not come out fully in his presentation today. I also thank him for his kind note on my election as Chair of the Business, Innovation and Skills Committee, and I look forward to his coming to our Committee and to talking to him about his future plans for industry and manufacturing.
As a long-standing member of the Business, Innovation and Skills Committee, and as a Member of Parliament representing a constituency with an economy that is heavily manufacturing-based, and which is adjacent to the constituency of the now shadow spokesperson, my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), I had many discussions with local manufacturers in the depths of the recession. Yes, they wanted our public finances cleared up, but the Secretary of State did not mention two other things that came through loud and clear: first, they wanted the level of demand in the economy to be sustained, as they depended on that to sell their products; and secondly, they wanted a range of individual schemes designed and tailored to support weaknesses within the industry, to preserve their future.
Mr Bailey
I agree completely. Many companies made the point vigorously that if they went down now, future tax revenues would be lost, and the prospect of us going into a deeper and further recession would be much greater. The previous Government’s short-term measures to sustain local manufacturing were therefore essential.
I looked at what the coalition document says about the coalition Government’s commitment to manufacturing. I was disappointed to find that the only reference to manufacturing was in the section on business:
“Our aim is to create the most competitive corporate tax regime in the G20, while protecting manufacturing industries.”
Although that is laudable and welcome, it is hardly the most robust commitment to sustaining our manufacturing industries. The previous Government’s measures to sustain demand and provide selective support, such as the car scrappage scheme, contributed to the current deficit, which, we are told, it is essential to eliminate if our manufacturing industry is to survive. However, the fact is that without incurring that debt our manufacturing industry would not have survived and would be in a far weaker position.
The title of the debate on the Order Paper is “Government Support for Industry”. The first thing the Secretary of State could do to support industry would be to say to the Chancellor of the Exchequer and the Prime Minister, “Stop making apocalyptic utterances about the state of our public finances.” I am happy to say that the report of the Office for Budget Responsibility on Monday demonstrated that our public finances were very much as reported by the former Chancellor of the Exchequer, and in no way conform to the current Chancellor of the Exchequer’s scaremongering portrayals. That is a serious matter, as it not only has implications for investment in industry and the public services, but for the public climate, which might be very damaging to our industries. Literally millions of public sector workers feel that they could be affected by decisions about investment in our public services. As a result, they are likely to decide to save rather than spend, which will reduce demand and potentially precipitate that double-dip recession.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I understand the passion felt by the hon. Gentleman on behalf of public sector workers in particular, and I think that it is shared across the House. Does he not recognise, however, that the debt interest payments that we shall soon be making will affect every worker, and every non-worker, in the country?
Mr Bailey
I am committed to public sector workers, but I am equally committed to those in the private sector. My point is that unless we sustain our private sector in manufacturing industry, it will be far more difficult to pay off our debt in the long term. We need to sustain our base. That, I think, is a better strategic position, and it is the position taken by the last Government.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
On Monday I visited a firm in my constituency which employs 25 people and has a turnover of about £1 million. It largely contracts its work from the public sector. Does the hon. Gentleman agree that the cuts agenda will affect not only the public sector, but the private sector as well?
Mr Bailey
Yes. The days when the economy could be divided between the public and the private sector are long gone. Engagement between them is subtle, sophisticated and often mutually supportive. The livelihoods of millions of workers in the private sector could be affected by decisions about public investment, but public utterances fail to take that into account.
Let me say something about individual schemes. Although it would obviously be unreasonable to expect the Secretary of State to present a comprehensive plan for support for manufacturing industry, I should have liked to hear a greater indication of the priorities that he would identify in his new role. The fact that the Government have begun by calling into question a range of initiatives taken by the last Government to support strategic industries does not augur well for the future. The argument that some of the grant and loan guarantees provided through either the automotive assistance programme or the strategy investment fund were in some way politically motivated prior to the election is a canard.
Before the election I was a member of the Business, Innovation and Skills Committee, which was chaired by a Conservative and which operated on an entirely cross-party and consensual basis. It criticised the then Minister, my right hon. Friend the Member for Wolverhampton South East, for taking too long to implement some of the loans and grants under that scheme. I debated publicly with the Minister at the time and was vigorous in my criticism of him, and I shall be vigorous in my criticism of the current Secretary of State for trying to imply that there was anything political in that process. In my view, the delays were due to an exaggerated consideration of due diligence and other complicating factors.
There are two helpful things that the Secretary of State could do. First, he could ensure that his colleagues do not damage demand, public confidence and industry by their public utterances. Secondly, he could resolve not to call loans and grants into question and create doubt and uncertainty in areas where they have been allocated by implying that they are there for a political purpose, because that would inevitably lead local people to believe that they are likely to be withdrawn following the change of Government. It would be playing political football not only with the livelihoods of individuals but with the strategic significance of the companies involved, particularly Sheffield Forgemasters.
I am running out of time, but let me make one more point. There was considerable debate about the regional development agencies. Yes, it is fair to say that there were some patchy performances, and yes, in the new climate there will be reductions. However, I hope that when the Minister winds up the debate, he will give a commitment that if RDA functions are to go to local deliverers, the funds that they are currently scheduled to receive will go with them.
Dr Phillip Lee (Bracknell) (Con)
Thank you, Madam Deputy Speaker, for allowing me to catch your eye so that I can make my maiden speech. I am grateful for the courtesies that the Chamber shows to new Members when they make their maiden speeches, but, being a doctor, I am reminded of the occasion on which I stood outside the human dissection room. I feel like that now: rather anxious, rather excited, and perhaps too eager to get stuck in.
It is customary for new Members to pay tribute to their predecessors. My predecessor, Andrew Mackay, served in the House for 29 years, representing Birmingham, Stechford for two years between 1977 and 1979, Berkshire, East from 1983, and Bracknell from 1997. It is fair to say that his reputation for constituency work was outstanding. His will be a tough act to follow, and emulating it presents a challenge that I hope to meet.
The name “Bracknell” comes from the Anglo-Saxon word Braccen-Heale, which means “bracken-covered secret place”. It was first mentioned in a boundary charter in 949 AD. A thousand years later Bracknell was designated a new town, and ceased to be a secret place. Its has grown significantly since then, and has managed to attract many companies: Honeywell, General Electric, Cable & Wireless and 3M, to name but a few. But Bracknell is not just good at business; it is also a regional centre for culture, and South Hill Park is within its confines.
The theatre at South Hill Park is named after Oscar Wilde. He is reputed to have stayed locally, and may have named his most famous stage character, Lady Bracknell, during his stay. Like, I fear, many present and former Members, I have a past in amateur dramatics. I can assure the House that I did not take the role of Lady Bracknell, but I did take the role of Jack Worthing in the same play. Members may recall that that character had two names, Ernest in town and Jack in the country. I can assure the House that I will be Philip in all places, but that I will always remember, when speaking,
“the vital Importance of Being Earnest”.
My constituency includes two other towns, Crowthorne and Sandhurst, and the delightful village of Finchampstead. Crowthorne is perhaps best known for being the site of Broadmoor hospital and Wellington college. Sandhurst, of course, has the Royal Military Academy, but in addition it has a remarkable series of events and community activities under the banner of Sandhurst Pride. Finchampstead is a delightful part of the world. It is famous for its association with Tudor royalty, who hunted there, and is also the site of a remarkable community centre, the Finchampstead Baptist Centre. It provides wonderful views of the Hampshire countryside from Fleet Hill.
Let me now talk about a topic that is allied to this debate. Next week we shall all be in the Chamber to listen to the Budget statement, and to hear about the dreadful finances of the country. Of course we need to make some decisions very quickly to deal with not just the deficit but with the debt, but I believe that we also need to make decisions about the future balance and direction of the economy so that we can secure greater stability, sustainability and strength, an emphasis on a creation of wealth that is real rather than transitory, and more energy-related and knowledge-related independence from friend and foe alike. That is why I want to mention the space industry, which I think merits Government support. As I look around the Chamber, I suspect that there are quite a few BlackBerrys in operation. I look at the cameras and delude myself into thinking that millions have tuned in to watch my maiden speech. Both forms of communication need satellites. Someone had to make the decision to put the satellites up there, and we are really good at making them.
The space industry is a growing area. That is why it is vital for UK prosperity. There is a multitude of economic opportunities. The industry has grown four times the average since 2000. It adds £6.5 billion to the UK economy annually. My own company, Tektronix, in Bracknell makes sophisticated measurement gear for satellites. The key point is that the industry is growing. Why is it growing? It is because we are the best at it. We have to be the best in this global economy. We also need to anticipate the direction of technological demand in the world.
It is not just about the economy. The industry also benefits education. It inspires innovation. It inspires generations of scientists and engineers. In one poll of engineers, almost 40% cited it as the reason that they went into their chosen career. It also helps us with the environment, an issue that I am very interested in. It allows us to assess man’s impact on the natural world. It also offers solutions, one example being the transfer of data into space, getting rid of terrestrial-based masts that are so energy dependent.
The industry is also strategic. It underpins critical parts of infrastructure. It allows Government to have intelligent ways of formulating transportation plans. It is hugely important in defence, of course, and it aids our ability to wield soft power in the world.
Space is indispensable; that is basically what I am saying. It is an open goal for us. We should be shooting at it repeatedly. The sky is not the limit when it comes to the space industry. It offers a new economy, a green economy that offers real returns, and a niche market that depends more on knowledge than on labour, which is relevant when competing with China, India and Brazil.
I am often asked why I stood for election to this Chamber and moved away from being a doctor to being a Member of Parliament. To my mind, people who come in here should want to make this country a better place. I want to put Britain first. I do not want to be part of a Government who manage decline. One way of doing that is by having a strong high-tech sector. Government’s role is to reduce tax and regulation and thereby stimulate an increase in scientific knowledge.
I have no idea how long I have in this House. That is up to the people of Bracknell constituency to decide, but when I leave I hope that I will have contributed to putting the “Great” back into Great Britain.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
I am thrilled to be able to welcome you to the Chair, Madam Deputy Speaker. I congratulate the hon. Member for Bracknell (Dr Lee) on his very fine maiden speech. Humour is welcome in the Chamber, especially today in such a serious and important debate, and I am pleased to be able to contribute to it.
People often talk about the north-east of England as the industrial engine room of Britain, or at least they used to. The 1980s put an end to that, unfortunately. A whole generation of workers were left without jobs by a Conservative Government who did not even see fit to try to reskill them, and told them that their “unemployment was a price worth paying”. That is fine and well when you are not the one paying it.
We were not “all in it together” when I was growing up in poverty in the north-east in the 1980s, just as again we will not be all in it together if the Prime Minister and his Lib Dem hatchet men wield their axe with impunity, as the north-east and our constituents will once again suffer the most. It took time—13 years of a Labour Government in fact—to put my own region, the north-east, back on the map as the place to be if someone wants to do business, to innovate and to manufacture—so much so that, just as the north-east led the industrial revolution of the 19th century, it is also now leading the new green revolution of the 21st century.
I want to talk about the successful industries in my constituency and the wider region that are fine examples of that. It is clear that there are three reasons why we have a success story to tell. The first is the tenacity, skills and determination of the work force. The second is the co-ordinated work that has been done by the RDA, One NorthEast, and the ongoing commitment to the region by major manufacturers such as Nissan. The third is the support of the Labour Government for the steps taken to establish the region as a green economic zone.
Members do not just have to take my word for it. The North East Chamber of Commerce said only last week when talking about the north-east and exports that
“this simply emphasises the importance of continued Government support for new and existing exporters, even in the face of large scale public sector cuts.”
Therefore, I am hoping that today the Minister will be able to assure me that my constituents are not going to lose the level of strategic support from the Government and from One NorthEast, in particular, that our economy needs to stay strong and to carve out its own niche in the economy of the 21st century.
I was delighted to hear in Prime Minister’s Question Time last week that Nissan will still receive the grant—the Secretary of State for Business, Innovation and Skills confirmed it today—which will enable it to build the new LEAF car at its Washington plant in my constituency. I was also grateful to my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) for using both her opportunities two weeks running at PMQs to raise that issue not only on behalf of me and my constituents, but on behalf of all right hon. and hon. Members in the north-east. She was able to force an answer from the Prime Minister at the earliest opportunity. This issue has major implications for all north-east Members, as we all have constituents who rely upon Nissan for their jobs, businesses and livelihoods.
The motor industry creates over £1 billion a year in value for the north-east economy and the 260 companies in the sector are estimated to employ 26,000 people across the north-east. The production of the Nissan LEAF will bring investment of £420 million to the economy and will maintain about 2,250 jobs at the plant. However, Nissan is not the only low-carbon motoring success story in my constituency. When Tony Blair visited my constituency in February 2007 and opened the Smith Electric Vehicles new production facility in Washington, he said:
“This will be a company that will really make its presence felt not just in the North East, but actually throughout the world”.
I am very pleased to say that he was not wrong. The company has worked with major car manufacturers such as Ford on concept vehicles, and has repeatedly secured business from companies such as Sainsbury’s and TNT. The company has weathered the recession, and is now making further inroads into Europe, with new product launches all the time.
There can be no doubting the importance of low-carbon vehicle engineering and its central role to the economy of Washington and Sunderland West. It is estimated to contribute over £500 million to the wider regional economy. Without Nissan, we would have struggled to attract businesses in the supply chain, many of which have set up a manufacturing base in the north-east. The company is estimated to provide around 13,000 manufacturing jobs in total in the supply chain. Although I am pleased that the Government will go ahead with the grant to Nissan, I cannot help but wonder why they ever thought about taking it away in the first place. The grant for Nissan to produce the new LEAF in Sunderland was delivered thanks not only to the company’s commitment to the region, but because One NorthEast pushed for ultra low-carbon vehicle manufacture across the region.
A cursory look at the latest edition of The Sunday Telegraph makes it clear that plans are afoot to scrap all nine regional development agencies. That has been confirmed by the Government today. That is despite us being told just a few weeks ago that where RDAs work they would remain. In yesterday’s edition of The Journal—today we have had it clarified—I read that the RDAs will be scrapped but that a new body will be formed in regions where they can be justified, such as, I would imagine, the north-east. What is the point of that—dismantling one body that is doing the job perfectly well and replacing it with another, just so that it can have a different name? Talk about bureaucracy and wasting time and resources.
Whenever I speak to local politicians, business leaders and entrepreneurs in the north-east, I am told the same thing, which is that One NorthEast is working well as it is. During my time serving on the North East Regional Committee—that is another thing that the coalition Government have decided to scrap—I heard glowing reports in our evidence sessions from a diverse range of individuals and organisations about the valuable work of One NorthEast. The only reason that I can see for it to be scrapped is an ideologically driven one; this is about a commitment to making cuts, regardless of whether or not those cuts are needed.
The case I am making is not just bluster from those of us in the north-east who believe that the region needs a strong voice, because PricewaterhouseCoopers estimates that for every pound invested by regional development agencies the return for the economy is £4.50—I reckon that the differential is even greater for One NorthEast. We know, too, that One NorthEast has played its part in the creation of more than 160,000 jobs. It is also vital to note that when jobs have been lost in the north-east, One NorthEast has led the response and taken the initiative to get people back into work as soon as possible. Therefore, the Government are not only taking away a proven job-creation scheme at a time of public sector cuts, but scrapping one of the most effective means of support that newly redundant workers have.
There is no reason why we cannot continue to improve the long-term prospects of the region’s manufacturing base, but it seems clear that removing the strategic level of planning and support that One NorthEast provides would be counter-productive. I wanted to say a lot more today, but our time has been curtailed so I shall merely say that I look forward to hearing the Minister’s response.
Tony Baldry (Banbury) (Con)
I congratulate my hon. Friend the Member for Bracknell (Dr Lee) on a truly outstanding maiden speech.
This Parliament will be overshadowed and dominated by the budget deficit and the consequent need to make cuts in public spending, but we should never forget that it is a Labour deficit and that these will be Labour cuts. The speeches made today by Labour Members have displayed a total inability to recognise that we have a serious budget deficit and that action needs to be taken as a result. The only comments made by those on the Labour Benches—I suspect that this will be the same throughout this debate—have been in support of more public spending. They do not appear to have recognised that that is not sustainable any longer.
We need to examine what businesses in our constituencies want. I think that we are all agreed that, as the motion says, we need
“a clear deficit reduction plan, and that such a plan must have at its heart measures to foster growth and create the conditions for a strong business-led recovery”.
What do businesses want? First, they want access to bank lending. The coalition agreement clearly states:
“We will develop effective proposals to ensure the flow of credit to viable SMEs. This will include consideration of both a major loan guarantee scheme and the use of net lending targets for the nationalised banks.”
So the Government are going to address the issue of ensuring access to bank lending for businesses.
The vast majority of businesses in my constituency want to see red tape cut and the burden of regulation lifted from businesses. The coalition agreement clearly states:
“We will cut red tape by introducing a ‘one-in, one-out’ rule whereby no new regulation is brought in without other regulation being cut by a greater amount”.
It continues:
We will end the culture of ‘tick-box’ regulation…We will end the so-called ‘gold-plating’ of EU rules, so that British businesses are not disadvantaged relative to their European competitors…We will give the public the opportunity to challenge the worst regulations.”
Small and medium-sized businesses in my constituency have been crying out for all those things for many years.
Businesses want a simplified tax system. The coalition agreement clearly states:
“We will find a practical way to make small business rate relief automatic.”
It continues:
“We will reform the corporate tax system by simplifying reliefs and allowances, and tackling avoidance, in order to reduce headline rates. Our aim is to create the most competitive corporate tax regime in the G20, while protecting manufacturing industries.”
Again, that is very much welcomed by the business community.
What will also be welcomed in a business-led growth approach is the following coalition Government intention:
“We will make it easier for people to set up new enterprises by cutting the time it takes to start a new business. Our ambition is to make the UK one of the fastest countries in the world to start up a new business.”
That is excellent.
I shall now discuss the regional development agencies. I must say, as the Member for Banbury, which is on the edge of three geographical regions—the west midlands, the east midlands and the south-east—that RDAs have been of almost no use to my constituency. They have been inflexible, rigid and expensive. The creation of local enterprise partnerships—joint local authority-business bodies introduced by local authorities to promote local economic development—will ensure much more flexibility. My local district council is currently in negotiations with another district council, which lies in another geographical area but is contiguous to us, and the new arrangement will give us a lot more flexibility. It also goes with the grain of what local people want.
It is also excellent news that this Government will try to encourage more green industry and green-collar jobs and the creation of a green investment bank in my constituency. We hope that we will see the start of a new eco-town at Bicester, because things can be built upon green-collar jobs.
We are therefore going to see access to money, a reduction in the regulatory burden and the other thing that most businesses in my constituency want: improved and enhanced skills. An excellent start has been made with funding for 50,000 apprenticeships having already been made available. In addition, the Government are going to seek ways to support the creation of apprenticeships, work pairing, and college and working training places, as part of our wider programme to get Britain working. I am going to ensure that my constituency gets as many of those apprenticeships as possible, because it is incredibly important to enhance the skills base.
We will not be able to spend or tax our way out of the current situation. What we must do is have a business-led recovery, which also means having an export-led recovery. I very much welcome what my hon. Friend the Member for Bracknell said about the space industry, but this country can take the lead in exports in all sorts of other areas. Only a very small amount of what we produce goes to China. We need to tackle the huge markets that exist in the world, and China is just one example. Since the election, I have started to establish a north Oxfordshire export club in my constituency, so that everyone in the constituency can share advice and collaborate to see how we can collectively help to promote exports and to try to ensure that a far larger part of our output goes overseas. It is those exports—the hard cash earnings that we get from exporting goods overseas—that will help to pay for the recovery here.
This Government have a positive agenda that is going to help a business-led recovery. They are doing and proposing to do the sorts of things for which businesses in my constituency have been crying out for a very long time, and I wish the Government well in their endeavours.
Julie Hilling (Bolton West) (Lab)
I cannot begin to explain what an honour and privilege it is to be making my maiden speech as the new MP for Bolton West. Of course, I follow in some august footsteps. William Tyson Wilson was elected as the Member of Parliament for Westhoughton in 1906, as one of the first 29 Labour MPs. Do not worry, Madam Deputy Speaker, I am not going to talk about every one of my predecessors, although it would be good just to mention Baroness Ann Taylor, who came from Johnson Fold, one of the big estates in my constituency and was the Member of Parliament for Bolton West for nine years from 1974.
Anyway, back to William, who, like me, came from the trade union movement and was particularly passionate about education. One of his greatest achievements was the introduction of school meals, because he recognised that children could not learn and flourish if they were hungry or undernourished. My immediate predecessor, Ruth Kelly, also made a real difference to education. She was involved in schools throughout the constituency, but it was as Secretary of State for Education that she made real changes. She oversaw the healthy eating agenda and introduced the extended schools programme, now often known as “Kelly hours”.
Ruth represented Bolton West at the highest level of Government for much of her career, including a long stint in the Treasury, and as Communities Secretary and, latterly, Transport Secretary. She was the youngest woman ever to sit in Cabinet and somehow found time to become mother to four children. Ruth championed the cause of hard-working families and I wish her well in her new career.
The constituency of Bolton West has had many boundary changes over the years, but I am delighted with the last one, which has brought the town of Atherton, which has been my home for the past 24 years, into Bolton West. The constituency also has the town of Westhoughton, where the residents are called “keawyeds”—I had better translate that; it means “cow heads”. Legend has it that a cow got its head stuck in a five-bar gate and because the farmer could not get the cow out, he sawed its head off. People thought that that was just because he was stupid, but it was not at all—it was because the gate was worth more than the cow. The cow now has pride of place on the badge of Westhoughton high school. The town has also just been named as one of the best shopping centres in the county.
Atherton and Westhoughton share a piece of tragic history. In December 1910, 343 men and boys perished in the Pretoria pit, which was situated between the two towns. The centenary of this disaster will be commemorated this year with the installation of a monument.
We also have the village of Blackrod in Bolton West. I hoped to find out that that was the ancestral home of Parliament’s Black Rod, but no such luck. Wikipedia does not have too much to say about the village of Blackrod, except that it has a dialect
“very far removed from Standard English.”
We have the town of Horwich, which was once a major centre of train building at the loco works—sadly gone—but is now the home of the Reebok stadium and Bolton Wanderers. We also have several parts of Bolton itself: Smithills, the home of the haunted coaching house; and Heaton and Lostock, probably the most affluent part of the borough and home to many footballers.
The whole of Bolton West has a proud industrial heritage, particularly in coal mining and textiles: the pits and the mills, which were largely destroyed during the last Tory regime. However, we have companies that have managed to change and develop and to be part of a diverse local economy, including companies such as the Richard Threlfall Group, a family firm which has been trading for 175 years. The firm started making machinery for the textile industry and continues to supply valves—although now to the oil industry—and manufactures silicon products. Companies such as Web Dynamics, which manufactures technical textiles, are able to succeed and thrive due to the support from the regional development agency and Government grants. It has become a world leader in the development of insulation.
We have Watson Steel Structures, which is providing the steelwork for the Olympic stadium and has also given birth to Wenlock and Mandeville, the two mascots for the Olympic games. Two of our local companies recently won regional apprenticeship awards—the Green Team and MBDA. MBDA is a shining example of a company dedicated to work force development. All employees are encouraged to undertake training to fulfil their potential and it has the most amazing apprenticeship programme. The company really concentrates on the personal development of its apprentices as well as their industrial skills. This means that it has young people who are a real credit not only to themselves but to MBDA—they are confident and capable. Half the apprentices are female and as part of their programme they go into schools to encourage other girls to make a career in engineering. MBDA has received widespread recognition, not least from the previous Labour Government, for its outstanding record and I only wish that every company could follow its example.
Companies like those and others in my constituency have developed and thrived because of the support they have received from the Labour Government, the Labour council and the regional development agency. Work-based learning through apprenticeships, the union learning fund and graduate training programmes have made a real difference to their ability to compete in these challenging economic times. I am disappointed that the Government are cutting the future jobs fund but I hope that they will continue to support the union learning fund, a fund that enables trade unions and employers to work in partnership to increase the skills of the work force and that is particularly effective at getting to hard-to-reach groups. Cuts to the future jobs fund, cuts to the regional development agency and cuts to Government support for industries in Bolton West will not help the budget deficit. They will simply mean that there are more people out of work and more businesses closing.
I was a youth worker during the last Tory Government. I worked with unemployed young people in the ’80s and ’90s when we had generations of them with no jobs, no hope and no future—young people whose lives were so damaged that some of them never recovered. I hope that the Government have learned from the past and that they do not let this situation happen again.
I am ambitious for my constituency. I believe it is a tragedy that young people who live on my estate of Hag Fold do not believe they can become brain surgeons, solicitors or teachers. If only we could overcome the poverty of aspiration, it would make a huge difference to the lives of many people in Bolton West.
I have spent the majority of my working life as a youth and community worker and as a trade union activist. Six years ago I went to work for the trade union movement. My last job was for TSSA—the Transport Salaried Staffs Association—the union for people in travel and transport. So hon. Members can see that I have spent all of my adult life fighting for people with disadvantage or in difficulty. I shall continue that fight and hope I can be a real champion for the people of Bolton West. I hope that I can do justice to the faith placed in me by them.
Margot James (Stourbridge) (Con)
I must congratulate my hon. Friend the Member for Bracknell (Dr Lee) on his excellent maiden speech, with which I agreed in every respect. I also congratulate the hon. Member for Bolton West (Julie Hilling) on her excellent maiden speech, which was entertaining as well as informative.
I am grateful for the opportunity to contribute to this important debate on support for industry, but we cannot debate support for industry in a vacuum. I do not want to dwell on the past, but none the less we want to learn from it. A lot of the Opposition’s schemes for supporting business when they were in office had a rather half-hearted effect, at best. Many of the schemes, such as the capital enterprise fund, were only subscribed to by 50%. The trade credit insurance fund, which had an original budget of £5 billion, only had a take-up of less than £20 million. Apprenticeships have been hard to fill. A lot of the problems with these schemes are caused by low awareness among industry, eligibility criteria that are far too complex and rule out far too many worthy applicants, and a bureaucracy that small enterprises simply cannot cut through.
Rachel Reeves
I thank the hon. Lady for giving way. I am surprised by what she says about apprenticeships, because in my constituency of Leeds West, the number of apprenticeships has gone up from 70 to 210 in the last decade. At Leeds college of building, 400 people started on apprenticeship programmes supported by businesses this year—more than they have ever had before. I am very surprised that she says that people are not taking up places.
Margot James
There is a big problem with apprenticeships for a lot of people in my constituency. The college funds NVQ level 2 and 3 training programmes and more and more students are trying to stay in college because they simply cannot get the apprenticeships outside as the employers are too hard up to provide them.
Andrew Percy
I am a former schoolteacher, and I am sure my hon. Friend will agree with me that what has happened in education over the last few years is that the gap between the best-performing and the worst-performing schools has widened, the number of children from poorer backgrounds going on to decent and good universities has fallen and more people are leaving school with poorer qualification levels and poorer standards in basic literacy and numeracy than did before the previous Government came to power.
Margot James
I thank my hon. Friend for that excellent intervention. I was going to go on to make that point myself, but I shall leave it to Sir Terry Leahy, the chief executive of Tesco, to make the point for me. He employs 41,000 people under the age of 20 in a total work force of 280,000. He said at the end of last year:
“Sadly, despite all the money that has been spent”
on education,
“standards are still woefully low in too many schools. Employers like us…are often left to pick up the pieces.”
That is one of the many problems that industry faces.
Let me go back to the points that I was making that follow on from the apprenticeship schemes. Stourbridge has a great many small to medium-sized enterprises. Indeed, in the metropolitan borough of Dudley, of which we are part, 90% of companies employ fewer than 50 people. It is all very well for business leaders to support regional development agencies, as some of them have in the past, but smaller companies cannot cut through the thicket of bureaucracy and have not benefited from them in any large number. In my constituency, where so much industry is classified as SME, that is a real problem.
Support for industry cannot exist in a vacuum. I must contest the Opposition’s claim, in their motion, about
“supporting businesses through the downturn”.
I have already made the point that a lot of the measures that the last Government took under the umbrella of support for industry had a very limited effect at best when set against the disastrous macro-economic policies that they pursued. The macro-economic environment is really what affects business, not this scheme and that scheme.
Stealth taxes were a cardinal sin of the last Chancellor but one, and in my constituency they had a disastrous effect on industry. Empty property relief was abolished and that had a very negative effect. That, the rise in business rates and the spiralling cost of energy and fuel are the things that really make a difference to business. Business was really let down and was not supported by the last Government, so I strongly contest the wording of the motion. The point on education has already been well made thanks to my hon. Friend the Member for Brigg and Goole (Andrew Percy).
What business needs, first and foremost, is for sanity to be restored to the public finances. My right hon. Friend the Secretary of State made that very clear in his response. A robust deficit reduction plan that will enable us to keep interest rates low is one thing that will support industry far more than this support programme and that support programme. I congratulate the Government on promising us—presumably we will hear more detail next Tuesday—a simpler and lower corporate tax regime, as that is crucial. Tax and regulation are two sides of the same coin, and I also applaud the regulation proposals of the new Business, Innovation and Skills team. My hon. Friend the Member for Banbury (Tony Baldry) mentioned the one in, one out regulation rule that is going to come in. I am hopeful that it might even develop into a one in, two out rule over the next couple of years, and I set that as an aspiration for the new BIS team. I was also delighted to hear the Prime Minister announce this week a review of health and safety regulations, which have got out of hand. They are a burden not just on the private sector but on the public sector.
I make a plea for the protection of our science base and our research and development base, so I am delighted that my right hon. Friend the Minister for Universities and Science is present. I will pay tribute to the last Government in one respect regarding the science base. The shadow Secretary of State, the right hon. Member for Wolverhampton South East (Mr McFadden), mentioned the new patent box tax incentive for drugs and biotechnology products that are researched in the UK. That tax break of 10% in corporation tax is a very useful and proper incentive that might help to stem the tide of research and development that is, tragically, going overseas, despite our having one of the best science and research bases in the world. The last Government belatedly came up with a solution and I very much hope that our Government will continue with that support.
I support the amendment to the motion, particularly in relation to the skills agenda. I am delighted that we will be giving additional funding for apprenticeships to drive business more in the direction of taking them up, as that is badly needed. I am also pleased to see at least some rescue of capital funding for the further education college sector. Stourbridge college in my constituency made a fantastic bid, and was encouraged so to do by the old Learning and Skills Council. It spent a lot of money pursuing that bid in quite a proper manner only to find at the death that all its plans had to be put on hold because the old LSC had over-committed its budget by at least four times. Stourbridge college is pursuing some of those plans, and I wish it all the best. I hope that I can find the right corner of the BIS Department to lobby for our college to get some of the additional £50 million in capital funding that is being made available.
The new skills agenda, the diversion of money from Train to Gain into apprenticeships and the diversion of money from RDAs into local enterprise partnerships will enable small firms and students in my constituency to access that funding directly, to operate under a lighter inspection regime and to get on with the job of training our young people so that they are fit for business. That is what I really applaud about the skills agenda, and I support 100% the amendment to the motion.
Ian Lavery (Wansbeck) (Lab)
First, I congratulate the hon. Member for Bracknell (Dr Lee) and my hon. Friend the Member for Bolton West (Julie Hilling) on their excellent contributions, and I thank you, Madam Deputy Speaker, for giving me the opportunity to make my maiden speech today, particularly during the debate on industry.
I worked in a traditionally heavy industry—the coal industry—which, although it is now struggling for its very survival, is very strategic in terms of security of indigenous energy supplies for electricity generation in the UK. Coal still produces, on average, 33% of the electricity generated in the UK and at peak times it is not unusual for the coal that we burn to produce up to 50% of the nation’s electricity requirement. Sadly, as a nation we are now a net importer of energy, importing up to 40 million tonnes of coal and burning approximately 60 million tonnes per annum. Clean-coal technologies, particularly carbon capture and storage techniques, need to be implemented without further delay if we are serious about saving the planet from its own demise.
The Houses of Parliament have many traditional and historic protocols, one of which allows me to pay tribute to my predecessor, Mr Denis Murphy, who represented the people of Wansbeck for more than 13 years. He was a hard-working Member of the House, who at all times worked with passion, diligence and dedication for the constituents of Wansbeck. On behalf of those constituents, I should like to place on the record my heartfelt thanks to Denis and take the opportunity to wish him and his family the very best for the future. I am proud to follow in the footsteps of Denis Murphy, Jack Thompson and other Wansbeck MPs such as the much-revered Northumberland Miners Association leader Thomas Burt, who became the first ever coal mining MP in 1874. When he retired in 1918 he was the Father of the House, following a long and distinguished career that lasted for more than 44 years.
I have worked in the coal mining industry, having been a coalface worker from an early age before graduating to that fine old school of moderacy, the National Union of Mineworkers, of which I was the elected national president up until the general election in May. I can think of no finer people to represent than those in my constituency and the miners of the UK, and I can think of no finer privilege than representing them in this House—a challenge that I greatly relish.
Wansbeck has been heavily dependent on the coal mining industry, with more than 70,000 miners being employed at one time. It was once the epicentre of the great northern coalfield, which proudly contributed to the industrial revolution from the 18th century onwards. Many people paid the ultimate sacrifice as a result. Many women were widowed and too many children were orphaned. However, as safety and health regulation was strengthened, with the implementation of the Mines and Quarries Act 1954 and the Health and Safety at Work, etc. Act 1974, employee safety in the industry became the envy of the entire world.
At this juncture I must stress that if recent reports are correct and the Government are looking to repeal and dilute hard-fought-for workplace safety and health legislation, which will accurately be portrayed by the general public as an attack on hard-working, decent people, I and my colleagues will campaign vigorously and oppose any such draconian measures. My experience shows clearly that the weakening of any such legislation results in the amplification of the strength of the employer at the expense of protection for the employee, increasing the current imbalance in fairness at work that many people experience. Health and Safety Executive statistics do not lie. In 2008-09, 180 people were killed at work and 132,000 had injuries reported under RIDDOR––the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995—and there were a further 246,000 reportable injuries.
There are many challenges ahead for the people in my constituency. The heady days of the coal industry have passed, but the benefits and experience that shaped our area are still evident—the dignity, the honesty, the sincerity, the good grit and determination of both young and old shine through, even in what might be described as the dark and difficult times of the not-too-distant past.
We shall make the best of our opportunities. Like other areas, we demand high standards in public services. We want schools that we are proud of and hospitals that we can rely on. We want safe streets, free from crime, and employment for all ages, with acceptable wages, terms and conditions. Above all, we want a community built on a spirit of social justice that is both equitable and fair.
Only this week, a report published by the National Cancer Intelligence Network stated that lives could be saved if people from poorer backgrounds were as healthy as the rich. People in my area are not only more likely to suffer from late diagnosis of cancer but also from inequalities in the treatment offered. That is not acceptable. This is 2010, not the early 1800s. We will not tolerate such behaviour from those in power, and nor should we be expected to do so.
There are many wonderful areas in Wansbeck, ranging from Bedlington to Ashington, Cambois and Morpeth, but there are also many problems. Sadly, Morpeth and its residents were victims of horrendous flooding in September 2008, when there was a month’s rainfall in 12 hours and more than 1,000 properties were affected. I am working with the Environment Agency to ensure that the proposed flood alleviation scheme is delivered in full and at the earliest possible date.
There are many fine projects in Wansbeck. The centre of the constituency is Ashington, followed by Bedlington and Newbiggin. For our area to progress and to emerge successfully from the days of heavy dependence on the coal industry we must attract new business and maintain our existing major employers, such as Rio Tinto Alcan. Our area is also heavily dependent on public sector jobs, and the Government must recognise that any attack on the public sector will have a catastrophic affect on constituencies such as mine. Opportunities for young people in employment and education must remain a top priority, while we allay the fears of the elderly and infirm and reassure them that their future is to be cherished, free from fear.
Finally, I thank Members again for their forbearance over the last few minutes. I look forward to many lively but constructive debates in this historic Chamber and hope to emulate the many great speakers from both sides in the mother of all Parliaments.
Guy Opperman (Hexham) (Con)
On a point of order, Madam Deputy Speaker. The hon. Member for Bolsover (Mr Skinner) may have been here for 40 years, but he should surely not be in the Clerk’s chair, unless perhaps he is looking for another job.
Madam Deputy Speaker
I am grateful to the hon. Gentleman for his enthusiasm, but it is up to me to decide whether it is appropriate for a Member to sit next to the Clerk. I hope the hon. Gentleman will bear that in mind for future reference.
Sajid Javid (Bromsgrove) (Con)
I congratulate Members who have made their maiden speech today—my hon. Friend the Member for Bracknell (Dr Lee) and the hon. Members for Bolton West (Julie Hilling) and for Wansbeck (Ian Lavery). I am glad I made my maiden speech last week, because they have raised the bar even higher. I wish them all the very best in their future careers in the House.
I am glad to be speaking in this debate on the best way for the Government to support industry. There is one thing on which I think all Members will agree, and it is the most important factor—that the recovery of our industrial sector is linked to the recovery of every other part of our economy. That will repair the broken economy bequeathed to us by the former Administration.
To help industry, before considering anything else, we have to fix the fundamentals of the economy. Britain’s prosperity has traditionally been built on the foundations of sound public finances, low and simple taxation and light, flexible regulation. Over the past 13 years, Labour progressively shredded each of those principles. The previous Government saddled our country with a budget deficit of more than 12% of gross domestic product—the largest in Europe—and a national debt approaching £900 billion, a staggering increase of more than 160% in 13 years.
As a result, we have no choice but to make cuts in both public borrowing and public spending. If we do not, we shall no longer be able to sell enough Government bonds to fund the deficit, resulting in a catastrophic economic crisis. It really is that simple. At this point, we cannot even plan to reduce our total debt stock; at best, we can only hope to add to it less fast.
Let us be clear: these are Labour’s cuts. As we make them, we must of course make sure that we protect the most vulnerable in society.
Mr David Anderson (Blaydon) (Lab)
The hon. Gentleman makes the point that the cuts are Labour’s. Earlier this year, the OECD said that only the action of the previous Government prevented a recession from becoming a depression. Does he disagree?
Sajid Javid
A few weeks ago, the OECD, the G7 and the International Monetary Fund said that we had no choice but to make the cuts, so I think they would agree with what I have just said.
We cannot rely on a benign global economic outlook as we approach the cuts. I believe that the international financial markets are at their most fragile since the collapse of Lehman Brothers in 2008; the euro’s troubles are only just beginning; the largest emerging economies in the world are about to raise interest rates, so demand will fall, which will affect global demand; and investor appetite for sovereign debt, including our own, is rapidly diminishing.
If we are to get our economy moving again we have no time to lose, so I look forward to the emergency Budget statement that my right hon. Friend the Chancellor will make next week.
To help industry, we need to get the banks lending again. I have met many people in Bromsgrove who tell me that it has never been so difficult to get a loan. Drawing on my 19 years’ experience of working in the City, I believe that bank lending will not recover until the banks are forced to admit the true state of their balance sheets. Right now, the markets just do not believe that our banks are being truthful about the problems that they face. In turn, the banks are not getting the capital that they need, so they are instead squeezing existing customers, as well as not lending.
As well as a thorough review of financial regulation and regulators, we need an independent audit or a stress test of each British bank, eventually leading to a private sector recapitalisation of weaker institutions that are identified. In that regard, the report that was recently issued by the Future of Banking Commission—of which, I believe, my right hon. Friend the Secretary of State for Business, Innovation and Skills was a member—has made some worthy suggestions.
Also to help industry, we need a dramatically different approach to business regulation, as many of my hon. Friends have said today—an approach that is radically different from that of the previous Government. Many business men and women say that the sheer cumulative volume of regulation makes their lives so difficult. People who need to be dealing with customers and products are instead too busy complying with regulators, and many regulations are simply not necessary to keep businesses honest and safe.
Nick de Bois (Enfield North) (Con)
The word “regulation” is often bandied around. Although many people hear it, they do not appreciate its full impact. Does my hon. Friend agree that, in the small business sector alone, nearly one full-time employee a year is needed to deal with the growth in regulation, particularly over the past decade—equivalent to a cost of about £11 billion a year—and that there is no greater signal for turning back the clock? I agree with my hon. Friend the Member for Stourbridge (Margot James) that it is perhaps time for a one-in, two-out policy on regulation.
Sajid Javid
Absolutely, and I think that my right hon. Friend the Secretary of State for Business, Innovation and Skills said earlier that 21,000 new business regulations have been introduced over the past 13 years—six every working day of the last Government—but such talk of regulation also applies as much to EU regulations as to domestic regulations. Much of what comes from Brussels is often unnecessary, badly thought through or just ignored by other member states when it suits them. So we need a new approach to EU regulations that helps British industry and business and not one that undermines them.
My constituency of Bromsgrove was once a very proud manufacturing hub, supplying much of the west midlands industrial complex. Much of that industry has now, sadly, disappeared. Some hon. Members may remember one of my predecessors, Sir Hal Miller, who was a passionate advocate of industry in the west midlands, especially the motor car industry.
In recent years, a large “closed for business” sign has been hanging over our country. Whether down to punitive taxation, excessive regulation or inadequate incentives, the effect was always the same: to repel new businesses and discourage existing ones. Having run a private equity business, I cannot stress highly enough how destructive those misguided policies have been. Consequently, I support the amendment, and it is hugely reassuring once again to have a Government who recognise the urgent need to re-open Britain for business.
Jack Dromey (Birmingham, Erdington) (Lab)
First, I congratulate you, Madam Deputy Speaker, on your election and the hon. Member for Bracknell (Dr Lee) and my hon. Friends the Members for Bolton West (Julie Hilling) and for Wansbeck (Ian Lavery) on their witty and wise maiden speeches.
In 1981, I was one of the organisers of the people’s march for jobs—500 unemployed men and women from the ages of 16 to 60 who marched with dignity to London, such as the mother and her son from Whaley Bridge and the 150 people who joined the march from Birmingham and the midlands. They were the victims of a Conservative Government who stood back and said that unemployment was a price worth paying. That was an error of historic proportions, which severely weakened our manufacturing base, with catastrophic consequences still being felt to this day, including in the poorest parts of my constituency—Birmingham, Erdington.
All that stands in stark contrast to the wise decisions that were taken by a Labour Government in the depths of an unprecedented global economic crisis to embrace industrial activism. Short-term measures were taken such as the scrappage scheme on the one hand and strategic investments in Sheffield Forgemasters, Nissan, Airbus, General Motors and others on the other hand. As a consequence, the scrappage scheme alone created 400,000 jobs, with tremendous benefits for the supply chain in the automotive industry. Those strategic investments have built firm foundations in areas of growth: the nuclear industry and renewables, aviation and the car industry. Nissan is a classic example, with £20 million of public investment levering in £420 million of investment by the company, 50,000 new cars and 60,000 batteries—a good deal for Britain.
We now have the right hon. Member for Tatton (Mr Osborne). He is the Private Frazer of Downing street. “We’re doomed. Doomed,” is his daily refrain. “Labour mismanaged the economy,” is the moan that we constantly hear from Ministers. It could not be further from the truth. By 2007 we had reduced borrowing and debt to beneath the levels that we inherited from a Conservative Government. Then, in a global economic crisis, we borrowed to invest, to boost the economy and the order books of the companies in my constituency, such as those in the machine tool industry—companies such as Dana, Guhring and Micro. All those benefited from the wise and brave leadership given by our Government.
Mr Brian Binley (Northampton South) (Con)
Will the hon. Gentleman explain why, when Labour came to office, Northampton was 440th in the long list of areas of low unemployment. We rose to 132nd in that list under Labour. What do the people of Northampton have to thank a Labour Government for, in that respect?
Jack Dromey
A Labour Government in the most difficult times did not do what a Conservative Government did in the 1980s—abandon people to their fate. The Labour Government stood on the side of ordinary people and took the necessary strategic long-term decisions to rebuild our manufacturing economy.
Christopher Pincher (Tamworth) (Con)
I am obliged to the hon. Gentleman. We are both Members of Parliament in the west midlands, and he waxes eloquent about public investment being the only panacea for the problems that we have in the west midlands. There is an organisation that he will know about called Advantage West Midlands. I am sure the shadow Secretary of State also knows about it, because he appointed the board when he was a Minister. I have business men in Tamworth queuing up to tell me how inefficient and how ineffective that organisation is. One of them is a former Labour councillor who went to AWM, asked for investment, did not get it and lost his business—
Jack Dromey
I will come to the truth about Advantage West Midlands in a moment. The truth is the opposite of what has just been said.
What we are hearing is the politics of the alibi, camouflaging an ideological objection on the part of the Con-Dem alliance to what its members call big government. It fails to understand the critical role of Government in boosting manufacturing in Britain. Of course it is true that good companies are those that help themselves. I have been involved in negotiating ground-breaking deals in the nuclear industry, the food industry, dockyards and the defence sector—ground-breaking deals that have transformed what were failing companies, working with the employers by way of a change and investment agenda.
I know from my experience in the real world of work, not the world of the trading floors, that time and again, with good employers, we have had to go to central Government, local government and the regional development agencies. Only last year I was involved in an exercise together with Scottish Enterprise and the Scottish Government with a leading food manufacturer. Had it not been for partnership, we would not have got the investment, which in turn levered in further investment from the company, securing the future of 500 jobs in an area of high unemployment.
Gordon Birtwistle
Can the hon. Gentleman explain to me where the 400,000 jobs came from, as a result of the car scrappage scheme? He gave a list of machine tool manufacturers. How many are based in the UK and manufacture in the UK?
Jack Dromey
First, the reference was to 400,000 cars. Secondly, the companies are British-based world class manufacturers of machine tools who, when I was at their exhibition last Friday and met many of them, said with one voice, “For us to succeed, we look to support from and partnership with Government.” Those are precisely the companies that were rescued from the brink by the car scrappage scheme.
The lesson from experience in the real world of work is that industry best flourishes in partnership with Government, with a framework provided by good government, and sustained and strategic investment underpinned by a determined national will. One need only look at Germany’s enduring strengths in manufacturing, which exist precisely because there is that national will. I am proud of the fact that a Labour Government embraced industrial activism. Now is absolutely not the time to pull back from that, because it would be an error of historic proportions. The decisions we make now will decide whether we grow or decline in the future—whether we condemn another generation to no hope. It is therefore essential that we invest to grow and act to rebalance our economy, which had become too heavily dependent on the finance sector.
That is why, for manufacturing, capital allowances matter because they incentivise investment in machinery and plant. That is why, for manufacturing, the patent box matters, with its 10% reduction in corporation tax to encourage innovatory companies to locate intellectual property and manufacturing here in Britain. That is why, for manufacturing, it matters that there is support for research and development. I hope that in refocusing current support, it is not so severely circumscribed as to avoid support for world-beating companies such as Jaguar Land Rover. The Jaguar plant in my constituency is at the heart of a hub of 150,000 people in the midlands who depend on the motor industry for their livelihoods. I will look to the Government to work with me, as the Member for Erdington, in respect of the Jaguar plant, and the hon. Member for Solihull (Lorely Burt), in respect of the Land Rover plant, to secure the future of those two beacons of manufacturing excellence.
That is also why regional development agencies matter. What we have heard today is ill-informed prejudice that flies in the face of the history of, in particular, the successful RDA that is Advantage West Midlands. I have seen that at first hand. After the crisis at Rover in 2000, the supply chain became less dependent on Rover, thanks to the work of Advantage West Midlands. As a consequence, when Rover collapsed in 2005, the supply chain did not collapse, as might otherwise have been the case. The manufacturing technology centre and the manufacturing advisory service are prized by manufacturing employers in the midlands, and that is because of what Advantage West Midlands has done.
Let me issue a challenge to the Secretary of State: necessary as it is to move beyond myths, will the Government now publish the independent evaluation of regional development agencies ordered by the Labour Government before the election? Will he confirm that that demonstrates that Advantage West Midlands is one of the best two RDAs; that for every pound of public money invested, £8.14 of wealth is created in the regional economy; and that it has scored the maximum possible score and has been deemed to be performing strongly? In this new era of openness, will that report now be published?
Birmingham is historically the laboratory of manufacturing and of the genius and enterprise of the British people; too often, now, it is British genius but made in China. Our single biggest task is the renaissance of manufacturing in our country. That will not happen if Government once again abandon British manufacturing.
Mary Macleod (Brentford and Isleworth) (Con)
I thank those who made their maiden speeches today. It is so good to hear them participate in a debate on industry. For me, this is one of the most important debates that we can have, given that we are in the middle of a recession and trying to take our country out of it. Truly focusing on industry, business, skills and innovation will take us through the recession and get us back to the strong economy that we need again for this country.
I also feel personally that this is important. I still remember the day when I was in school and was first taught about the industrial revolution, and how that motivated and inspired me to go and do something in business. I spent the 20 years after I graduated in different sectors of business. The industrial revolution is a part of our history that made us great—one hon. Member mentioned that in his maiden speech today—and we want to make our country great again, and creating a strong economy is one way to do that.
The Government can do several things in that respect. Reducing bureaucracy has already been mentioned by several hon. Members, but I want to emphasise what businesses with which I have worked and spoken—in Brentford and Isleworth and elsewhere—have told me. We must do something about the bureaucracy and red tape that both small and large businesses must manage, because they saw it increase under the previous Government. Instead of that red tape and bureaucracy, we need to ensure that we create the atmosphere and environment in which enterprise can flourish, and create an enterprise-led economy. That means encouraging new businesses and getting them to innovate and create new ideas. Time and again, as a country and as individuals, we have proved that we can do that so well in Great Britain. Let us get rid of the regulation, support new enterprise, and ensure that we build this country again into what it can be.
On creating a better-balanced economy, we have perhaps limited ourselves and focused on too few sectors. I worked in financial services, which in the past has helped us to create a strong economy, and I believe it will again. However, we need to look beyond what we have done before and ask, “What is needed for the future?” I want to ensure that we are supporting the manufacturing sector, research and development, and science and technology, which need our input and support if they are to grow.
On education and skills support for business, I welcome our proposal—it was mentioned today, in the coalition agreement and previously in the general election—for investment in apprenticeships and university places. Businesses have told me that they have spent crucial training time in their organisations teaching people how to read and write, rather than getting on and developing the skills that they need. We must begin to address that at schools, by ensuring that our children get the best possible education, so that we create the skills necessary for the country.
The previous Government pursued wasteful policies in the past 13 years. They introduced a number of schemes that were designed to help businesses through the recession, but those have failed. We now have a duty to this country to review those projects and ensure that we are getting value for money for them. Policy is really all about the outcome; it is not about having another new idea or drafting another piece of legislation every day. It is about asking, “What will this policy actually deliver on the ground in terms of jobs and support for industry?” I encourage the Government to look again at those policies. We need to ensure that we are supporting people in skills-based training and apprenticeships. I thank my right hon. Friend the Minister for Universities and Science for visiting West Thames college in Isleworth with me. That college is a great example of a good scheme. We need to build on such schemes to ensure that we gain the skills that are required in future.
I also encourage the Government to do everything that they can to support British industry and create that competitive environment for business investment. Given the state of the public finances, we must find ways to do that and increase opportunities for business, cut excessive expenditure and red tape, and simplify our processes. I therefore support the Government’s amendment, because we should do all that we can to rebuild our country and allow businesses and people across this land to aspire to do what they can to make this country great once again.
Pat Glass (North West Durham) (Lab)
I am grateful for the opportunity to make my maiden speech today in this debate on Government support for industry. I congratulate the hon. Member for Bracknell (Dr Lee) and my hon. Friends the Members for Bolton West (Julie Hilling) and for Wansbeck (Ian Lavery) on their contributions. Over the last few weeks, I have listened to many maiden speeches and been very entertained—although probably not as much as I was today by the story of the cow—and taken on a descriptive geographical journey around many parts of this great nation.
It is a great privilege to stand here today in this wonderful place, having recently been elected by the people of North West Durham, the community that I was born into and grew up in. There is something very special in being elected to represent the people I grew up with, went to school with and still live among. I follow in the footsteps of Hilary Armstrong, who served North West Durham for 23 years and, before her, of Ernie Armstrong, her father. I have followed in Ernie’s footsteps in more ways than one as he was a head teacher in Durham County and went on to be the assistant director of education in Sunderland, a job I followed him into many years later, before following him and his daughter as Member of Parliament for North West Durham. Both were first-class Members of Parliament, hard working and passionate about the north-east region and the North West Durham constituency.
Hilary is certainly going to be a very difficult act to follow. She was a social worker who brought practical skills and experience to this House. She was a strong, determined and persuasive female MP, at a time when there were even fewer female Members than there are today. She was immensely proud of her northern roots and a staunch defender of the north-east region. She had a long and distinguished career, holding several posts in government—not least Chief Whip—but it was her role as social inclusion Minister where she was truly in her element. Hilary was passionate about improving the lives of the most vulnerable and the disadvantaged in our society, and in that we share a common purpose.
For those who have never visited North West Durham, I can tell them that it is a hauntingly beautiful place and that they should plan to visit it soon. The towns of Consett, Crook and Willington are surrounded by small villages. The Durham dales and countryside surrounding that are categorised as an area of outstanding natural beauty. That contrasts sharply with the countryside as I remember it as a child, when it was black and covered with coal dust, but all that has now gone. I do not know why I should be surprised at that—given that it is sandwiched between north Yorkshire and Northumberland, it was always going to be beautiful under all that coal dust.
Durham has a long and proud industrial history. It was heavily dependent on coal mining, steel production and heavy engineering. Every village had a pit and Consett was a steel-making town. North West Durham, our industries and our people suffered terribly during the Thatcher years. The closure of Consett steelworks resulted in unemployment among the male population reaching almost 100%. We lost jobs and we lost industries, but there were some things that even the Thatcher Government could not take from us—our communities; our resilience; our fortitude in the face of unemployment, poverty and deprivation; the warmth of our people; and the way in which they care and work for one another. That may be linked to what the Prime Minister now refers to as the “big society”, but we in the north-east think of it fondly as socialism.
North West Durham, like most of the post-industrial north, has undergone an economic and social revolution in the past 13 years, with the support of the last Government. Educational outcomes, which are very close to my heart, have been transformed. We now have some of the best schools in the country, with the best performances. Sure Start centres are ensuring that our children have the best beginning to their academic lives, and our young people now go on to further and higher education in much great numbers than was possible before. There are more good, sustainable jobs; people are better off; health and housing services are much improved; our local economy has been given the time and support needed to adapt and diversify; and the food and renewable energy industries and tourism now thrive. The biggest employers in North West Durham, outside the public sector, are International Cuisine and Derwent Valley Foods—a sign of the diversification of our industries and jobs. Renewable energy and green industries were being established in the north-east region with the help of the last Government, and I sincerely hope that they will continue to be supported by the new Government.
Like Ernie and Hilary Armstrong, I have spent much of my career working with, and supporting, vulnerable young people—in my case, specialising in special educational needs. I will be campaigning on behalf of these young people in the House and will speak on SEN and disability matters whenever I have the opportunity. I will be looking to Members from both sides of the House to support me in advancing the interests of this group of disadvantaged, and very often marginalised, young people. I will also be championing the cause of children living in poverty, because I have seen first hand too many times the links between poverty and educational under-achievement. It is simply unacceptable that children in receipt of free school meals—a clear indicator of poverty—on average do progressively worse at school than their peers, that young people with parents in manual occupations are far less likely than others to go to university and that only one in six students at top universities come from lower socio-economic backgrounds.
With the recession and the return to power of a Conservative Government, backed by their Liberal Democrat friends, my people fear a return to the desperate situations of the 1980s and early 1990s. They fear for their jobs, their homes and their children’s future. The public sector in my constituency employs 6,100 people, and I am especially worried about them, particularly given the Prime Minister’s warnings about what he has in mind for the north-east. In order to grow, the north-east needs a work force who are highly skilled and possess diverse, adaptable and technological knowledge. There are real opportunities for us to seize, in tourism and the renewable energy industry, that have the potential to bring jobs and growth to the north-east, but to do this the Government need to show that they have faith and confidence in the region—the kind of faith and confidence that employers such as Nissan have shown and which the previous Government had in my region.
I will work ceaselessly as the MP for North West Durham—the constituency I was born into—and for the people I grew up with and whom I am proud to represent in the House.
Nadhim Zahawi (Stratford-on-Avon) (Con)
I congratulate the hon. Member for North West Durham (Pat Glass) on her passionate speech about her constituency, and I am pleased to hear how attracted she is to the big society—she is always welcome on the Conservative Benches.
We all know that we are in times of deep economic hardship, but we are now heading in the right direction. A key reason is that we have already begun to fix the wrongs, and our first focus has been on balancing the books. For anyone in any doubt about whether this is the right strategy, I need only point to the commendations that my right hon. Friend the Chancellor received at the G20 summit in South Korea for his efforts in this area. However, although we have made an important start, there are of course many things that we need to do, and for me the importance of business cannot be underestimated. From my experience at YouGov, and from talking to businesses in Stratford, small or large, I know that there are three main areas that people want us to focus on: getting rid of bureaucracy and red tape, simplifying the tax system and giving small and medium-sized businesses tax incentives and easier access to funding. All those areas must be addressed, and I shall endeavour to discuss them today.
It is no coincidence that after 13 years of a Labour Government, business in this country feels bogged down by bureaucracy. I am delighted that one of the first things that we have done is introduce a one-in, one-out policy on regulation. That will change the culture of Whitehall and help those stuck in red tape to free themselves and get on with their business. Next, we need to focus our efforts on the need for a simpler and fairer tax system for business. It is not in our country’s interest for businesses to waste time and resources on decoding the hugely complicated tax system. Someone running a small business is the chief executive officer, the salesperson, the receptionist and the accountant, so the more time they spend on bureaucracy, the less they spend on building up their business.
The abolition of the employer’s contribution to national insurance must be commended. It is an excellent policy, and there are already businesses in my constituency, such as GreenMech, DCS Europe and the brilliant Purity Brewing, applauding this initiative. Even Lord Digby Jones, the previous Government’s adviser, warned against that anti-jobs policy in the other place.
One of the most difficult areas to address is the funding available to SMEs. The previous Government made steps in the right direction, but they did not work. The RDAs have clearly not worked, and they have wasted an enormous amount of taxpayers’ money on bureaucracy. Banks want to lend only when the sun is shining. The previous Administration failed to fix the roof during those times, and it was SMEs that paid a heavy price. However, I am pleased that we have already pledged to ensure that a flow of credit is available to viable SMEs, both by considering a national loans guarantee scheme and by the use of net lending targets for banks. In the future, we must continue to do more to help in that area.
I want to address another matter that is key to strengthening our business sector in this country. We must ensure that our employees of the future are equipped with the skills that can help them and their employers succeed. I for one always looked at the skill and expertise of a potential candidate, rather than just their university education. That is why I am such a strong believer in apprenticeships and the skills that they offer. In a previous life, I did a lot of work with a fantastic charity called Edge, and I applaud the Government’s focus on apprenticeships.
Making things and selling things to the world are going to be vital for our future. That is why we need to support engineering, whether it be mechanical, civil or software engineering. Engineering needs to be seen as an aspirational qualification again. We need only look at Germany, a nation proud of its engineers, to see what can be achieved. For me, we must focus on specific areas of business, in order to create a niche for ourselves as a nation.
Mr Tom Watson (West Bromwich East) (Lab)
I am grateful to the hon. Gentleman for giving way—I believe that this might be his first run at active combat in the Chamber, so he is welcome. He talked about software engineering, and his party made a commitment in the election to a tax relief system for the games industry, which is important in the sub-region that he represents. Does he still support that?
Nadhim Zahawi
It is important that we look at whatever area we can support, but at the same time—
Nadhim Zahawi
I am going to answer the hon. Gentleman. At the same time, we have to remember that we are currently borrowing £500 million, and we have to cut our cloth accordingly.
We must focus on specific areas of business to create our niche. If we look at Britain in relation to our Chinese and Indian counterparts, we see that we can never hope to compete with them on production cost or quantity. That is why we must focus on intellectual property and innovations. We need only look at Formula 1 to see what talent we already have in innovation here in the United Kingdom. As politicians, we need to focus our energy on the recommendations of inventors such as Sir James Dyson. Sadly, however, we are tending to lose our best people to other nations where innovation is better funded. For example, Jonathan Ive, the designer of the iPod—such an iconic brand of our era—is British, but he works for a great American company. We must learn from the USA. Silicon valley is the home of US tech start-ups precisely because of the environment created there by the US Government and because of the support that start-ups receive. We should learn from that and create our own opportunity zones here in the United Kingdom.
I applaud the approach taken so far by the coalition Government, and it is important that we continue to do all we can to encourage growth in the private sector, so that we can continue to create jobs that are sustainable. That will be an important move away from the previous Government, whose policies led to an unsustainable and unrealistic bloating of the public sector. Our future lies in business and, for me, specifically in innovation. What we do now will affect the course of our business future, and I am confident that, with the coalition Government in place, we will succeed.
Let me end by saying that I support the amendment tabled in the name of the Prime Minister and colleagues.
Mr Deputy Speaker
Order. The conventions of the maiden speech apply. I call Michael Dugher.
Michael Dugher (Barnsley East) (Lab)
Thank you, Mr Deputy Speaker, for this opportunity to make my maiden speech. I warmly congratulate the hon. Member for Bracknell (Dr Lee) and my hon. Friends the Members for Bolton West (Julie Hilling), for Wansbeck (Ian Lavery) and for North West Durham (Pat Glass) on their excellent contributions to the debate today.
Barnsley East is a new constituency, albeit one with an old name. It is made up of wards in the old constituency of Barnsley East and Mexborough and in the old Barnsley West and Penistone seat, so it is my privilege today to pay tribute to not one but two predecessors. Jeff Ennis served the people of Barnsley for three decades, first as a local councillor, rising to become leader of Barnsley council, then as the Member of Parliament for Barnsley East and Mexborough. Born and bred in Grimethorpe, he still regards himself as a “Grimey” lad. He was not merely from that community; he was always part of it.
Jeff Ennis was well known in this House, not least as an animal lover, particularly those animals of the four-legged variety that can be seen at events such as the 2.15 at Newmarket, the 3 o’clock at Cheltenham and the 3.30 at Sandown—votes permitting, of course. Hon. Members might know that Grimethorpe is the home of the world-famous Grimethorpe colliery band. The band featured in the film “Brassed Off”, which was set in my constituency. Indeed, Jeff Ennis helped to set up the all-party group on brass bands. He understood as much as anyone that the elites who run the world of culture do not always properly reflect and support the culture and entertainment of working-class communities, and in a small but important way, this highlights the insight that Jeff Ennis was able to bring to the House. He was always a powerful and authentic voice for working-class people.
I mentioned that I also had the privilege of representing wards that were part of the Barnsley West and Penistone seat, which was represented with great distinction for the better part of 20 years by Michael Clapham—better known to us all as Mick Clapham. It is fair to say that, in the brief time that I worked in the Labour Whips Office, Mick’s name would occasionally appear on the lists of hon. Members who might require extra assistance in finding their way through the appropriate voting Lobby. I know that he opposed ID cards, tuition fees and the Iraq war, which puts him on broadly the same platform as all the candidates for the Labour leadership. I am sure that that will amuse him, and slightly surprise him.
I was privileged to be present at the unveiling of a memorial by the steps of the town hall in Barnsley to mark all the men and boys who were killed or injured while working in the pits in and around Barnsley. Mick Clapham spoke movingly, and without notes. In this place, he was able to use his tremendous experience to considerable effect, especially in helping to secure much-needed compensation for former miners. I know that he will continue to use his experience in his capacity as chair of the Government’s important review committee on the regeneration of the coalfield communities.
Mick embodied one of the finest traditions of this House in being one of the large number of former miners who have served here. My hon. Friend the Member for Bolsover (Mr Skinner) represents this tradition extremely well, as do others, including my fellow new Member, my hon. Friend the Member for Wansbeck (Ian Lavery). The number of former miners in the House is, sadly, reducing and it is my view that the House of Commons is the poorer for it.
The area I represent remains a community built on coal. I myself grew up in Edlington, the site of the main Yorkshire colliery, and the house I grew up in overlooked the pit. My brother and his family still live in the same house. In not-too-distant history, coal mining in Barnsley accounted for more than 30,000 jobs, with many more dependent on that employment. My constituency has had more than a dozen pits at one time or another. Today, the number is zero, and we are still dealing today with the consequence of the closure of those pits.
My constituents are proud—very proud—of their industrial heritage. They remember the jobs of the past, but they want the jobs of the future. The question today, then, is how we continue to give people the opportunities they need and how we can continue to transform lives and life chances. The context was set out very well by the leader of Barnsley council, Stephen Houghton, in the “Tackling Worklessness Review” of March last year. How we use the power of Government, working with the private sector and with local government to promote employment in areas like my own is extremely important.
I have to say that the policies of the new coalition Government are not encouraging. There seems to be complete hostility towards the public sector, and complete hostility towards the role of Government: it is always the Government who are the problem, and they can never be a force for good. That was certainly the Prime Minister’s and the Chancellor’s rhetoric. We heard, I thought, a slightly different tone from the Secretary of State in his rather baffling performance today, but I am sure that we will get to the bottom of where he is coming from.
The abolition of the future jobs fund, which was pioneered in Barnsley, was a major blow and a matter of profound regret for me and my constituents. We are also seeing the beginning of the hidden cuts in education that are affecting schools across Barnsley right now. This is not new politics, but old economics. The mistakes of the 1920s are being repeated today—the sort of deflationary policies that we are now seeing repeated nearly a century later. By itself, the private sector cannot possibly deliver all the decent jobs in areas like mine that have fundamental structural problems.
To finish, George Orwell spent some time in Barnsley when he was researching “The Road to Wigan Pier”. He once said, in a rather critical way:
“A Yorkshireman in the South will always take care to let you know that he regards you as an inferior. If you ask him why, he will explain… The Northerner has ‘grit’, he is… ‘dour’, plucky, warm-hearted, and democratic; the Southerner is snobbish, effeminate, and lazy”.
That might be slightly uncharitable towards southerners—[Interruption.] I emphasise the word “slightly”. Despite the serious threats we in Barnsley face from the new Government and despite the challenges that lie ahead, I am convinced that the greatest asset we have in Barnsley are the people of Barnsley. It is their talent, their skills, their hard work, their ingenuity, and their pride in themselves and their compassion for others that make me so very proud to represent them here today.
Nicky Morgan (Loughborough) (Con)
I begin by congratulating the hon. Member for Barnsley East (Michael Dugher) on his confident and well-spoken maiden speech. I noticed that he mentioned in the early part of his speech that he had worked in the Labour Whips Office, so I suspect he will be extremely useful to his new colleagues in helping to explain to them exactly how this place works. He also mentioned the need for jobs for the future; I entirely endorse what he said and agree with him on that.
I think it was the Secretary of State for Business, Innovation and Skills who set out earlier the basic difference of opinion between the Government and the Opposition regarding the spending of money, and that is reflected in the Government’s amendment to the Opposition motion. The previous Government tested to destruction the theory that if we throw money at a problem, we will resolve it. We all know now that that is not the case.
All Members should welcome discussion in the Chamber of the importance of manufacturing, and of the need for a balanced economy. I might have misheard the shadow Secretary of State earlier, but he seemed to imply that only Labour Members of Parliament understood the needs of manufacturing because it was based in their constituencies. Perhaps Labour Members have missed this, but there has been an election, and some seats have changed hands. I for one represent a seat with a significant amount of manufacturing, although there will be less when AstraZeneca closes its site at the end of 2011. However, my constituency has a large amount of high-tech manufacturing, including a wonderful engineering department at Loughborough university.
Matthew Hancock
Does my hon. Friend share my bafflement that all the speeches that we have heard from Labour Members seem to ignore the fact that over the past 13 years the share of manufacturing in our economy has halved? It is entirely contrary to the facts for them to talk about the brilliance of the Labour Government as regards manufacturing.
Nicky Morgan
I entirely agree with my hon. Friend. Manufacturing has fallen at a faster rate over the past 13 years than in the 1980s. The hon. Member for Birmingham, Erdington (Jack Dromey) spoke about the need for a balanced economy, but the previous Government had 13 years to achieve that. I welcome the fact that the Conservative-Lib Dem Government’s coalition agreement says that there is a need for a balanced economy.
Mr Stewart Jackson (Peterborough) (Con)
My hon. Friend makes a powerful case. Was not the entire strategy of the former Labour Government predicated on three things: the housing market, the growth in financial services and public sector expenditure increases? All were found wanting, and manufacturing and other sectors were neglected.
Nicky Morgan
I entirely agree with my hon. Friend. I noticed a certain amount of eye rolling when an earlier speaker mentioned that she had worked in the financial services industry. As my hon. Friend has pointed out, however, the financial services industry’s growth over the past 13 years was huge. We will not take lessons from Labour Members in that regard.
In referring to industry, I think that Labour Members have been talking about larger companies—perhaps I will be corrected—but most people in this country work for smaller businesses, and in some cases very small businesses. They are the backbone of our economy, and their growth will drive the economy out of the current situation.
I want to talk about three aspects of support for business, some of which have been referred to already. First, more bank lending to businesses is necessary. As chamber of commerce research shows, small businesses are being penalised with higher rates of interest. In my constituency, two gentlemen running a small industrial company who rightly took out a mortgage to buy premises in 2007—when lenders were falling over themselves to lend their company money, as it was a very sound bet and had never failed to make repayments—have suddenly been told by the building society in question that the property has fallen in value and that the ratios are therefore wrong, so they will have to renegotiate the mortgage and pay higher interest rates that are clearly beyond them. That is exactly what banks should not be doing at this critical time in the economic cycle when businesses need support.
Nicky Morgan
Obviously I am not running the Treasury, and I am not the Chancellor of the Exchequer. [Hon. Members: “Not yet.”] That is too kind.
I contacted the chief executive of the building society I mentioned and asked for an explanation, but I sometimes wonder whether decisions are made at a lower level of management and without any real thought or understanding. We heard a statement earlier about the directors of banks. I should like to know whether all directors are fully informed of the way in which their bank is running its business, and whether they realise that they are putting the squeeze on businesses which, although sound, cannot afford to make higher repayments at this stage of the economic cycle while they are also trying to stay afloat and keep people employed.
Much has already been said about the increase in regulation. According to the Federation of Small Businesses, small firms spend seven hours a week dealing with red tape. I welcome the Government’s decision to introduce a “one in, one out” system. I do not know whether other Members have been receiving surveys, but I received one recently asking what law I would like to introduce. Actually, I do not want to introduce any more laws. I should like to see fewer laws. I should like laws and regulations to be simplified, both for businesses and for individuals.
Members have mentioned the gold-plating of European Union legislation, which goes on all the time. I sincerely hope that following the change of Government, we shall see an instruction that regulations are no longer to be gold-plated.
Andrew Miller (Ellesmere Port and Neston) (Lab)
May I commend to the hon. Lady the most recent report of the Regulatory Reform Committee, published in the last Session? Evidence was taken from a wide range of sources, including the London Business School, which said that it was not true that Britain was in the habit of gold-plating EU regulations.
Nicky Morgan
I am grateful to the hon. Gentleman, and I shall certainly look at the report, but I know from my business experience that that is not the case. Some regulations may not have been gold-plated, but I understand that in one instance that has been brought to my attention—the agency workers directive—the Government have gone further than was intended in the EU’s original drafting.
I visited a local business recently, a recruitment company. I was told that it employed one individual to help it to deal with its accounts. In one month, he has to fill in four different forms for a business register and employment survey, an annual business survey, an annual survey of hours and earnings, and a monthly wages and salaries survey. The annual business survey asked how long it took him to fill in the form. It had taken him one hour and 25 minutes—one hour and 25 minutes that could have been spent earning money for the business. Who is using all this information, and what is it being used for? Is it just going into some big black hole somewhere? We are making our businesses spend far too long on red tape and form-filling.
Before I return to the subject of regional development agencies, I want to say something about skills and apprenticeships. I was delighted when, earlier today, the Prime Minister said that there would be support for them in the Budget, and I welcome the 50,000 additional places that are mentioned in the amendment to the motion. We have a terrific college in Loughborough, which I visited again recently. My right hon. Friend the Minister for Universities and Science has visited it with me, and his colleague the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), has visited it as well.
The college provides a variety of courses, but its building plans—like those of the college in the constituency of my hon. Friend the Member for Stourbridge (Margot James)—have been hit by the chaos in the Learning and Skills Council. Having committed £30,000 to the planning process for its new buildings, Loughborough college found that the LSC had massively overspent, and that it would receive none of the money. It now tells me that, although it does a tremendous job and its courses are well over-subscribed, its buildings will not be fit for purpose for much longer, and it does not know how it will find the money to fund the new ones.
Adult learning is very important. The hon. Member for Bolton West (Julie Hilling) spoke of aspiration. I think that we should encourage better careers advice, emphasising the importance of manufacturing to school pupils and informing them of the opportunities that are available in the engineering sector and, indeed, all areas of manufacturing. One practical suggestion from a manufacturer is to help employers to run in-house training courses.
I want to comment on RDAs because I did not get a chance to intervene on the hon. Member for Birmingham, Erdington (Jack Dromey). Some RDAs may have achieved their purpose, but I recently spoke at a conference organised by the Leicestershire Asian Business Association. There were 50 people in the room. Not one of them—I specifically asked the question—had a good word to say about their RDA, the East Midlands Development Agency. I am happy to listen but it is up to the regions to decide the best way to offer business support. The best way may be through local enterprise partnerships. It may be through keeping some form of regional structure, but I support the amendment to the motion.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I congratulate you, Mr Deputy Speaker, on your new position. I also congratulate the new Members—the hon. Member for Bracknell (Dr Lee), and my hon. Friends the Members for Bolton West (Julie Hilling), for Wansbeck (Ian Lavery), for North West Durham (Pat Glass) and for Barnsley East (Michael Dugher)—on their excellent speeches.
I am grateful for the opportunity to address the House for the first time as the Member of Parliament for Middlesbrough South and East Cleveland, particularly during a debate on industry. I follow in the footsteps of my former employer, mentor and friend Dr Ashok Kumar, who tragically died on 15 March this year. He was a polite, courteous and conscientious local community leader with an exemplary knowledge of manufacturing, processes and industry in general. More than that, he was loved in our area not just for his tenacity and work ethic, but for the warmth that emanated from his every pore. The people living in the hills, valleys and suburbs of Middlesbrough South and East Cleveland, whom he served with a selfless and determined devotion, will miss him terribly. He will be a hard act to follow.
It is a great honour and a privilege to represent the constituency where I was raised, and that I call home. Middlesbrough South and East Cleveland is a microcosm of British society. It includes former mining villages such Loftus, Carlin How, Skinningrove, Brotton and Skelton, large estates such as Hemlington and Park End, market towns such as Guisborough, leafy suburbs such as Nunthorpe, Marton and Coulby Newham, and seaside resorts such as Saltburn, where I live today. Those are all areas where I have personal memories of growing up.
Middlesbrough South and East Cleveland encapsulates some of the diverse and interesting communities that make our country great, and those communities are a reflection of their industrial setting. My area bore men and women who assisted a son of my seat, Captain James Cook, to build the Endeavour from local timber to sail and discover Australia. Centuries later, the descendents of those same people helped to build the Sydney Harbour bridge from East Cleveland iron ore and Tees river steel. Today, my constituency still provides and proudly manufactures steel components at Corus Skinningrove and at TC Industries—places I know very well—where, alongside fellow workers at TCP Redcar, whom I represented as their union official, and with our two local papers, the Evening Gazette and The Northern Echo, we have fought to keep our proud steel-making heritage. That campaign still continues.
Many of my constituents work in and around the Wilton and Billingham chemical sites. A proud tradition of mining still continues at the Boulby potash mine; it is still going strong. Important institutions such as TTE bring on and train apprentices to be our next generation of skilled workers.
My seat also has a rich and varied agriculture. It has begun to diversify into a bourgeoning tourist industry, and a rapidly emerging digital economy, supported by our local Teesside university. That rich diversity was represented excellently by Ashok, an Asian MP in a predominantly white seat, who in his own maiden speech reflected upon following in the footsteps of local Labour heroes who overcame prejudice to build a better and fairer country for the minorities of the future. He talked about Billy Mansfield, an East Cleveland ironstone miner who left school at 13, and from the pit face to Parliament, as Ashok said, fought for his class and his people. There was also Ellen Wilkinson, who represented the old Middlesbrough East constituency throughout the early 1920s. She proved, against the conventional wisdom of the day, that a woman could successfully promote the needs, aspirations and dreams of a heavy industrial region.
As Ashok always reminded me, without the Labour party none of these huge cultural shifts could have been achieved. I am proud and humbled to be following in the historic tradition set out by my predecessors. The voices of the people of my area are ringing in my ears when I enter this House every single day. I am thinking of voices such as June Goodchild, a local community activist, who has strived for her estate in Easterside for years and achieved great things for her community by working in partnership with her local Labour authority in Middlesbrough; and Robbie Middlemas, a Skinningrove steelworker and community trade union site official, who for the past 24 months has led his members through some of the most difficult days that they have ever witnessed at Skinningrove. There has been a similar situation down the road at TCP Teesside. I am thinking of voices such as that of Ian, a local entrepreneur who lives next door to my parents, runs a small chemical fabrication business and has been helped by One NorthEast. Their lives will not be improved by over-simplified ideological positions and a reliance on the invisible hand of market forces. Sometimes the reason why that hand seems invisible in areas such as mine is because it is not, in fact, there at all.
The new coalition Government seem intent on a withdrawal of public funding, and a rolling back of the state and of the work of regional development agencies such as One NorthEast. The coalition blame red tape and not the real culprit: a lack of long-term secure capital specifically set aside for a manufacturing base—it is a base that has historically provided revenues to keep leafy idylls in the south leafy. This ideology condemns my area and my people—the people of Teesside—to a bleak future. This ideological short-termism fails to seize the opportunities that the level of sterling currently offers in building on our manufacturing export markets; money could be reinvested in vital research and development projects. This bleak future undermines market certainty for any prospective private long-term investor in my area.
It has always been necessary for the public sector—or, rather, the Government—to take the initial risk in investment, so that private investment would follow with assured certainty. The new coalition Government see this public spending, on my home town area, as a huge waste. They apply a perfectly rational, liberal, laissez-faire logic—they say that if the market does not invest in the area, it should be left—but where does that leave the people I live alongside, who need jobs and opportunities to feed their families? This monetarist logic is not new; neither is the grim condemnation of my area’s people.
Another predecessor of mine waxed lyrical in his maiden speech about the fact that the world-class British TCP site produced 1.5 million tonnes of steel with 25,000 employees and within the period of terminal Tory rule could then produce 2.5 million tonnes of steel with only 5,000 employees. This is a grim logic of no industrial support and a grim Government who defer to an inflated natural level of unemployment. But in this era, the deliberate attack upon jobs in my area is now targeted at the public services, public servants and the voluntary sector. These are all jobs that provide a market for the private sector. Public sector jobs make up the lion’s share of employment in my constituency. Prior to the election, both the Lib Dems and the Tories promised to protect front-line services, but we have seen jobs for the young cut, incentives for employers to employ cut, training for the unemployed cut, grants to build housing for people with learning disabilities cut, funding to offer college places to all 16 and 17-year-olds not in employment or education cut, funding for the police cut and free school meals cut. Those are all the real coalition anti-job policies. In addition, if this coalition raises VAT on 22 June, it will hurt the poorest people and the smallest businesses the most. The only VAT rates that should be raised are the current 0% rates on private health care and private education, which only the rich can afford.
So, I come to this House with great regret for my area that Labour is not in power and with great anxiety and fear over what the future under a Tory-led coalition Government will bring. However, as a newly elected representative, I pledge here and now to be vigilant in the face of every threat to the livelihoods of the people of my constituency and never to give up fighting for those who elected me.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
This is the first time that I have spoken in a debate when you have been in the Chair, Mr Deputy Speaker, and I welcome you to it. I warmly congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop). He has a truly charming constituency—it is perhaps not quite as charming as my own—with a distinctive pioneering heritage. Given the eloquence of his speech, I believe that he will be doughty champion for people in his constituency.
My speech follows a long line of maiden speeches made today. The hon. Member for Barnsley East (Michael Dugher) referred to miners and former miners. He may be aware that the Government Chief Whip was also a miner, so he may add him to his little club. The hon. Member for North West Durham (Pat Glass) also spoke eloquently, as did the hon. Members for Wansbeck (Ian Lavery) and for Bolton West (Julie Hilling), and our friendly doctor, my hon. Friend the Member for Bracknell (Dr Lee), even though his joke was the worst that I have heard in a maiden speech. [Laughter.] I am sure he will thank me for that later.
I was terribly surprised that the first debate called by the Opposition was on Government support for industry, because these are the same people who have just been in government while we witnessed the loss of 1 million jobs in the manufacturing sector. I shall bring my personal experience to this debate, because I worked in manufacturing for 13 years for a company—not as a trade union official, but right in the thick of it. I should have said that I also worked for the BBC for six months and I saw where they filmed—I can assure hon. Members that they were the flashiest offices.
I worked in industry only under a Labour Government, and I am sorry to say that I learned the Labour litany “Regulation, regulation, regulation”, “Tax, tax, tax”, and “Reporting, reporting, reporting”. To sum up, I encountered a lot of bureaucracy and complexity wrapped up in red tape. There has been talk today about capital allowances, refunds and rebates, but for me, as a finance director of one of the subsidiaries of the company that I worked for, all I can say is that it got more and more complex. The only people who truly benefited were the tax accountants from PricewaterhouseCoopers and other firms. They were the people who had to take on the job, if we wanted to do it, of reclaiming the money. Better still, I think, is the attitude that we should stop telling industry how to invest and that we should reduce corporation tax instead. I praise the former Government, because they undertook that during their term of office. That was the right thing to do and I hope we will go further.
I want to share two small examples. I am sure that people will have sampled the excellent produce of Adnams, a company in Southwold in my constituency, which built a special new building that required no equipment to keep the beer cool. Because Adnams did not buy old-fashioned technology, it could not get capital allowances for it. It even pressed the former Prime Minister on this point, but people still cannot get capital allowances for a new building. Adnams has suffered as a consequence.
Let me use another example from my personal business experience: car tax. There are a lot of unintended consequences. The health and safety aspects, which I thought were important, meant that we insisted on estate cars for all our field-based employees. We tried to encourage them to buy or lease British-made cars, but the sad reality was that the extra costs of preparing for £600 or £700 of car duty meant that we had to think through the options of recommending that they no longer buy cars from manufacturers that made cars in Britain or to remove two or three jobs to pay for that. That is the unintended consequence of some of the legislation, which might sound good at the time, but in the real world means that jobs go.
Both sides of the House are united in believing that the private sector will lead the recovery—or, at least, most of us are. Of course, we disagree on how to do it. I see the hon. Member for Wrexham (Ian Lucas) on the Opposition Front Bench; he is a great advocate for businesses in his constituency. I know his constituency quite well, not just because he soundly beat me five years ago when I stood for election there, but because I have cousins who live and work there in Kellogg’s and other businesses. For me, it is an example of a one-business town—mining was a big part of it—that has diversified. It needs to broaden its base and I welcome that, but we need to see that more across every region—every county, I should say—in our great country.
The RDAs were one of the flagship policies of the last Government and I am delighted that they are having their sails trimmed—indeed, that they are being scuttled. The hon. Member for Birmingham, Erdington (Jack Dromey), who is not with us at the moment, referred to a report. I am not sure which one he was talking about, but the National Audit Office published its report just three months ago and it was not rosy reading when it came to the effectiveness of the RDAs in helping business. The net cost was £60,000 per job created, which is a hefty introduction fee for trying to get jobs into our economy. The NAO was unable to say that there was value for money and could not conclude that the return for money was optimal. It blamed aspects of poor project analysis, pervasive optimism bias—that is, very rose-tinted spectacles were worn in considering how particular projects would generate benefits—and weak evaluation. Indeed, it made the point that most RDAs were unaware until 2009 of the types of projects that yielded the best and most enduring benefits.
The fact that in a number of cases RDAs struggled to identify market failure and, where an intervention was made, they could not justify why they had done the project, speaks volumes to me. It gives a feel of money being thrown at projects, as my hon. Friend the Member for Loughborough (Nicky Morgan) mentioned, and throwing money does not solve a problem. That might be backed up by the statistic given by the NAO—30% of RDA funds were spent in one month, the last month of the financial year, when RDAs were desperate to get rid of their budget, no matter where.
I shall not cry to see the RDAs go. I am not saying that everything they have done was bad, but for me they are not necessarily the best way to deliver the support that businesses need. The key point that the National Audit Office uncovered was that targeted business support generated the best return. I hope that the new local enterprise partnerships will focus on that and will learn that lesson.
I welcome the amendment to the motion, because it mentions the college places and apprenticeships that are necessary to rebuild the skills needed to get Britain back on its feet. Local businesses of mine, including EDF at Sizewell and BT at Martlesham, already run apprenticeship schemes that are oversubscribed, and I hope we can encourage more to do so. Companies such as Brafe Engineering in Woodbridge want more technically skilled people coming through—not just people with degrees in any subject, no matter what. We have to do this and it is absolutely imperative to have appropriate Government support and not just the blank, scattergun approach that is the legacy of the previous Government. I support the amendment.
Phil Wilson (Sedgefield) (Lab)
First, I thank hon. Members on both sides of the House who have made their maiden speech today, especially my hon. Friends and neighbours the Members for North West Durham (Pat Glass) and for Middlesbrough South and East Cleveland (Tom Blenkinsop). They reminded me that the north-east of England is probably the most beautiful part of the country and that we discovered Australia as well, so we have a lot going for us.
Today’s debate is mainly about how we reduce the deficit and how to grow ourselves out of the problems that we have at the moment. My big worry about all the doom and gloom that we are getting from the Government, who are basically talking down the economy and talking down the country, is that we will end up in a spiralling, self-fulfilling prophecy where it is all doom and gloom. It is not just me who says that. On Sunday, a recent business survey by the Centre for Economics and Business Research was on the BBC’s online news website. It stated:
“Business confidence among UK firms has seen its biggest drop since 1995 due to the government’s rhetoric on spending cuts, a survey suggests…there is a significant risk that the rhetoric has begun to impact on business confidence, and fears of the economic impact of spending cuts may be causing businesses to rein back on growth plans.”
So, it is not just the Labour party and the Opposition saying that; it is business itself, which will be fundamentally affected by the Government’s current programme.
Let me say something about employment. Previous Government intervention has meant that even though we are going through what is apparently the worst recession for 60 years, unemployment is nowhere near what it was in the 1980s and 1990s. Today’s statistics put the figure for people claiming benefits at about 1.4 million or 1.5 million. In my constituency, the number of people who are out of work has fallen by 600 in the past year and by 140 in the past month. In the 1980s, that figure was 5,500, and 40% of those people had been out of work for 12 months or more.
We all know the quote that has been mentioned twice today about the Tory Government of those days saying that unemployment was a price worth paying, but we do not need to go back to those days. We can look at last Thursday’s Department for Communities and Local Government questions to find the Government’s default position on their programme for cuts. When my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) asked,
“is it not inevitable that those in greatest need will take the biggest cuts?”,
the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), without hesitation, stood up and said:
“Those in greatest need ultimately bear the burden of paying off the debt”.—[Official Report, 10 June 2010; Vol. 511, c. 450.]
That proves to me where the cuts are going to hit the most—local communities not just in the north-east of England but throughout the country. We have to be prepared for that, and one thing that prepares us for it is the regional development agencies.
I must say that I am more confused now than I was at the beginning of the debate about what the Government’s position is on RDAs. “The Coalition: our programme for government” document says on page 10:
“We will support the creation of Local Enterprise Partnerships—joint local authority-business bodies brought forward by local authorities themselves to promote local economic development—to replace Regional Development Agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular.”
After the Secretary of State spoke earlier, I kept asking myself, “When is an RDA not an RDA?” It seems, from what the Government are saying, that the answer is—when it is an RDA.
Let us get some facts right about RDAs. First of all, they have trained more than 400,000 people and created more than 850,000 jobs over the last 10 years. They have helped nearly 60,000 businesses to start up and more than 110,000 businesses have benefited from a free business health check. RDAs brought forward funding of £100 million for regeneration projects, and they have launched transition loans to help businesses access finance. We are talking about a strategy for growth, but RDAs helped to deliver it.
In my constituency, the RDA helped businesses such as Rock Farm Dairy to set up a new bottling facility. The RDA is creating jobs in the north of the constituency. The Printable Electronics Technology Centre—PETEC—is in Sedgefield village, at NETPark, the North East Technology Park. The hon. Member for Bracknell (Dr Lee) was on about space and science. From what I see at NETPark, I know that today’s science fiction is tomorrow’s reality. That work was being done with the help of the RDA and a Government who invested £12 million to promote it. The research and development facilities at PETEC have helped to protect more than 600 jobs at Thorn Lighting, just over the border in the constituency of my hon. Friend the Member for Bishop Auckland (Helen Goodman). That is creating high-value jobs, making sure that manufacturing jobs stay in this country and do not migrate to the far east or to eastern Europe.
One NorthEast put investment of £10 million into NETPark to help set up headquarters for global science and technology companies, such as Kromek—global headquarters in the north-east of England. We should be proud of the fact that such companies are basing themselves in an area that in the past was used to deprivation and high unemployment. That investment was under a Government who were thinking ahead for the future well-being of local people.
Newton Press is a small company in Newton Aycliffe that has just invested in £100,000-worth of new equipment. It is a family firm, going back over many years, employing 11 or 12 people; I know the owner, Syd Howarth. He had a phone call from One NorthEast to tell him that he could not have the £20,000 grant they were working on to fund a further two jobs, because the Government said that One NorthEast can no longer award grants. That may be only two jobs, but it would be two people off the unemployment total in my constituency. If those grants are being withdrawn all over the region, how many other people who could be in work will not be in work?
The cuts are undermining growth in areas such as the north-east of England, which has suffered in the past. We should be thinking about the future, and ensuring that there is a future for people in places such as Sedgefield. One person’s cut is another person’s front line, especially in business where the front line could be the bottom line, too.
What we have learned from the debate is that there is total confusion in the Government. What is their strategy for growth? The Government started the debate by saying that RDAs were safe, then they said that RDAs could be safe, then that they were not and now they are again. We need consistency and clarity from the Government, because the people I represent want certainty.
Kwasi Kwarteng (Spelthorne) (Con)
This is the first time I have had the privilege of speaking while you are in the Chair, Mr Deputy Speaker, so I congratulate you on your appointment.
We are in a bit of a déjà vu situation. Labour Members cry about Tory cuts, yet they forget why the cuts have to take place. They are suffering from collective amnesia and forgetting that for the last 13 years they ran this country and the Government on the proposition that they had abolished boom and bust. The former Prime Minister, when he was Chancellor, openly boasted about that. There was a feeling that money would pour in—that there was an inexhaustible pot of gold to be drawn from. It reminded me of Aladdin, who rubbed the lamp and the genie appeared. Labour seemed to think that the genie would appear, they would ask for money and, magically, it would arrive.
Rachel Reeves
Does the hon. Gentleman remember that the financial crisis happened across the whole world? Does he believe that the Labour Government are responsible for the budget deficits in all those countries?
Kwasi Kwarteng
I remember that very well, but I would point out that, in the five years before the crisis that the hon. Lady speaks of, we were running completely needless deficits. We did not have to run those deficits; we did so because of the concerted attempt by the then Chancellor to expand the state and to keep spending money.
Rachel Reeves
Can the hon. Gentleman give us an example of when the Conservative party opposed our spending plans?
Kwasi Kwarteng
During the 2005 election, we were—[Interruption]. If I may continue.
The general Aladdin’s lamp approach was shown to be absurd. As the then Government kept rubbing the lamp and the genie came out, they asked for money, but the genie suddenly became rather less giving. At one point, the genie—in form of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)—wrote a letter and said, “There is no money. We have run out of money.” The reason why we have done so is simply that we were spending too much.
I have a Methodist background. My mother is a Methodist lay preacher, and she would tell the Sunday school, which I attended, about the seven fat years and the seven lean years. Those hon. Members who know the Old Testament will remember that Joseph had a dream in which he dreamt of seven fat cows and then the seven lean cows. [Interruption.] This is not very complicated; it is quite simple actually, so please bear with me. I know that Labour Members have concentration problems sometimes. I am sorry—it was a long time ago. The pharaoh had the dream and he spoke to Joseph. [Interruption.] This is very important and interesting. He asked, “What does this mean?” and Joseph said very simply, “You will have seven fat years and seven lean years.” The whole point is that we are meant to save money in the fat years, so that we can spend it in the lean years. The Labour Government comprehensively failed to do that. They thought that the fat years would run indefinitely. They thought that they had abolished boom and bust.
The point of telling that simple story is to show comprehensively the reason for the cuts mentioned by the hon. Gentleman—I forget his constituency. [Hon. Members: “Sedgefield.”] I apologise; I was perhaps confusing him with another Member for Sedgefield. The hon. Member for Sedgefield (Phil Wilson) referred to them as Tory cuts, but the simple story of Labour’s failure to rein in Government spending in the boom is why we must make these cuts. They are not coming out of the blue or from savageness.
Phil Wilson
I was pointing out that, because of Government intervention, we were creating jobs, especially in the north-east of England, through the regional development agencies. We were not creating poverty; we were creating growth and prosperity. We took action when we were in government before the last election, and 500,000 fewer people are out of work than if we had not done so.
Kwasi Kwarteng
With respect, the idea that, somehow, our wealth was purely predicated on Government spending is exactly the principle that Conservative Members have problems with.
Matthew Hancock
Is my hon. Friend aware that Great Britain went into the recession with the largest budget deficit in the developed world and that that was nothing to do with the banking crisis but was solely due to the management of the economy by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)?
Kwasi Kwarteng
I am fully aware of those facts. The figures show that the ratio of our debt to GDP is 12%. That is higher than any other country in the west. [Interruption.] I am sorry; I stand corrected. The deficit-to-GDP ratio is the highest of any other country in western Europe and, indeed, in the western developed world.
Rachel Reeves
I am sorry to correct the hon. Gentleman again. He is right to correct himself—the deficit, not the debt, ratio is 12%—but is he aware that the deficit figure in Greece stands at 14%? Greece is, I believe, in the western world. Is he also aware that we went into the crisis with the second lowest debt-to-GDP ratio in the G7?
Kwasi Kwarteng
The hon. Lady is being quite clever and fixing the measuring rod.
Gordon Brown, the former Prime Minister, openly boasted of abolishing boom and bust. That was the central claim that he made. He predicated his entire policy on that premise. The premise was wrong. As we all know, and as hon. Members have commented, we went into a recession and we were faced with a huge deficit. That was a huge bust, which the former Prime Minister, in his wisdom, failed to see. That is why we were saddled with the deficit, and why we have had to make some of the tough adjustments to which Opposition Members have alluded.
That context is important. I know that there will be difficult times. I know that up and down the country Opposition Members will bemoan and complain about Tory cuts, but the context demonstrates why the adjustments have had to be made. They were forced upon us by the international environment. My hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) mentioned that investors would not buy British Government debt. As a consequence, we have to rein in our spending. That is common sense. It is wrong for Opposition Members to say that we are trying to strangle the baby in its cot and that we are savage and uncaring. It is a matter of practical policy. Without that, we have a bleak future.
Mr Anderson
The hon. Gentleman spoke about fairy tales and Bible stories. Some of us lived the reality. Some of us in this country were starved for 18 years, while others became fat cats. We know that his party is taking us back there.
Kwasi Kwarteng
I am not talking about the 18 years from 1979 to 1997. I am talking about the 13 years in which we lived under Labour.
To finish my contribution, I want to talk about the private sector and the public sector. Someone described trying to grow an economy by focusing on the public sector as a man sitting in a bucket trying to lift himself up by pulling the handle. It does not work. The only way we can have a viable public sector is if we can have revenues coming in from a buoyant private sector. As my hon. Friends have reiterated time and again, it is only by having a prosperous private sector that we can grow our way out of the recession. The message about a strong private sector is clear. It wants less regulation, less red tape and bureaucracy and a clear tax system, and it generally supports the coalition Government and the Government programme. For these clear and simple reasons, I support the Government amendment.
Mr Deputy Speaker
Order. Under the power I have to vary the time limit, I am changing it to 10 minutes.
Mr Alan Campbell (Tynemouth) (Lab)
I welcome you to your new post, Mr Deputy Speaker.
I am not sure about the Aladdin analogy. I am, however, convinced that with the Prime Minister and the Deputy Prime Minister, we are now in the age of the brothers Grimm.
Before I get to that, however, may I congratulate everyone who made their maiden speech today? They spoke with passion, commitment and humour, and all bring something special to this very special place. I want to mention in particular the contribution of my new hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who spoke superbly about his predecessor, Ashok Kumar, who was both a colleague and a friend to those of us who were elected before 2010.
I congratulate the Government and, in particular, the Prime Minister. They got the decision on the £21 million for Nissan absolutely right, confirming the investment made by the Labour Government. It offers welcome reassurance to the highly skilled work force, some of whom live in my constituency, to the companies in the supply chain, and to the region as a whole. If the Government insist on revisiting all the spending commitments that were made in the preceding months before the election, I hope that when they do so, they will follow the model that they have developed in looking at the Nissan grant. It is important that they get on with it, because if they do not, they risk sapping the confidence of business in the region.
I want to make it absolutely clear, as did the shadow Secretary of State, my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), that we accept the need for deficit reduction, but we also accept that there needs to be a strategy for growth alongside it.
Kwasi Kwarteng
The hon. Gentleman said that he accepts the need for cuts—for the deficit to be dealt with. Where does he, as a representative of his party, see those cuts falling?
Mr Campbell
I have news for the hon. Gentleman: he is sitting on the Government Benches. It is up to the Government to bring their proposals to this House, and it is for this House to make judgments on them. As my right hon. Friend made clear—
Mr Campbell
One at a time!
As my right hon. Friend made clear, the Department for Business, Innovation and Skills identified £900 million-worth of cuts before the election. Before the election, I was in the Home Office, where we had identified £500 million-worth of savings. It is simply wrong to say that the previous Government did not identify savings, but if the hon. Member for Spelthorne (Kwasi Kwarteng) wants to go beyond that programme, it is up to his party and his Government to bring forward those proposals.
Matthew Hancock
The hon. Gentleman talks about cuts that were identified by Labour. We all know that the Labour figures implied £50 billion of spending cuts; for all that we have heard about demanding more money, that is the fact of the matter. He mentions £500 million as an aggregate figure, but can he give us, say, five specific examples of cuts at the Home Office, where he was a Minister, that would have happened under a Labour Government had they been re-elected?
Mr Campbell
I would first mention the battle for savings that every police force has to deliver while protecting front-line services. However, I do not necessarily want to talk about that—I want to talk about the money that was in the budgets under the previous Government for a very good reason.
This debate is not only about BIS but about the whole of Government. I hope that the Minister will have a word with colleagues in other Departments, for the sake of construction workers in my constituency. I hope that we can have a decision on Building Schools for the Future in north Tyneside. Our children deserve the best learning environment, but our construction workers deserve jobs, too. When the last new school in my constituency—Monkseaton high school—was built, more than half the construction jobs went to local people. When the then Leader of the Opposition, now the Prime Minister, went to the school, he praised the building. So let us have some commitment from the Government that gives certainty and ensures that Monkseaton high school was not literally the last new school to be built in my constituency.
There was also money in the regional transport budget, but that budget has been frozen. That has caused me concern, but, more importantly, it has caused concern for local businesses and their representatives. There was £30 million in the budget to improve the A19-A1058 Silverlink roundabout. A driver who turns left at that roundabout goes to the new green technology park on the north bank of the Tyne. If they go straight over, they go to the Cobalt business park—the biggest private business park in the country, which is there because of co-operation between the public and the private sectors in bringing those jobs to the area. If we do not get those improvements, then people who go through the new Tyne tunnel—delivered by the previous Labour Government—will end up in gridlock. A whole host of then shadow Ministers came to look at those roads and made promises to my constituents about what they would do. Well, they are in government now, so they had better start delivering on those promises. If the road network in the north-east is not upgraded, if we are excluded from the rapid rail link, and if the new runway at Heathrow does not take place, squeezing out the regional air links, why would an investor who comes to Great Britain think about putting their money into the north-east given that we do not have a transport network for the future to create future jobs?
I want to concentrate on the regional development agency, which has been mentioned. Before the recession, the north-east had the fastest-growing economy of any region outside London. That did not happen despite Government action, it happened with it, and One NorthEast was part of that story.
Mr Campbell
No. The hon. Gentleman has had his chance.
One NorthEast has been a leading player in the New and Renewable Energy Centre in Blyth and along the north bank of the Tyne, in low-carbon vehicles at Nissan on Wearside, and in the Printable Electronics Technology Centre in County Durham. Every one of those developments had at their heart a level of operation between private investors and the public sector. There may be support for small businesses for local authorities to pick up, but I am concerned that without such strategic action, the big national decisions will go elsewhere. My fear is that that will be bad news for the north-east.
If the Government are getting rid of RDAs in England, as has been suggested, have they spoken to the devolved Administrations in Wales and Scotland about them getting rid of their RDAs? One of the first issues that I took up in 1997 was the case of LG Electronics. That company went to Wales because we in the north-east did not have the money, but the Welsh Development Agency did. LG did not stay there, but Wales pinched the jobs.
Cuts in the RDA budget are already affecting jobs in my constituency: the Seafood Training Centre looks as if it will close its doors. Again, a troop of Conservative spokespersons went to that training agency and said how important it was, but now it is closing its doors, which is another bitter blow for the local fishing industry. That is why the Government need to be much clearer than they have been today about their plans for RDAs.
The Business Secretary said that
“changes depend very much on the reaction of local business and local authorities.”—[Official Report, 3 June 2010; Vol. 510, c. 556.]
I can tell him that One NorthEast has the support of local authorities, five universities, the Northern Business Forum, the CBI, the chamber of commerce, the Federation of Small Businesses and the Engineers Employers Federation, so let us see him get on and back it.
Of course, we know why there is dither: there is disagreement at the heart of the coalition. The Communities and Local Government Secretary—the man with the money—wants the money to go to local enterprise partnerships, but the Business Secretary, who is in charge of the sponsoring Department, favours regional economic enterprise partnerships, rather like RDAs. As my hon. Friend the Member for Sedgefield (Phil Wilson) said, this afternoon we have simply heard confirmation of uncertainty. That adds to confusion, and it is not good for business.
Mr Campbell
Not at the minute. I will if I have time later.
The Government need to accept, as the Opposition accept, that although deficit reduction is important, so too is economic growth. If we do not have the latter, we cannot have a better-balanced economy, including in respect of the regions and London. The north-east remains hopeful, but not expectant, because the Prime Minister said in that interview with Jeremy Paxman that of all the English regions, the north-east can expect to bear the brunt of the cuts. The problem and the danger is that in taking too much of an orthodox approach, involving cuts but very little else, we risk mirroring the policies of the last peacetime coalition Government, who turned a recession into a depression. They were not balanced in their approach to the regions, and the effects were not even, because the depression hit regions such as the north-east hardest. We must not, and we will not, allow that to happen again.
Matthew Hancock (West Suffolk) (Con)
It is a pleasure to catch your eye, Mr Deputy Speaker, and to see you in the Chair. I am glad to see that you have adopted the traditional attire of the Deputy Speaker. It has been very enjoyable this afternoon to listen to the maiden speeches of my hon. Friend the Member for Bracknell (Dr Lee) and the hon. Members for Wansbeck (Ian Lavery), for Barnsley East (Michael Dugher), for Bolton West (Julie Hilling), for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for North West Durham (Pat Glass)—the latter was a particularly charming speech. I agreed especially with the speech by my hon. Friend the Member for Bracknell, and less so with all of the others.
I wanted to speak in this debate on business because I grew up in a small family business. In a sense, that is what brought me into politics. It taught me the values of enterprise and responsibility as I watched that small business grow. It was my first job and it has informed the way in which I think about the world and how it operates. I still remember the occasion when I first realised the impact of Government regulation on small businesses and the amount of time that that could take up to no particularly beneficial effect. The Health and Safety Executive visited my family business—an office-based computer software business—and took two days of senior management time and its own staff’s time to search for something that breached the health and safety code. I am sure that many small business people across the country will recognise that scenario. After two days, all that they had found was a bottle of bleach in the cupboard under the sink in the small office kitchen and no sign saying that it was there. This was put into the report and I remember laminating the sign that still hangs above the sink and says, “There is bleach in the cupboard. Please do not drink it.” That gave the company a clean bill of health from the HSE. What a waste of resources, of management time and of the HSE staff time.
I was therefore delighted to hear that the Government will review health and safety laws. We all recognise the importance of health and safety—indeed, it was a Conservative Government who introduced the Factory Acts—but the over-bearing, centralised, top-down, intrusive, suspicious, expansive and expensive health and safety system that has grown up in the past few years needs to be reviewed.
I have given just one example of something that has happened frequently over the past 13 years. The end result has been the economic crisis that we are now in and that members of both parties on this side of the House are trying to face up to and solve for the future good of our country. I have been astonished that in this debate Opposition Members have joined in a leftward march away from the centre of political debate, ignoring entirely the depth of the crisis that we face. Even the former Minister, the hon. Member for Tynemouth (Mr Campbell) could not specify a single reduction in spending in his Department, despite saying that he had identified £500 million of cuts.
Mr Alan Campbell
I identified £116 million of back-office savings that police forces were instructed to make. That is £116 million of cuts, is it not?
Matthew Hancock
It is £116 million of unspecified cuts, which is precisely the point that I was making.
Mr Campbell
It is not for us to tell police forces where they should make cuts. It is for us to set the police budget, but police forces are operationally independent, and it is for police authorities to make those decisions. The Government do not tell them how to do that.
Matthew Hancock
We have not heard a single consequence of the £50 billion cuts that the Labour party would have had to introduce had they won the election. That puts the Labour party out of the debate, and leaves it to others—especially those on this side of the House—to work out how we get our country out of this terrible mess.
Over the past 13 years we have heard about the six regulations a day from the Secretary of State and the £11 billion cost each year of extra regulations. I used to say that we had the longest and most complicated tax code in the world except for India, until last year when India overtook us—I mean, when we overtook India. I will get it right eventually! Youth unemployment is the highest on record; we have had a record fall in business investment; and for all the hot air about manufacturing, the number of manufacturing firms in this country has fallen by a fifth over the past 13 years. We do not need to hear anything more from the Labour party about manufacturing as we try to turn the economy around.
I am delighted that, in the agreement on in-year spending reductions of £6 billion, £50 million was found to put right part of the catastrophe in further education funding that happened under the last Labour Government, when so many promises were made with no funds attached, when the budget was completely overcommitted, and when the Government had to go around the country to half-started projects and take away the funding. Since the election, we have heard that that is the case in Department after Department, and that FE was just unlucky that it all came out before the election. So I welcome strongly the statement by the Minister for Universities and Science that that money will go to FE colleges and that we can try to put right some of that wrong and reduce the deficit in a way that does not cause the greatest possible damage. I will be writing to him today to argue the case for Haverhill college in my constituency. It was ready to go and had been allocated funding by the previous Government, but had the funding taken away at the last minute because they had overcommitted the budget. I welcome the £50 million that the Government have found to do that.
More than all those things, and more than the Mandelson cheques we have heard about, businesses crave stability in the broader economy. Under the last Government, we had an asset price boom and bust, a credit boom and bust, uncertainty and complexity in the tax system, the longest recession in the world, the deepest recession since the war and the worst peacetime public finances in our history—and perhaps worse than all that, we had no answers to the questions of how to deal with those problems and of where growth would come from. I noted earlier that the shadow Secretary of State refused to say whether it was still Labour party policy to put a tax on jobs via an increase in national insurance, and I will be fascinated to hear whether the leadership candidates plan to argue next year that taxes should go up on every job in the country. Instead, all we have heard is the tinny sound of demands for cash and, from one hon. Member, a demand for an unfunded tax cut—those used to come from our party!
Phil Wilson
Does the hon. Gentleman believe that VAT should go up next week?
Matthew Hancock
I think that is one for the Budget statement on Tuesday.
Finally, we are starting to get the answers to some of these deep-rooted problems. We heard today about the changes to financial regulation, and I wonder how long it will take the Labour party to involve itself in the debate about the future of financial regulation. We think that banks should be properly regulated, not regulated under the old system that failed. The Government are also putting forward solutions to help credit flow to businesses; we are getting increased certainty in the tax system; and of course we have measures to tackle the deficit. As a result of those last measures, since the election, the interest rates paid on Government bonds has fallen by 0.4%—one tenth—which means that the interest on Government debt has fallen by one tenth in just over a month since the election, in anticipation of action to deal with the deficit.
Claire Perry (Devizes) (Con)
I want to emphasise that point. We heard so much about the financial stability that the previous Government were going to give us, yet the international markets have sent out an incredibly strong signal: that we finally have a Government with the guts and the policies to tackle this deficit, which hon. Members who are now on the Opposition Benches could never even own up to, let alone deal with. The markets are saying, “This is now a country that we want to invest in again,” and interest rates have fallen as a consequence. I want to underline the importance of the statistic that my hon. Friend gave in demonstrating the world’s view of Britain finally being open to business, now that we have had a change of Government.
Matthew Hancock
It would be a delight to give way to the hon. Lady, who has made so many fascinating interventions this afternoon.
Rachel Reeves
The hon. Gentleman has quoted a fascinating statistic, but does it not fly in the face of what those on his Front Bench have been saying about how, because nobody wants to buy our debt—that is what one of his colleagues said earlier—we have to make cuts immediately? If interest rates are going down, surely there are lots of people who want to buy our debt.
Matthew Hancock
Interest rates are going down in the market because people can see a Government who are taking action and getting to grips with our problems, who have already made in-year cuts and who will finally put this country back on the path to fiscal sanity. That is exactly why interest rates are going down, which is a commendation on the action that the Government have taken so far.
The point that I will rest on is this. Across this country, businesses are paying interest rates that are in some cases extremely high. They need to borrow in order to invest for the future and get the private sector recovery that even some Labour Members talk about. The single best measure to do that is to have low interest rates and a stable economy, with confidence in the future. That is exactly what this Government’s programme is delivering, and I commend them on that. I strongly support the amendment to the motion, and I look forward to voting for it later.
Andrew Miller (Ellesmere Port and Neston) (Lab)
May I join others in congratulating you, sitting there in your smart attire, Mr Deputy Speaker, and also the many hon. Members who have made their maiden speeches this afternoon? Clearly standards have gone up since you and I entered the House in 1992. Congratulations are due to those from all parts of the House who have made such interesting contributions.
I want first to encourage people to think about what has been happening in manufacturing. There has been massive technological change impacting on manufacturing, along with a continual process of globalisation in the manufacturing process, which has put all developed countries under huge pressures to maintain their positions. Because of the changes that have occurred, we have to work at the leading edge—something referred to by hon. Friends who spoke about Nissan and similar projects—if we are to sustain our position. However, one thing is for certain: we will not sustain the number of jobs in manufacturing. There will continue to be pressure on those jobs, as there has been over a long period, because of technology.
I would like to cite two examples from my constituency by way of illustration. Vauxhall Motors used to employ nearly 11,000 people, but now produces a much higher quality product with 2,200 people, with much higher numbers of vehicles coming out of the factory. The Shell oil refinery used to employ 10,000 people, but now the control room looks like something out of NASA and a handful of people can control the whole refinery, because of sophisticated IT technologies, which have made such a massive change to the way such operations work.
Andrew Miller
No, I will not for the moment.
The Secretary of State and I had a short exchange about Vauxhall Motors earlier, and there have been developments during the course of the afternoon. The Government eventually agreed that the loan guarantee approved by Lord Mandelson had been approved correctly and was in order—contrary to earlier suggestions—but despite that and because of what has happened in Germany and the UK, the company finds itself having to drive things forward itself. In a statement issued this afternoon, the company says:
“We cannot afford to have uncertain funding plans and new time-consuming complex negotiations at this time when we need to keep investing in new products and technologies. With these new products and the impact of restructuring, we expect to return to profitability shortly”.
The parent company is going to support the necessary changes. It is a pity that the Government were not part of the solution, but I welcome the fact that the mischief that had been created over the inappropriateness of the grant has at last been dealt with.
Mr McFadden
Does not my hon. Friend agree, however, that the delay involved in this case should serve as a warning of the damage that can be caused by needlessly calling a halt to important industrial projects? It is little use the Government coming along today and saying that they have approved the loan guarantee, on the very day that the company in question has run out of patience.
Andrew Miller
May I please finish?
I could not agree more with my right hon. Friend the Member for Wolverhampton South East (Mr McFadden). There is a lesson for us all here. There has to be proper due diligence, and I respect the fact that Lord Mandelson took a long time to reach the agreement, working with my right hon. Friend. It was done correctly and, what is more, the then Opposition party was notified of that during the process.
Richard Graham
I am grateful to the hon. Gentleman for giving way. Does he agree that one of the main reasons for the decline in manufacturing in this country has been the slowness of decision making by the previous Government? To bring that point alive, I shall give one particular illustration. British Energy, which is headquartered in my constituency of Gloucester, was eventually taken over by the French company, EDF, simply because the previous Government failed to make any future provision for the nuclear power that this country so badly needs.
Andrew Miller
That is a bit rich, coming from the hon. Gentleman. He really is rewriting history. He must acknowledge how slow his party has been to wake up to the calls from people like me who were demanding a move towards nuclear power. I find it ironic that the amendment to our motion starts with the words “leave out from ‘power’”. I just wonder how much of a row there was in the coalition about that, given the fact that the two words before “power” are “civil nuclear”. I am pleased to see that the Government’s amendment would allow those words to stay in the motion, but I bet there is going to be trouble in the coalition when it comes to agreeing on some of the decisions that the hon. Gentleman is quite right to suggest are mission critical to the success of the UK economy.
This Government’s delays in decision making have also had a dramatic impact on the supply chain and, as a consequence, on many of the apprenticeships in the supply chain. We have heard all the stories about the creation of 50,000 new apprenticeships, but, goodness me, those delays have slowed down the creation of apprenticeships in my constituency and in the travel-to-work area around it. That includes the constituency of my hon. Friend the Member for Wrexham (Ian Lucas) and others, all of which are affected by the decisions at Vauxhall and the other big manufacturing operations around us.
The Minister of State, Department for Business, Innovation and Skills (Mr John Hayes)
I could not intervene on a less experienced or distinguished hon. Gentleman than the one who is speaking. On apprenticeships, he will understand that recessions do make things difficult, but will he not celebrate and welcome the commitment of this Government to creating more apprenticeships, particularly in small and medium-sized enterprises, in constituencies such as his?
Andrew Miller
I am counting every one of them, and if I have to come back and agree with the hon. Gentleman in a year’s time, I will do so. I just hope that he is not double-counting the commitments already made by those on the Labour Front Bench before the election. As long as he is not double-counting the number of apprenticeships, I will celebrate them with him. I look forward to seeing them.
We have also heard mention of FE colleges this afternoon. One thing I am immensely proud of—photographs of it feature on my website if anyone would like to look at it—is the new FE college that was built with funding provided by the Labour Government. It was chosen to be part of the network of colleges that would be built because of the importance of manufacturing to constituencies like mine. Apprentices from Vauxhall and the petrochemical sector, as well as from the retail and leisure sectors, study in that college, which is going to be a centre of excellence in the middle of Ellesmere Port, where manufacturing genuinely matters. I welcome that investment.
I move on to the second issue that is particularly important for the future of manufacturing. I welcome the fact that the Minister for Universities and Science has taken over the science portfolio, and I look forward to working with him in my new position as Chair of the Science and Technology Select Committee. We have already had some exchanges. I also put on record my thanks to my hon. Friend the Member for Blackley and Broughton (Graham Stringer) for the civilised way in which the election between him and me was conducted.
The Minister of State, Department for Business, Innovation and Skills, the hon. Member for South Holland and The Deepings (Mr Hayes) knows how passionately I feel about the role of science. He and I have talked about information technology issues in the past. I will press the Minister for Universities and Science in particular to ensure that he protects our science base, without which our future will genuinely be bleak.
To return to what I said at the beginning of my remarks, the impact of technological change on manufacturing and the globalisation of manufacturing mean that if we are to have a place in the manufacturing of tomorrow, part of it is going to have to be science-led and driven by the highest levels of research. It is mission critical—I hope this commands support from all corners of the House—that we maintain our investment in the science base. In areas of scientific endeavour that are close to market, we cannot afford—because of the pace of change—to take our eye off the big picture either. When it comes to our commitment to CERN or the European Space Agency, we need to realise that these blue-sky areas are incredibly important for our children and their children in turn. They are crucial if we are to maintain our position in this incredibly competitive field.
Another important issue for my new responsibility is ensuring that we work together—I hope in a collegiate way—across parties to improve public understanding of some of the complex scientific challenges that face society today. On that note, despite our odd disagreements on manufacturing issues, I hope that there will be common ground between the parties. Some aspects will divide the parties and other aspects might divide people within the parties, but I hope that serious progress can be made during this new Parliament. Nothing can be more important to our children than making sure that we are at the leading edge. If we do not stay there and if we do not invest in science and technology, we will start slipping down the ladder.
In seeing you join us, Mr Deputy Speaker, I note that this is the first time I have had the pleasure of speaking with you, another Lancastrian, in the Chair. I will conclude my remarks. I know how dearly you, Mr Deputy Speaker, hold manufacturing to your heart and how importantly you view it as the cornerstone for our future. It has to be manufacturing that is led by investment in science and technology; we need to deliver that at all levels in every aspect of our endeavours.
Harriett Baldwin (West Worcestershire) (Con)
It is a pleasure to take part in this Opposition day debate on Government support for industry. It was a great pleasure to hear the maiden speech of my hon. Friend the Member for Bracknell (Dr Lee). I also heard the maiden speeches of the hon. Members for Bolton West (Julie Hilling) and for Wansbeck (Ian Lavery). I apologise for having to leave the Chamber, as I had been invited to tea by Mr Speaker, and that is why I sadly missed the maiden speeches of the hon. Members for Barnsley East (Michael Dugher), for North West Durham (Pat Glass) and for Middlesbrough South and East Cleveland (Tom Blenkinsop), but I look forward to reading them in Hansard. It has been delightful to hear so much about the north-east in today’s debate. In 2005, I fought Stockton North, and, as they say, Stockton North fought back. However, I do know what a delightful part of the world the north-east is.
I speak as someone who has worked in the private sector for the past two decades—my whole career thus far has been in the private sector. In those two decades, I have survived both boom and bust and all types of economic cycle. I have been through the cycle in which one hires additional people, the cycle in which, sadly, one has to let people go, the cycle in which one invests heavily in training, research and development, and the cycle in which one markets and exports products overseas, so one travels to explore overseas markets. I learned in those two decades that businesses have to be adaptable to thrive and survive. I also learned that Governments do not create wealth. Governments do not invent new products or start new businesses and cannot tell which businesses will survive or thrive. However, I strongly agree with the Secretary of State’s comments at the beginning of the debate that the Government have an important role to play.
There are signs that the Labour party is beginning to understand that Governments do not create wealth. Last week, the former Labour City Minister, Lord Myners, said:
“There was flawed thinking about job creation in the past. I found it very frustrating to sit in meetings with some of my fellow Ministers talking about creating jobs in the green economy and biotechnology. The Government cannot create jobs.”—[Official Report, House of Lords, 8 June 2010; Vol. 719, c. 625.]
Lord Myners is right. Across the world, and throughout history, economic recoveries are almost invariably led by small business creation and by the jobs created by those small businesses as they grow and become successful.
Against that background, I would like to consider Advantage West Midlands, the regional development agency that covers both my constituency and that of the shadow Secretary of State, the right hon. Member for Wolverhampton South East (Mr McFadden). I have been surveying my local businesses recently about how they perceive Advantage West Midlands. Their reactions are mixed. Some of the bigger businesses have had a very positive experience of working with the regional development agency. However, some of the smaller businesses, which the Federation of Small Businesses represents, have found it difficult to negotiate a way into the large regional organisation that is the regional development agency. As it is the small businesses that create the large part of the jobs that bring us out of recessions, it is vital that we get better at signposting that help to small businesses.
According to the annual report of Advantage West Midlands for 2008-09, which covers the worst period of the recession, its budget peaked at £330 million, which I think we would all agree is substantial. With that budget, it was able to create or safeguard 16,997 jobs. I worked that out to be approximately £20,000 per job—quite a high level of subsidy. The Labour Government cut this year’s budget of Advantage West Midlands to, I think, £270 million, and so far it has created about 4,000 jobs, but let us assume that that annualises out to about 8,000 jobs—a cost of well over £30,000 per job.
In 2008-09, the key inward investment achievement was the expansion of Deutsche Bank into Birmingham, which created 300 jobs. Perhaps my hon. Friend the Member for Bromsgrove (Sajid Javid), who is not unfamiliar with that organisation, will be able to find out whether Advantage West Midlands was the deciding variable in Deutsche Bank’s decision, or whether the expansion might have happened anyway.
Management costs and the implementation of the myriad different initiatives and programmes used a considerable proportion of Advantage West Midlands’ annual budget. The salaries of the chief executive, the director of resources, the director of operations, the director of strategy and communications, the director of economic development and the director of economic regeneration are all similar to, or higher than, that of the Prime Minister. If that management structure is replicated in all eight regional development agencies and the London Development Agency, it is likely that many of the front-line funds destined to play their role in helping business and industry are being rather diluted by the high cost of implementation.
The Government have an important role to play in helping business and industry. I believe that they should focus on the creation of excellent infrastructure, on keeping the Government’s own borrowing costs down so that interest rates remain low, and on an attractive taxation environment for both start-ups and inward investment. That is how we can compete with countries such as Singapore and Portugal, which were mentioned earlier.
Ian Mearns
I welcomed the hon. Lady’s comment about the number of Members from the north-east of England who had spoken today. Obviously, when it comes to our region and our regional development agency, our perspective is very different from that of many Conservative Members. As was pointed out earlier, geography is an important factor.
In the north-east, one of the magnificent benefits of the RDA has been its fantastic “Passionate People, Passionate Places” tourism regime, which has received national and international acclaim and has massively boosted the tourism industry in our region. That is vital to us, given that the nearest capital city to Tyneside, for instance, is Edinburgh, 100 miles to the north. The amount spent on tourism per head of population by the Scottish Government is significantly greater than the amount spent in the north-east of England. That is the market in which we have to compete. We are peripheral to the English economy. I welcome what the hon. Lady has said about strategy and infrastructure, because it is vital to the integrity of the regional economy.
Harriett Baldwin
I love visiting the north-east. I wish that the weather were a bit better for the beaches, but it is a gorgeous part of the world.
Amber Rudd (Hastings and Rye) (Con)
Delightful though it always is to hear about the north-east, may I add that we have a town in the south east, Hastings, which is heavily deprived? Members may not be aware that, although it has received a good deal of investment, in the past 13 years the average wage has fallen from £30 to £100 a week below the United Kingdom average. We need the private sector investment that the Government are talking about.
Harriett Baldwin
I thank my hon. Friend for that intervention.
I was outlining some of the other ways in which Government could help small businesses. We all agree on certain points, and I hope we can agree that the Government should concentrate on keeping regulation to a minimum. They should also concentrate on reducing the gold-plating of European legislation and confining such legislation to acceptable levels. I think we can all agree that they should spend money on education and skills. The more flexible, well trained and mobile the work force are, the more they will be able to thrive and adapt to the changing environment that we will inevitably experience in the future.
Direct spending on business and industry should happen at as local a level as possible. The regions sometimes make natural geographic sense. Sometimes they do not, so I welcome the opportunity to look at local partnerships. Local communities should be encouraged to reap the reward of businesses’ expansion as much as possible and be allowed to keep some of the increase in taxation revenues locally. I welcome some of the points that have been made along those lines in respect of the Government’s programme.
We have had to learn all over again that Labour Governments run out of money. As we rebuild Britain’s industrial and business base, we need to acknowledge the limits of Government support for industry but at the same time focus on unleashing the potential of the private sector to help us to grow our way once again to prosperity.
Rachel Reeves (Leeds West) (Lab)
I welcome you to your position in the Chair today, Mr. Deputy Speaker. It is a pleasure to speak in the debate after so many excellent speeches, not least from the hon. Member for West Suffolk (Matthew Hancock). Ten years ago, he and I started work on the same day at the Bank of England. We had many good debates there and I am sure that they will continue in the House.
It is also a pleasure to follow the maiden speeches of so many Members: the hon. Member for Bracknell (Dr Lee), and my hon. Friends the Members for Bolton West (Julie Hilling), for North West Durham (Pat Glass), for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Wansbeck (Ian Lavery), and for Barnsley East (Michael Dugher). I know that my hon. Friend the Member for Barnsley East shares my concerns about the future of Yorkshire Forward, our RDA.
We have heard lots of stories from Members on the Government Benches about the waste of RDAs. I can only tell them what Phil Thompson, managing director of Resource Print Solutions in my constituency, says. His business, like many in all our constituencies, was hit hard by the recession, but he got through it because of a grant from Yorkshire Forward, which enabled him to buy new machinery and equipment and to keep jobs in-house that he had previously had to contract out. During the recession, he did not lay off a single worker. Because of the support from Yorkshire Forward and changes to shift patterns, he managed to keep people in work. The company is now growing again as we recover from the recession. What Phil’s business needs now and what the British economy needs now is economic growth.
Mr Hayes
The hon. Lady is already a distinguished and articulate advocate of her cause—I note it from her many interventions in the debate. In an effort to be helpful on RDAs, may I recommend to her the National Audit Office report and the report that preceded it from the Public Accounts Committee, which make it absolutely clear that in many instances the RDAs are cost-ineffective and insensitive to the very local circumstances that she champions?
Rachel Reeves
I thank the hon. Gentleman for that intervention. I think that we can tell from the debate today that different Members, representing different areas of Britain, have different views about their RDAs. I plead with the Minister. Labour Members representing Yorkshire, the north-east and the west midlands have spoken with huge passion about their RDAs. They have related the stories that they hear day in, day out from businesses and the people they represent. Let us keep our RDAs and let them continue to do the work that they are doing in our regions. That is all that I ask.
Matthew Hancock
Given what the hon. Lady has just said, does she support the Government policy on RDAs, which is to allow local people to decide whether local economic partnerships should cover the region or a smaller area?
Mr Deputy Speaker (Mr Hoyle)
Order. Only one Member can be on their feet at any one time. Please allow the Member to finish before rising again.
Rachel Reeves
Thank you, Mr Deputy Speaker. I am sorry for my enthusiasm.
I welcome the clarification from the hon. Member for West Suffolk that regions will be able to make their own decisions, but that was not my understanding of what the Secretary of State for Business, Innovation and Skills said earlier. [Interruption.] If he did say that, I think that everyone on the Opposition Benches would welcome that. If our regions will be able to make the decisions about our regional development agencies and their future, I welcome that. I am grateful for that clarification, but that was not my understanding of what the Business Secretary said in his statement.
I know that Conservative Members will disagree with this, but I am sorry to say that we do not hear enough from them about growth. They cite the G20 advice about reducing deficits while consistently forgetting about or ignoring the advice in the G20 communiqué for
“credible, growth-friendly measures, to deliver fiscal sustainability”.
That omission on growth is worrying from the perspective of industry and jobs—the subject of today’s debate—because the greatest risk we face is that of a double-dip recession, with the job losses, business failures and higher budget deficits that that would bring.
On Monday, the Chancellor dismissed the possibility of a second recession, but businesses in my constituency are less certain that we are out of the woods. Key to the recovery and to bringing down the budget deficit—we hear a lot about that from Conservative Members—are growth and having a regionally strong and diverse economy. That will not happen by chance; it depends on a strategic Government policy supporting industry in all our regions.
Nadhim Zahawi
What does the hon. Lady think about scrapping the national insurance hike for employers? A lot of employers in my constituency will say that the really harmful thing to do to growth is to add to the cost of employing people, thus reducing the net income of a business. What does she think about that?
Rachel Reeves
I thank the hon. Gentleman for that intervention. What he describes perhaps comes up less in my constituency than in some others, because average earnings in my constituency are £16,000 a year and the national insurance increase proposed by the previous Labour Government was to apply only to wages of more than £20,000 a year. So that was less of a concern in my constituency.
Britain is the sixth largest manufacturer in the world. If one believed some of the statements made by those on the Government Benches, one would think that the UK did not have a manufacturing industry at all—that is not the case. People in Yorkshire have huge pride in our industrial past. From wool to coal and steel, and to retail and finance, our industries have enriched the region—more than that, jobs and industry in Leeds and Yorkshire have helped to power the UK economy.
The true test of this Government’s strategy and their woolly words about local economic partnerships will be whether they can give local people and businesses a true sense of control over their economic future. That is what Yorkshire Forward and other RDAs have been doing; they have been promoting enterprise and driving economic growth across Britain.
We now know—I am reading what I wrote before the intervention by the hon. Member for West Suffolk—that the RDAs are to be scrapped. Or are they? That wind-down has already started in Yorkshire. The Yorkshire Evening Post today revealed that the proposed cuts to Yorkshire Forward mean that no fewer than 109 projects will see their support slashed and that that will affect 24,160 separate companies our region. Some £1 million that would have been used to help small and medium-sized enterprises to access finance is to be cut. Some £1.4 million that would have helped businesses and universities with research and development is to be cut. Some £2.4 million that would have been spent on Tower Works in Leeds to support the digital and creative industries in my city is to be scrapped.
Rachel Reeves
I shall give way once I have finished citing these examples. Some £3.2 million that would have supported the roll-out of broadband and £2.5 million that would have helped people at risk of redundancy to get back to work are to be cut. I could continue on this, but I shall give way.
Harriett Baldwin
I seek clarification, because cuts were announced by the previous Government and I want to find out whether the cuts that the hon. Lady is describing were announced by them.
Rachel Reeves
The hon. Lady makes an important intervention, because cuts were already proposed. The hon. Member for West Suffolk asked whether Labour had any plans to reduce Government spending. I can tell him that it had, and this is one example of them. But this is in response to the—
Mr Deputy Speaker
Order. Hon. Members can, by all means, seek to intervene, but if the Member does not give way, they just have to leave it there. We cannot have two Members on their feet at the same time.
Rachel Reeves
Thank you, Mr Deputy Speaker. This Government—the party of the hon. Member for West Worcestershire (Harriett Baldwin)—have called for £293 million of cuts from the regional development agencies. Yorkshire Forward was asked to make £44 million of cuts. It was written to and asked to come back with those cuts within two weeks—it had two weeks to determine cuts that will affect 24,000 businesses in my region. These are not Labour cuts; they are Conservative cuts.
I ask the Secretary of State for Business, Innovation and Skills to give my constituents some commitment and some hope and certainty that the work that Yorkshire Forward does to support innovation, manufacturing, jobs and skills will continue. I urge the Government not to destroy the support for jobs and growth that the Labour Government put in place. Without Yorkshire Forward, we would not have brought clean coal to our region and the 1,000 jobs that that means in South Yorkshire. Without Yorkshire Forward, we would not have negotiated a deal with Siemens and GE to bring offshore wind, with thousands of much-needed jobs, to Hull, Grimsby and Scunthorpe.
Nick de Bois
What I am hearing today is that growth depends entirely on regional development agencies. We have to liberate businesses from the heavy hand of regulation and taxation that the Opposition imposed under the last Government. That is the way to growth. It is not entirely dependent on the regional development agencies to which the Opposition seem to be so wedded.
Rachel Reeves
The reason that I talk so passionately today about regional development agencies is that they are what the Government intend to cut.
The regional development agencies do not create jobs. I recognise that, and I believe that all Labour Members recognise it. Siemens and GE will bring those jobs, but they could bring the jobs to anywhere in Europe and anywhere in the world. It is the work of the regional development agencies with businesses, on skills and with people in my region that means that those jobs are coming to Yorkshire. That is why I and other Members on this side of the House speak with such passion about the work that the regional development agencies do.
Matthew Hancock
Does the hon. Lady agree that there is a short-term populism that pushes us towards more Government intervention? What we need is a thriving and effective private enterprise to lift our economies up and through to better times—not my words but those of Tony Blair.
Rachel Reeves
I thank the hon. Gentleman for that intervention. I hope that I have made it clear that I support the private sector’s coming to our region and bringing jobs with it. However, that requires a Government on the side of our communities and of businesses. That means encouraging jobs to come to this country when they could go to any other country in the world. If we were in Germany or China, we would be urging jobs to come to those countries. If we want a level playing field, we need a Government who support industry.
In Yorkshire, we look to Government for support—to honour the commitments on high-speed rail and on Sheffield Forgemasters. They are key to Yorkshire’s future and good for the British economy, too. Yorkshire Forward and regional development agencies have fought our corner in a way that Whitehall simply cannot. The support is critical and it is good for all of Britain. The short-term hatchet job pursued by the Government risks the recovery and will put Britain in the slow lane of the global economy, making reducing the deficit harder because there will be higher unemployment and tax revenues will be weaker. Growth is the essential ingredient that is missing from the Government’s strategy.
Now is the time for some more ambition. In the wake of the recession, we can build a fairer, stronger and more diverse economy, built on skills and high-end manufacturing, if the Government put in place the policies—
Claire Perry (Devizes) (Con)
Thank you, Mr Deputy Speaker, for your tutorial on how to be a good parliamentarian. I fear that many of us will let you down before we have learned to do our jobs properly.
I came into this debate to listen, not to speak, but I have found myself compelled to get up and speak on what I think is an incredibly important matter. I apologise for being in and out of the Chamber. I have had a huge visit from the 3rd Regiment Royal Military Police, who I then took for tea. They were marking the maiden speeches out of 10. I am not going to say who did well, but they were quite impressed by some speeches on both sides of the House.
I felt compelled to speak because I have a business background. I went to that bastion of capitalism, Harvard business school, but that was 20 years ago and I have been somewhat cleansed since then. I have had many years of working in consultancy, finance and running my own small business. Then I lived in the countryside and raised my children. On my campaign, I had a reputation for speaking from notes on the back of a fag packet. As this is a no-smoking zone, I have had an upgrade and am speaking from scribbles on the back of some very nice House of Commons paper.
I want to make a couple of specific points and to say why I felt compelled to get up and speak. I am really worried, because I do not think that Opposition Members understand the fundamental reason why we are here today or how Government should support business. We hear lots about micro-interventions and RDAs. Everybody knows that if one visits one’s RDA one will find that they have wonderful and often overlapping agendas with many other parts of the public and private sectors, but they are not lean, honed, efficient and joined-up mechanisms. In many cases, they are the worst bastions of the unaccountable and unelected public sector. They might, in many cases, be doing good work, and that is why they might well have a role to play in many places, as the hon. Member for Sedgefield (Phil Wilson) suggested, but they are not the best way in which to spend precious pounds of taxpayers’ money. However, the Opposition appear to think that that is the right thing to do.
The Opposition also think that micromanaging the economy is the right thing to do. Let me just reference a couple of the myriad schemes that were put in place to support business during the recession. The £10 billion working capital guarantee scheme was designed to underwrite portfolios of loans held by banks, which is such an important part of unlocking the crunched credit system, but it made only £2 billion-worth of guarantees in the time that it was operational. It lent only 20% of its capacity, which suggests that it was not doing what business needed.
Then we had the £75 million capital for enterprise fund, which was designed to do what we would all like to do—get high-tech, high-grade start-ups off the ground—but it lent only half of that money in the time that it was operational. That again suggests that there was a disconnect between what the then Government wanted to do and what business really needed.
Nadhim Zahawi
Does my hon. Friend agree that the real problem with these quangos is accountability? A very good local charity in my constituency was the beneficiary of some money from Advantage West Midlands, and it was very grateful for that money. When it asked, “How would you like us to report on our achievement?” the RDA said, “Oh, just write a report; it doesn’t really matter.” So there is no real accountability. Will she expand on that point and on how the coalition’s policy will bring to local people the accountability that will make the difference in terms of efficiency of delivery?
Claire Perry
I thank my hon. Friend for that important intervention. The whole issue of accountability and transparency in the public sector is key. One phrase that I love to say is that sunlight is the best disinfectant, and that can be applied to the spending of central Government, local authorities or these unelected, unaccountable quangos, which in many cases are not even consolidated into departmental accounts. It is very easy to pay for junkets to the south of France if one knows that nobody is looking at the books. He raises an incredibly important point on an issue that we have pledged to improve with a far more rigorous and accessible system of transparency in public spending, which I wholeheartedly support.
Let me return briefly to the other schemes that were meant to make such a difference. Do hon. Members remember the £2.3 billion automotive assistance programme—the former Government’s flagship scheme that was going to support the entire vehicle manufacturing system and supply chain? It made only three offers of loan guarantee schemes and only two companies decided to go ahead with them.
Then we had the other enormous underpinning of the British export industry—the £5 billion trade credit insurance scheme, which sought to underwrite firms doing the incredibly valuable job of earning pounds by exporting. Well, it underwrote 109 policies. That sounds reasonable, but they were worth £18.5 million. That sort of micro-meddling and initiative-itis bedevilled the former Government, and as a business person, I feel they do not get what British business needs. But we do.
British business needs three things. First, it needs transport and broadband infrastructure. If my memory serves me right, Labour Members only recently started to get to grips with the concept of high-speed rail, which will do so much to rebalance economic growth across the regions.
As for broadband infrastructure, in rural Britain we are extremely deficient in what will give us a living and working countryside. Instead of grinding through additional taxes, more changes and a digital switchover fee, the Government have a plan to get the broadband network in place. That is incredibly important.
Secondly, British business needs a decent low-taxation environment. On corporate competitiveness, we have gone from 10th in the world to 26th over the last 10 years. We can all give examples from our constituencies of companies that have left the country to move to more benign taxation environments. I am talking just about the headline rate, not the taxation complexity to which my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) referred earlier. Have Members seen the size of our tax code list? The list reaches my waist and I am 6 feet 1 inch. It is a lot of paper and we have developed a whole industry employing lots of people to interpret tax codes for small businesses. The Conservatives’ aspiration is to have the lowest tax rate in the G20 and that is what British business needs.
Thirdly, we need to get regulation out of the way. My hon. Friend the Member for West Suffolk (Matthew Hancock) described the health and safety madness that bedevils businesses of all sizes. Indeed, we have gone from fourth in the world for business regulation benignness to 86th over the last 10 years. We have become a country where people have to wade through acres of red tape to do what they need to do every day.
Over the last 13 years, Labour Members did not get, and still do not get, what British business needs. We are the party that will deliver our promises, which is why I am pleased to speak in support of the amendment for which I shall vote tonight.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said at the beginning of the debate, we stand on the brink of a new industrial revolution.
Let me declare two interests. Newcastle was at the leading edge of the first, high-carbon industrial revolution, so we have an interest in seeing a resurgence of industry and manufacturing. As an engineer, I too want to see manufacturing and industrial resurgence. But it is not my interests that lead me. There are five global challenges that require a new industrial response.
First, population and economic growth across the world are stoking demand. Secondly, the global financial crisis has made it extremely important that we grow other sectors. Thirdly, climate change is making many of our ways of building and manufacturing things inefficient. Fourthly, the population of the western world is ageing. That is a good thing; it is good that people are living longer, but it requires different markets and goods— for example, more automotive goods. Finally, globalisation means global markets and global industries.
On the Opposition Benches, we believe that we need to grow our way out of the global financial crisis. The challenges I have enumerated give us many opportunities for growth in the UK, in the north-east in particular; for example, in renewable energies such as wind power, which is why the previous Government invested in NaREC—the New and Renewable Energy Centre—a world-class testing facility for wind turbines in Blyth. Sustainable transport provides another opportunity for growth, which is why the previous Government invested in it by giving grants to enable Nissan to build the electric car facility in the constituency of my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson).
Some months ago, I visited Newcastle university’s electrical engineering department, where I saw the world-leading research into electric motors that is taking place as a result of the previous Government’s increased funding for research and development. Another example relates to ageing with dignity, as promoted by the centre for ageing and vitality in Newcastle.
We stand at the brink of enormous industrial change and the potential for enormous industry growth. The Government have two possible responses. They can leave things to the market, get out of the way—such a well-loved phrase—and let the existing capital and goods markets figure everything out, or they can put in place the economic and active industrial policies that will support industry. The Government seem to have decided to do the former; or having listened to the words of the Secretary of State for Business, Innovation and Skills, I would say that they have decided to do the former while professing to do the latter. I want to say why that is not in this country’s or even the coalition Government’s interests.
As I have said, I am engineer by profession. I also spent three years getting an MBA to hone my business and management skills. I have worked in France, the US, Nigeria and the UK, as well as travelling extensively for my work. I have seen many different combinations of private and public sector involvement, including the raw entrepreneurship of Lagos street markets. Having listened to Conservative Members expressing their contempt for all regulation, including that on health and safety, I now understand that that is the kind of market economy that they want to bring to this country. I have also worked in the highly regulated labour markets of Germany. I have helped to build small businesses, to grow medium-sized ones and to expand multinationals. I have also helped to set up the framework for the public sector regulation of the telecommunications industry. So I know from bitter experience just how difficult it is to create the virtuous cycle of investment, innovation and job creation.
Let me tell hon. Members what I have found that works. The role of the private sector is crucial—it mobilises investment, creates jobs, innovates and takes risks—but the public sector is equally important. The right regulatory environment gives investors the confidence to invest and helps smaller companies to compete on a level playing field. By providing grants and incentives for innovation and investment and using the public sector procurement process intelligently, the public sector can help emergent industries to flourish. By directing funds to build the right infrastructure, the public sector helps ideas to become businesses. Conservative Members are right: the public sector does not create jobs, but it can provide the soil and fertiliser to enable them to grow. So we need active individuals, partnered by industrial activism. A proactive partnership between the public and private sectors is essential if the UK is to take a leading role in the world’s low-carbon future.
Nadhim Zahawi
I am pleased to see a fellow engineer on the Opposition Benches. I recall the hon. Lady not wishing to be here for the election of the Speaker and wanting to go back to play bingo in Newcastle. Is she proposing that the Government give further subsidies to the bingo industry in her constituency?
Chi Onwurah
I would thank the hon. Gentleman for his intervention if I could understand the line that he is drawing between bingo and the huge questions that we face. I support the bingo industry—I support all service industries—but he may not have followed today’s debate, which is about Government support for industry, particularly manufacturing and engineering industries. I would appreciate being able to stick to that subject for the rest of my contribution.
Labour’s industrial activism means that there are appropriate grants to support industry across the country. Under Labour, the regional development agency One NorthEast was able to take strategic regional decisions and support new technologies and the complex supply chains necessary to make them successful. I share the utter confusion of my hon. Friend the Member for Sedgefield (Phil Wilson) about Government policy with regard to the RDAs, which are to be abolished but allowed to re-grow in some form that is not entirely clear. That uncertainty is damaging jobs and industry in Newcastle and across the north-east, and I urge the coalition to provide clarity and send signals that a regional strategic decision-making authority will continue to exist.
Chi Onwurah
I am afraid I will not give way. I have very little time and I know that other Members wish to speak.
Let us be clear. Active support for industry is not a uniquely Labour policy. Across the world, Governments who know the benefits of long-term investment support their industry. I do not believe that China is a political model for us, but it has invested aggressively in technology and is reaping the rewards for doing so. Its wind power industry has doubled in output in the past year. In Singapore companies planning to relocate are asked how many graduates they need, what kind of grants they want and what kind of infrastructure would help.
Chi Onwurah
No, I am afraid I have no time.
Our competitors recognise the importance of supporting industry. The coalition uses the excuse of not wanting to pick winners, but in reality it wants to take our country back to a laissez-faire industrial indifference which will leave us without technology leadership in any sector. It talks about the importance of cutting the deficit. We agree. We set out plans to cut the deficit in half over four years, but that should not be used as a reason to risk our futures.
The people of Britain understand that even when times are difficult, one should not stop investing in the future. It was Britain’s leading role in the first industrial revolution that gave us our current relative prosperity. If the Government do not equip the country to take advantage of the opportunities that are presented now, they will betray not only the north-east, but future generations across the UK. I support the motion.
Toby Perkins (Chesterfield) (Lab)
Thank you, Mr. Deputy Speaker. It is a great pleasure to speak for the first time in a debate chaired by you.
I am sorry to see that the hon. Member for Devizes (Claire Perry) is leaving us.
Toby Perkins
That was a brave attempt. Before the hon. Lady spoke, I thought we had already been patronised more than we could stand, but she raised the bar considerably.
Toby Perkins
No, I should like to make progress. Other Members wish to speak.
My background as a small business owner and now as an MP in the east midlands, in a coalfield and manufacturing area, gives me a broad perspective on the debate. That broad perspective is one of the things lacking in the arguments that we hear from the Government Benches. People seem to fail to understand that the private sector and the public sector do not live in two entirely opposite worlds that never have anything to do with each other. As a business man, I rely on people buying products from my firm. Some of those people might be doctors, some might be teachers, some might work in private industry. What all of us who run a business need more than anything else is a strong economy and a strong environment in which to do business.
Of course, everyone running a business and everyone in society wants to pay less tax. More important than a small cut in corporation tax is an economy supported by Government to run successfully. Hon. Members should remember that corporation tax is 5 per cent. lower now for big firms than it was in 1996-97. All the parties are talking about manufacturing, yet only Labour has put in place the financial means to support manufacturing and to boost industry, which is what should be happening.
I was pleased to hear the contribution by the hon. Member for Stratford-on-Avon (Nadhim Zahawi), who I think might be joining the proud tradition of Tory rebels over the years in his call for more support for industry. He said that the British Government should support our manufacturing firms in the way that the American Government support theirs. I hope that he will continue to stick to that line after he has spoken to his Whips.
In our area, the East Midlands Development Agency is not, of course, the whole solution, but it is an important contributor. In Chesterfield, there is an organisation called CPP that employs 270 staff. When I went to visit it before the election, people there told me that they were able to carry out the initial set-up only because of the support of the development agency, which put in £1.7 million.
The east midlands engages in more manufacturing than any other area. The Secretary of State has said that he wants his Department to be the Department for growth, but cutting investment allowances will not speed the growth that we need in our economy. I was horrified to hear the hon. Member for Loughborough (Nicky Morgan), who is not with us at the moment, say that she keeps speaking to people who tell her that the East Midlands Development Agency is not contributing and is not doing a good job, and they want to get rid of it. In fact, for every £1 the development agency puts into the local economy, we get £9 of benefit coming back. I do not know who the hon. Lady can have been speaking to, because local businesses and business organisations are queuing up to support it.
Chris Heaton-Harris
As a fellow east midlands MP and a former east midlands Member of the European Parliament, I thank the hon. Gentleman for giving way. Will he at least acknowledge that lots of the money that is invested by the East Midlands Development Agency goes to the so-called golden triangle, which his constituency falls within, and that areas in Northamptonshire and Lincolnshire have suffered because they have not been getting the inward investment that they might well have got had there been a local enterprise partnership?
Toby Perkins
I am sure that the hon. Gentleman knows his local area better than I do. I do know, however, that Derbyshire and Nottinghamshire chamber of commerce has spoken out strongly in saying that it would like the East Midlands Development Agency to be left in place. It is up to Members in other areas to ensure that they get schemes before the agency and try to work with it in a positive way. The current lack of certainty from the Government will not lead any organisations to think that they should be talking to the development agency, as they cannot be sure that it will even be there in a few months’ time.
Pat Zadora, the chair of the east midlands business forum, has said:
“We can’t speak for other areas of the country, but there can be no doubt that”
the East Midlands Development Agency
“has been extremely effective. The all-important private sector has forged a strong and helpful relationship with the agency and we believe it has made a positive contribution to the regional economy. There are a number of instances where we believe Emda’s intervention has been crucial in resolving key issues and unlocking opportunities to develop strategically important sites.”
The hon. Member for Mid Worcestershire (Peter Luff), when he was Chair of the BIS Committee, said that every business organisation that he had spoken to, from the Federation of Small Businesses to the CBI, said that development agencies help the economy, and that abolition would send completely the wrong message. We absolutely support his comments. The manufacturers’ organisation, the EEF, argues against a more local approach, saying:
“Local authorities lack the critical mass, the funds and the ability to step outside local politics to identify the priorities for their region, to set out how best meet them and to make it happen.”
What we need now is consistency from the Government. We need to see that there is support for our industries. Business wants Government to take a proactive role, but it also wants support to be there through measures such as investment allowances and the excellent car scrappage scheme that the Labour Government put in place—an example of Government investment supporting private industry. The Secretary of State is saying that he wants to send a clear and decisive message, but in fact he is painting a confused picture. His approach is not supported by manufacturing companies, which want to see Government driving growth, or by local businesses and business organisations in the east midlands, which are saying that we need investment in allowances, in development agencies, and in our manufacturing sector. They need a strong and unequivocal message from the Secretary of State, and in that regard he is failing them.
Mr David Anderson (Blaydon) (Lab)
It is a great privilege to speak before you, Mr Deputy Speaker, and I congratulate you on your new role. I congratulate all hon. Members who have made their maiden speeches today, in particular my hon. Friend the Member for Wansbeck (Ian Lavery), who has taken my title, which I never wanted, of the last miner to enter the House. I hope he does not keep that title either, because this House would be stronger and better if more people from the mining industry came here, as my hon. Friend the Member for Barnsley East (Michael Dugher) said.
It is from my history of working in the mines that I have formed my view today. The truth is that there are two nations—one nation split by geography as well as history. In my history, markets have failed our part of the world, as they have failed places such as Yorkshire and the east midlands. In the years between the wars, this is what happened in areas such as mine: we saw 1,000 miners killed every year—one man every six hours—in the coal mines of Britain. Why? Because the markets would not put the money in to invest in health and safety and machinery. We had a very poor industry that was let down.
There was public intervention after the war. The industry was taken over and nationalised and what did we see? Within a few years, health and safety legislation—the Mines and Quarries Act 1954—was passed through this House. We went from killing 1,000 men a year in the 1930s, to killing fewer than 20 men a year in the 1960s. That is the difference. That is what happens when we have red tape and health and safety legislation to take care of people. That is what happens when the public and the state stand up for people and do not let the market dictate.
We saw the same thing in the 1980s. What happened? The markets intervened. We did away with the most productive, cleanest, the most technologically advanced and the safest coal industry in the world. What are we left with now? A rump of a coal industry, in which more people are being killed pro rata than for the past 50 years. Only a few pits are left, but we have seen a fourfold increase in deaths in coal mines.
We saw the utilities taken into private ownership in the 1980s. What are we left with? There are problems with security of supply, the national grid is not fit for purpose, and there is a skills gap, because the companies have been more interested in looking after their profit margins than in developing a skilled work force for the future. But what else have we got? We have got all the utilities companies with their hands out, saying, “Give us some money from the public purse so we can develop carbon capture and storage. If you don’t give us it, we’ll turn our backs on the clean coal strategy and just have the dirty gas industry.” Effectively, they are putting this country over a barrel, which is what they will always do, because they put themselves first.
In the past 13 years, regions such as mine have had input from public bodies such as RDAs, which have been a success, because there has been a genuine partnership not only with the Government, but with local government and colleges, and particularly with private businesses, which have welcomed the fact that at long last, there has been stability, support and a way forward, particularly in the case of Nissan. At Christmas 2008, Nissan was going down the plughole, and 1,200 men were being put on the dole. Nissan worked with people from the House, and local councillors and colleges, to put together a scheme that kept people in work and training. When Nissan then got the contract for the batteries, those people went back to work, and the work force are doing better than ever. I would imagine that they will now be getting worried about where things are going.
It has been said that nobody in the Opposition has any alternatives for dealing with the deficit, but I will give the House some. The Government should go and work with the trade unions, the civil service and the TUC on tax evasion. In a report before the election, they pointed out that 20,000 tax collectors lost their jobs in the past few years, for a saving of £100 million, but that is at a time when this country has a tax gap of evasion and avoidance—this has been admitted by the leaderships of both main parties—of at least £40 billion, and that the TUC report says is £120 billion. The Government should go and close that gap before doing anything else.
Mr Anderson
No, I won’t—I’ll tell you the orders, right?
The Robin Hood tax—a tax on banks’ international financial transactions—was rubbished by Government Members, but it would take care of a big chunk of expenditure on public services. Public sector workers are asking me, “Why should we pay Dave? Why should we carry the can for the failures of the banks? Why should we have to lose our jobs? Why should we have to stop looking after people we want to look after, when people who have robbed this country blind are getting away with more robbery?” Everyone in this House should agree with that.
I will say it: we should put the national insurance contribution charges on employers as well as on the work force. Why should it be the work force alone who carry the can? If the Liberal Democrats have a voice in this place, I would like to ask them what they would do to pay for the £17 billion of tax cuts. I am all for giving tax cuts to the low paid, but why should people at the level of pay we get also benefit from those tax cuts, when we will be shutting hospitals and schools and sacking home care workers? We keep hearing that we are all in this together. It is like a vuvuzela sounded every week by George Osborne, or a rattle in the background. No one in the working class believes that we are all in this together—nobody who works in school meals or hospitals. They know that those with money will be looked after and those without will go to the wall. That is the way that it has always been in this country. Saying something often and loudly does not make it any truer.
Should my party say sorry? No, it should not, because it stopped this country going into depression as a result of the failures of global finance and capitalism. We stopped that being any worse. The G20 said clearly that the actions we took brought the country into recovery more quickly than would otherwise have been the case.
The most ludicrous suggestion is one in, one out for regulation. That is daft. Who decides which regulation should be done away with to bring in another one? It is nonsense and it should be abandoned now.
Ian Lucas (Wrexham) (Lab)
It is a delight to wind up this debate with you in the Chair, Mr Deputy Speaker. As we have already heard, your interest in manufacturing and in representing your constituents has been a feature of the House for many years.
I am pleased to have had this opportunity to debate the importance of Government support for industry. Some of the least endearing aspects—among many—of the Tory-Lib Dem Government are their willingness to misrepresent the policies of the previous Government, to be less than candid about their own past policy positions, and to adopt language that threatens the developing partnership for growth in UK industry which was the legacy of the Labour Government.
First, I pay tribute to the quality of the debate today and, in particular, the maiden speeches. The hon. Member for Bracknell (Dr Lee) gave us a very good joke about “Earnest”. It is always good to have a doctor in the House—we had Dr Howard Stoate until the election—and we know where to come if there are any difficulties in the Tea Room. The north-east had a very loud voice in the Chamber today, in maiden speeches and others. My hon. Friend the Member for Wansbeck (Ian Lavery) told us about his constituency and of the excellent Newbiggin by the sea, with which I am very familiar. From my home county, my hon. Friend the Member for North West Durham (Pat Glass) told us about the beauty of her constituency, which is unparalleled in Britain and should be visited by all hon. Members.
We heard also from my hon. Friend the Member for Barnsley East (Michael Dugher), who appears to be a natural in the House. With the Grimethorpe colliery band in his constituency, he is well qualified to be the chair of the all-party brass band group, and he can put me down as a member. I welcome him to the House.
My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) spoke movingly about his predecessor, Ashok Kumar, whom we all miss. He was valued not only in the House, but—as I know from ministerial visits to the north-east—was greatly valued by the community there. He will be sadly missed. I am sure that his successor will establish himself quickly in the House and make many contributions.
We also heard from my hon. Friend the Member for Bolton West (Julie Hilling), who let us know that the Reebok stadium is in her constituency. Bolton Wanderers are in the premiership, and that is where my hon. Friend will be with her contributions in the future.
For the past two years, the UK has faced, first, a world banking crisis and, second, a world economic crisis. As anyone willing to approach matters with an open mind must see, this crisis has affected all the world’s major economies, including the United States, Germany, France and Japan, as well as developing economies such as China and India. Against this backcloth, the previous UK Government had a choice either to pursue deflationary policies espoused by the Conservative party or to pursue policies designed to maintain employment and protect growth espoused by every other major economy.
For those of us who witnessed first hand the consequences of Tory Government policy in the 1980s and 1990s, when UK unemployment reached 3.5 million on two separate occasions, the choice was clear, and I am proud that the Labour Government acted to maintain employment and protect the fundamentals of our productive economy. That is why Opposition Members speak so passionately about the involvement of, for example, regional development agencies, and about their communities, which were devastated by the consequences of laissez-faire Tory economic policy in the 1980s and 1990s.
One of the features of this debate, which the Minister for Universities and Science did not attend, was the fact that Conservative Members are out of the Thatcherite school. That was clear when they spoke. What we did not hear, however, were Liberal Democrat voices—the only Liberal Democrat to make a substantial contribution in the debate was the Secretary of State. He does not have any support from his Back Benches; no speeches were made by the Liberal Democrats. Were I he and looking for their support, I would look well behind me.
As Gregg and Wadsworth have pointed out in the National Institute Economic Review, as a result of Labour action and intervention in the economy in the world recession, employment rates did not shrink at the same rate as in previous recessions, despite the reduction in productive capacity. This was due to the Government pursuing a Keynesian reflationary policy and the contribution of employers and trade unions, working together to agree reduced wages and hours. As a result, more people stayed in work and their homes, and Britain moved out of recession.
The Labour Government played a key role by creating the Department for Business, Innovation and Skills, which I note has been retained in the same form by the Tory-Liberal Democrat Government, and which acted to support manufacturing. Its new industry, new jobs strategy—an active industrial strategy—set the framework for its developing relationship with industry. I, for one, will always be grateful to those senior representatives of companies and trade unions who worked with me and gave their time freely in bodies such as the manufacturing advisory group, and I would like to use this opportunity to thank them for their commitment. If there is one piece of advice I would give to my successor—I am delighted he has finally been able to join us—it would be not to jettison this well of good advice, and I would welcome his assurance that he will continue to work with that group.
Partly as a result of the Labour Government’s close contacts with industry and trade unions, we introduced a car scrappage scheme. It is striking that we are hearing a different argument from the Conservative party. In 2008 and 2009, the then Opposition were saying that the Labour Government were spending too little, too slowly on supporting the economy—for example, I received criticism from the BIS Committee that the automotive assistance programme was not paying out fast enough—but today we are hearing from Conservative Members that the programme was a flagrant waste of money.
Building on the relationship that we established in our work on the car scrappage scheme, the Labour Government established the UK Automotive Council, which I am happy to see has been retained by the Tory-Liberal Dem Government, to build on past inward investment into UK industry and to make the UK a centre for low-carbon manufacturing. As a consequence, and working with Government, investors such as General Motors, Toyota, Jaguar Land Rover and Nissan all made commitments to the UK that would secure jobs in manufacturing. Very important work is being done by the UK Automotive Council relating to the development of the UK manufacturing supply chain, and it is important that continues.
The UK’s aerospace industry is the second largest manufacturer in the world, with companies such as Airbus, AgustaWestland and GKN looking to work with the Government by establishing a national composites centre in Bristol. There is a complete failure among Conservative Members to understand the importance and strength of the UK manufacturing industry.
We have a great deal to be proud of in this country, and it is quite disgraceful that the Government parties seem to talk down UK manufacturing so much. I invite them to go up to the Tyne—we have heard a lot from the north-east this afternoon—and see the Clipper site on the north bank, which is manufacturing a new generation of wind turbines, showing the Labour Government’s commitment to a low-carbon future.
If the Tory-Lib Dem Government’s rhetoric about a low-carbon economy is to mean anything, the Secretary of State must act to end the marginalisation of his Department in the Government, stop the Treasury running the show and fight for UK industry. One of the white flags of surrender that he put up today was the fact that he is going to scrap the RDAs—I think that that is where we ended up, after his tortuous exposition of coalition policy. The RDAs are extremely important. The north-east of England has a great champion in One NorthEast, which has brought investment from companies such as Nissan to the UK, when it could have gone elsewhere in Europe. Portugal fought hard for that money; One NorthEast and the Labour Government achieved it.
We must retain the competitive advantage that was built on Labour’s huge investment in science and our universities, but that cannot be done if the Government will not support UK industry, because there are European competitor countries that will support theirs, as I always witnessed at European Council meetings. Any reduction in the UK’s budget deficit must be built on three pillars: reductions in spending, tax changes and, equally importantly, economic growth. The Work Foundation’s recent paper makes some important points, not least that
“any successful deficit reduction strategy must include a strategy for encouraging growth and jobs”.
To date, the Secretary of State appears to have no understanding of that central truth, which was pointed out again by my right hon. Friend the shadow Chancellor over the weekend.
To hear the Prime Minister and the Chancellor trashing inward investment by major globalised manufacturers is quite astonishing. Do the Tory-Lib Dem Government not want Airbus, General Motors, Ford and Clipper to invest in the UK? The idea, peddled by the parties on the Government Benches, that detailed agreements with inward investors, which were worked out over many months, were not a good deal for Britain is simply not true. That accusation should be withdrawn immediately. Will the parties on the Government Benches tell us which of those partnership agreements was not good value? We are still waiting to hear that—I am prepared to wait longer, if they would like to intervene and tell us. If they cannot do that, they should stop demoralising British manufacturers and British industry.
Guy Opperman
I come from a family of manufacturers. I also come from the north-east, and I can assure the hon. Gentleman that tens of thousands of jobs in the north-east were lost under the previous Government. Does he actually believe that the increase in national insurance—a tax on employers—was a good thing, or was it a bad thing? Would it make us more competitive?
Ian Lucas
The hon. Gentleman should not lecture me about manufacturing in the north-east. My father worked for 40 years in manufacturing in the north-east, and I witnessed what the hon. Gentleman’s party did to those industries in the north-east in the 1980s and ’90s. That is why my hon. Friends are so passionate about protecting UK manufacturing and why the Conservatives will never understand why they are viewed with such distaste by the north-east of England, by manufacturing industries and by the people in manufacturing areas across the UK.
I am sad indeed that BIS has been marginalised within Government, moving from its pivotal role under my noble friend Lord Mandelson to the margins under the new Secretary of State. That must be draining for those who committed so much time to putting UK manufacturing at the heart of the UK’s recovery this year—the trade unionists, the industrialists and the small businesses, all anxious to build demand and jobs in UK manufacturing. Perhaps that is not surprising, when the Tory-Lib Dem coalition agreement said so little about manufacturing.
The reduction of £800 million in the Department’s budget is a threat to the lessening of the budget deficit, for it threatens to reduce the building of the economic infrastructure that is so necessary to sustain manufacturing. What the Department must do is fight its corner for British industry and British jobs. An active industrial strategy is an essential part of the way forward to reduce the budget deficit as the UK moves out of recession. If the Department allows itself to be neutered by the Treasury, the progress in building a manufacturing base will be lost. The cost will be high-quality jobs, innovation and a viable industrial base. That cost will be too high, and that must not be allowed to happen.
The Minister for Universities and Science (Mr David Willetts)
I am delighted that we have had so many firsts in this debate. It is the first in which I have participated with you and other new Deputy Speakers in the Chair, Mr Deputy Speaker, and we very much welcome you. We have also heard the speeches from the new Chairs of the Select Committees that will take a close interest in our deliberations: I welcome the speeches by the hon. Members for West Bromwich West (Mr Bailey) and for Ellesmere Port and Neston (Andrew Miller).
Above all, we have had some very welcome maiden speeches in the debate, and I pay tribute to the excellent speeches from new colleagues, including my hon. Friend the Member for Bracknell (Dr Lee). He spoke as a doctor, and also with great passion for space and the importance of the space industry. That cause is also close to my heart, and I welcome him to the Chamber. I hope that we shall be able to work together on that important subject.
We also heard from the hon. Member for Bolton West (Julie Hilling), and I agree with her about the importance of unionlearn. It is an excellent and cost-effective way of spreading access to skills in the workplace. We heard from the hon. Member for Wansbeck (Ian Lavery), who spoke of the importance of the coal industry to his constituency. We also heard from the hon. Member for North West Durham (Pat Glass), who explained that her predecessor had been Hilary Armstrong, and that Hilary Armstrong’s predecessor had been Ms Armstrong’s father. We therefore welcome this radical break with the hereditary principle, and welcome the hon. Lady to the House. She also referred to socialism in her speech. We do not hear the word “socialism” in the Chamber very often, but we enjoyed her contribution all the same.
The hon. Member for Barnsley East (Michael Dugher) spoke with great passion about brass bands. Just occasionally, the meaning of the word “socialism” is a bit fuzzy when used by Labour Members, but, having heard his speech about brass bands, we now know that a socialist utopia will have been achieved when the Arts Council devotes as much money to brass bands as it does to the Royal Opera House. We very much look forward to the hon. Gentleman’s advocacy of that cause.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
We’ll look into it.
Mr Willetts
I hope that all hon. Members heard that intervention.
We also had a maiden speech from the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop). That was particularly touching for those of us who were here in the last Parliament, because he referred to the sad loss of Ashok Kumar, who was held in high regard on both sides of the House.
As I was listening to those maiden speeches, I recalled a maiden speech delivered in a previous Parliament by a newly elected loyal Blairite Back Bencher who had previously been a London taxi driver. Many of us regretted that, in his new role, he would no longer be able to share his political opinions with us. However, we now have new Members who are certainly going to share their opinions with us in a most vigorous and effective way. Indeed, some newly elected Members are so vigorous and dynamic that they have already made their second speeches, which must be some kind of record. Among my intake in 1992, we had a competition to see which of us would first be referred to in the press as a senior Back Bencher, and I think that we have heard from several candidates for that title here today.
There was a paradox, however, in that many of these new Members, who are changing the character of our House, and rejuvenating and refreshing it by coming from all sides to bring fresh angles to the issues of the day, defined their political loyalties by historic disputes, especially disputes about the performance of our economy. I should like to set the record straight, especially for those Labour Members who have given such a caricature account of this country’s economic history.
In 1979—a year that clearly rankles with some Labour Members—manufacturing industry comprised 25.8% of the British economy. In 1990, when Baroness Thatcher lost office, as a result of the economic policies that Labour Members have been criticising today, manufacturing was down to 22.5 % of gross domestic product. In 1997, when we last lost office, it was 20.3% of GDP; and in 2009, it was 11.8% of GDP. So next time we have any sermons from Labour Members about what has happened to manufacturing industry, I hope that they will come to this House and be willing to accept the simple evidence from those statistics.
Perhaps I can give the House a second set of statistics on another important measure of the performance of our economy—business investment. In 1979, business investment was 13% of GDP. Business investment goes up and down, but there was a trend, and I regret to say that by 1997 that figure had fallen to 11.7% of GDP. In 2009, the last full year in which Labour was in office, business investment was 8.8% of GDP. When it comes to investing in the future of our economy and when it comes to manufacturing and the significance of the manufacturing sector, I hope that Labour Members will recognise the comprehensive failure of their years in office.
Mr Willetts
I have very little time.
Many Labour Members referred particularly to regional issues, and I have to say to them that of course we understand the concern about regional imbalances in our economy. In fact, another measure that deteriorated over the past 10 years has been the gap in GDP between different regions of our economy. If we are to tackle the problem of regional imbalances, we have to look objectively at the performance of regional development agencies. The report from the National Audit Office, published in March this year, made it clear that the NAO was
“unable to conclude that the regional wealth benefits actually generated”
by RDAs
“were as much as they could and should have been, and are therefore value for money.”
The report went on to refer to “weaknesses”, which
“in many cases, undermined the RDAs’ ability to make decisions and set priorities to maximise regional economic wealth”.
It concluded that RDAs were simply not doing the job they were supposed to do. That is why Government Members believe that RDA boundaries do not reflect functional economic areas; we wish to enable local enterprise partnerships to reflect better the natural economic geography of the areas that they serve. We are committed to replacing RDAs with local enterprise partnerships and we will invite local groups of councils and business leaders to come together to consider how they wish to form local enterprise partnerships.
Mr Willetts
We do believe that there are efficiencies to be made because of the very high overhead costs of RDAs. Government Members are committed to saving public money, and I have to say that one way in which we will do so is by saving money in the overhead costs of RDAs as we move to the new arrangements—and we make no apology for that.
We also believe that some roles currently carried out by RDAs can be scrapped to save money—regional spatial strategies, for example. We simply do not need them—full stop. There are other roles, including inward investment, that we believe should be led nationally and can be carried out elsewhere. We heard powerful examples from several of my hon. Friends of how individual RDAs were spending money around the world on regional offices; this type of function is better done at the national level. We believe that some RDA roles in sector leadership and taking responsibility for business support and innovation can also best be done nationally. That is the approach that we will take.
Our challenge is to rebalance the economy, to rebalance it in favour of manufacturing, to rebalance it in favour of investment and to rebalance it regionally as well. That is part of the inheritance that we take on from the previous Government.
Esther McVey (Wirral West) (Con)
I have listened to what has been said this evening, and I would like to raise the concerns of small business owners and family-run businesses in Wirral, Cheshire and Merseyside, as I have been part of the Merseyside Entrepreneurship Commission. What they say is drowning them is the burden and cost of regulation. Last year, in the north-west alone, it cost £8.3 billion and, since 1998, the overall figure has gone up by £11 billion a year. I want to know what we are going to do to help the small businesses across the north-west.
Mr Willetts
My hon. Friend is absolutely right. To indicate the challenge that we face, the previous Government introduced 20,938 new regulations. Between 1987 and 1997, 46 pieces of primary legislation affected the workplace. In the subsequent 10 years under the Labour Government, 92 pieces of legislation affected the workplace. In the Department for Business, Innovation and Skills, working with the Secretary of State, we have already identified on our forward programme 200 proposed regulations inherited from the outgoing Government that would have cost more than £5 billion to British business. Every one of those will be scrutinised, and we will roll back the burden of regulation, which is fundamental.
We believe in “rebalancing the economy”, and although those are the new words, I sometimes think that Winston Churchill, who served in the House as a member of the Liberal party and of the Conservative party, expressed it best when he said that he wanted to see finance less proud and industry more content. That is what the Government stand for. Getting a grip on the public finances is fundamental, because otherwise, as my hon. Friends the Members for West Suffolk (Matthew Hancock) and for Bromsgrove (Sajid Javid) described powerfully, interest rates will rise, which is a burden that British industry cannot be expected to bear. We need to bring down the burden of public borrowing and of the public finances.
The Government are not alone in believing in that—former Ministers who are now on the Opposition Benches signed up to such plans in government. They have failed today to give us any information about their plans to deliver the savings to which they publicly committed themselves. Let me remind them of what was in last year’s pre-Budget report with regard to the Department for Business, Innovation and Skills. It said that £300 million would be saved by reducing funding for adult skills budgets, and £600 million would be saved from higher education and science and research budgets. I agree with Labour Members about the importance of science, although it is a pity that they fought the last election on a proposal to save £600 million from higher education and science but have never informed us of exactly how they would have made those savings. We will now deliver the savings, and they are in no position to criticise the savings that they planned for but never had the guts to share with us and explain.
The Government are committed to a strategy for growth that involves an enterprise-friendly tax system, support for science, support for free trade and competition, a belief in investment in skills and training, and rolling back the burden of regulation, setting British industry free. As every contribution to the debate has revealed, there is a simple difference between the Government and Opposition. The Government believe in freedom, enterprise, initiative and competition, and the Labour party still believes in state control, higher public expenditure, more regulation, more RDAs, and more interference in the wealth-creating sector of the British economy. That is not the way we will recover from the recession in which the Labour party left the country.
The Government will commit ourselves to bringing down the burden of borrowing and managing the public finances prudently. In the Department for Business, Innovation and Skills, in which it is a privilege to work with the Secretary of State, we are determined to have a more flexible and dynamic industrial sector because of our commitment to free trade and free markets.
Question put (Standing Order No. 31(2), That the original words stand part of the Question.
The House proceeded to a Division.
Mr Deputy Speaker
I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.
Business without Debate
(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Horton General Hospital
(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Tony Baldry (Banbury) (Con)
I am grateful to Mr Speaker for allowing this debate on the future of services at the Horton general hospital in Banbury. This continues to be one of the most important constituency campaigns in which I have been involved during my time as a Member of Parliament. I am pleased to see in their places my constituency neighbours and hon. Friends the Members for South Northamptonshire (Andrea Leadsom) and for Stratford-on-Avon (Nadhim Zahawi). Their presence in the Chamber makes the point that the Horton general hospital’s catchment area, which is home to some 190,000 people, reaches well into Northamptonshire and Warwickshire.
The Horton general hospital also provides services for a significant part of Oxfordshire, including a sizeable part of the constituency of my right hon. Friend the Prime Minister. I am also grateful for the support of my hon. Friends the Members for Henley (John Howell) and for Oxford West and Abingdon (Nicola Blackwood), who, as usual, show great Oxfordshire solidarity on such important issues.
I am also pleased to see the Minister of State, Department of Health, my hon. Friend the Member for Chelmsford (Mr Burns), at the Dispatch Box, as he has taken particular trouble to ensure that he is briefed to respond to what I will say in this evening’s debate.
On Monday, the board of the Oxford Radcliffe Hospitals NHS Trust met in public in Banbury. Its meeting had only one agenda item: the Horton general hospital, to agree a vision for the hospital and proposals for the enhancement of services at the Horton. The ORH Trust board agreed to implement proposals made by the Oxfordshire primary care trust that would ensure 24/7 consultant-delivered children’s services, a 24/7 special care baby unit and a significant enhancement of consultant-led maternity and obstetric services at the Horton and the employment of further consultant anaesthetists for the hospital—all of which will also enhance the robustness of the accident and emergency service.
The chair of the ORH Trust, Dame Fiona Caldicott, and the trust board’s paper made it very clear that
“The Oxford Radcliffe NHS Trust is committed to a positive and vibrant future for the Horton General Hospital”
and that they and the Oxfordshire PCT want to see a situation where
“the vast majority of care required by the people of Banbury and the neighbouring communities will be delivered from an innovative and modern local District General Hospital working closely with primary care and other health and social partners.”
They made it clear that
“the strategy of the Horton General Hospital must exploit the very real strengths of the Horton to develop innovative ways of providing care in order to address the present challenges within a very difficult financial environment”
and that
“the objective will be to advance the opportunity to use the Horton General Hospital as the basis of a newer model for providing care where there is greater integration between services provided in a hospital setting and community based services while maintaining the appropriate level of immediate/emergency service support needed by the population.”
A strategy is needed that exploits the strengths of “Banburyshire”, as there is a general recognition that the area served by the Horton benefits from some unique strengths that must be fully exploited. In its vision for the future of the Horton hospital, the Oxford Radcliffe Hospitals NHS Trust has noted that
“the Horton is in a similar position to many other small District General Hospitals across the country. It should be an objective of the strategy to articulate a vision that will position the Horton as a national exemplar of how the challenges faced by such hospitals can be addressed in a positive and effective manner.”
Of course, as has been recognised by everyone involved with the Horton general hospital in recent years, if it is to aspire to be a national exemplar, its services will need continuously to change if they are to continue to meet in a clinically and financially sustainable manner the evolving health needs of the populations of Oxfordshire, Northamptonshire, Warwickshire and the surrounding areas that the hospital serves.
All this is very welcome news. I have no desire in this debate to dwell on the past, but it is important to explain how far we have all travelled in a campaign that has lasted for some seven years.
It was in July 2003 that the Banbury Guardian reported on its front page:
“The children’s ward at Banbury’s Horton Hospital is under serious threat and could be reduced to a daytime-only service...staff on the ward were gathered together by bosses this week and warned that current pressures could spell the end of the 24-hour acute paediatric services the Horton has enjoyed for the past 27 years.
A senior children’s doctor said the end of children’s services could mean the demise of other Horton Departments.”
Without 24/7 consultant-covered children’s services, it would not longer have been possible for the hospital to have a special care baby unit. Without a special care baby unit it would effectively have been impossible to have had a consultant-led maternity service, and the maternity unit at the Horton would have become a midwife-led unit with a very large number of mothers, many of them in labour, being obliged to go to Oxford to deliver their babies, and there would have been a cumulative knock-on effect on the effectiveness of the accident and emergency unit. In short, if those proposals had gone ahead seven years ago, the Horton would have ceased to be a general hospital and simply become a somewhat random collection of medical services.
This is not the opportunity and time does not permit me to give a full account of the exemplary way in which local people rose up to confront this challenge. The “Keep the Horton General” campaign, ably led by local Labour Councillor George Parish, now chair of the Cherwell district council, ensured that soon the whole community was involved in a campaign to “Keep the Horton General”. In due course the then proposals for downgrading services at the Horton were referred to Oxfordshire county council health overview committee, which unanimously decided to refer the proposals to the then Secretary of State, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), with the recommendation that they be referred to the independent reconfiguration panel—the IRP.
The then Secretary of State did exactly that. The IRP took evidence and produced a report. The IRP’s report was very clear. It concluded that
“our main focus is always the patient.”
The report continued:
“The Horton General Hospital in Banbury must continue to serve the local community in North Oxfordshire and surrounding areas...we concluded that the local community’s access to services would be seriously compromised if the Trust proposals were implemented. Panel members were particularly concerned about the difficult and costly journeys that local people would need to make to Oxford and felt this might even prevent or delay some people from seeking medical advice or treatment. The Trust’s proposals are not in the best interests of patients, families and carers.”
The IRP went on to state that
“local patient choice and access must also be a priority and that there are other possible solutions to the Horton Hospital”.
Not surprisingly, the chair of the IRP, Dr. Peter Barrett, commented:
“During the course of this review we were left in no doubt that local people are passionate about the Horton Hospital. The hospital is well located for the population it serves, and the Trust’s dedicated staff will play a vital role in the future success of the organisation. All parties should now work together to redevelop the proposals in response to our recommendations”.
The IRP recommended that Oxfordshire primary care trust should develop a clear vision for children’s and maternity services and a clear strategy for hospital services within north Oxfordshire as a whole.
It should be put on the record that I have no doubt that among the factors that caused the IRP to come to such robust conclusions were the very clear and unequivocal views put forward by my right hon. Friend the Prime Minister when he, as the local Member of Parliament for Witney, but also at the time Leader of the Opposition, gave evidence to the IRP, along with myself and my hon. Friends’ predecessors, John Maples and Tim Boswell, both of whom I am delighted to see will shortly go to the other place, where I am sure they will continue to champion the interests of the Horton general hospital.
My right hon. Friend the Prime Minister made it very clear to the IRP that as far as he was concerned, the only things that mattered were the best interests and the health care of his constituents, a view supported without equivocation by the Horton’s other Members of Parliament.
It is right that I should report to the House that in the just over two years since March 2008 when the IRP published its recommendations, the leadership and staff of the Oxfordshire primary care trust and the Oxford Radcliffe Hospitals NHS Trust have worked tirelessly and in an exemplary manner, on a process that sought to involve the whole community in finding a solution that works. Too many people have been involved in the process—the PCT, the Banbury better healthcare programme, and the community partnership forum, ably chaired by Julia Cartwright—for me to be able to name and thank them individually, but they all know who they are and they deserve our thanks.
During the time that this work was going on, we had visits to the Horton hospital from my right hon. Friend the Prime Minister, and several visits to Banbury by my right hon. Friend the Secretary of State for Health. Indeed, I do not think there was a single Opposition health spokesperson in the last Parliament who at some point did not come and visit the Horton hospital. The last Labour Secretary of State for Health, the right hon. Member for Leigh (Andy Burnham), came and visited the staff and patients at the Horton and observed:
“I am very impressed. This is a much loved hospital which is crucially important to Banbury...there have been question marks over the hospital for too long and that will have had a destabilising effect on any hospital. I came to signal my commitment to the Horton. The time has come to take away the doubts. There comes a point where you have to take a decision”.
We were grateful for the visit of the previous Secretary of State and are grateful that decisions to support the Horton hospital have been taken. I am now concerned to look to the future. I want, so far as is humanly possible, to ensure that we will never again have to pursue a seven-year-long campaign to keep Horton general hospital.
I very much welcome my right hon. Friend the Secretary of State to the Department of Health, together with an impressive ministerial team. He is probably better prepared than any of his predecessors, and his knowledge of the NHS is as impressive in private meetings as it is in his public speeches. I suspect that people have seriously underestimated the scale of the ambition of the new Government in their health policies. Health professionals are swiftly starting to recognise that the Government’s proposed programme is intended fundamentally to change the health care system and has the intention of shifting power from the centre to patients and clinicians. The Secretary of State obviously has a clear vision of where he wants the NHS to get to over time.
There are several issues on which I would welcome the Minister’s thoughts. There is going to be commissioning by GPs with funding going directly to them for such commissioning. When the Secretary of State visited the Horton, he made it clear that he believed that GP commissioning would potentially be a great support to the Horton that would enable the many GPs in Oxfordshire, Warwickshire and Northamptonshire who refer their patients to the Horton to collectively commission services at the hospital and help to develop new services. We will want actively to engage with local GPs in support of the Horton.
What is the timetable for the transition to GP commissioning? What will then be the role for primary care trusts? The Horton has only one potential weakness—it is a smaller general hospital. The cost of underpinning the new consultant appointments at the Horton will effectively be about £2.5 million over tariff. That is an annual cost that will be shared between the PCT and Oxford Radcliffe Hospitals NHS Trust. It is the price of maintaining services in a smaller general hospital serving a significant catchment area, where the distances to the next general hospital are such as to justify extra investment in maintaining services at the Horton. But who in the new system will make the value judgments and have the funds to ensure the continuity of care at the Horton? I understand that in due course there will be an independent board to set standards in the NHS, allocate resources and oversee the system. Can my hon. Friend provide more details?
My next concern relates to consultant provision. The effect of the European working time directive is that there has been a need for more doctors. I think I am correct that the previous Government were the only Government in the European Union who decided to interpret the directive in such a way that training counted as work. A few days ago, the British Medical Association issued a response to the review of the impact of the working time directive on training, concluding that
“the review defines and calls for a consultant-delivered service. The BMA has long advocated a service organised in this way—it will assure a high quality of care for patients as and when they are in the greatest need.”
By developing consultant-delivered services at the Horton, we are in the vanguard of this trend, but the Government will of course need to ensure as time goes on that there are sufficient consultants to take up these places.
Medicine and medical training is one of the few disciplines where the numbers are almost entirely controlled by the state. I fully appreciate that medical manpower planning involves a whole number of difficulties in getting it right. However, all too often in the past, there has been a tendency to believe that if at any time we have insufficient doctors, we will always be able to busk it by recruiting doctors from overseas. For all sorts of reasons, that is now becoming much more difficult, and I think we all need to be confident that there will be sufficient training places today to ensure that there will be sufficient consultants tomorrow. Moreover, we should not in any way underestimate the changes in work practices that a consultant-delivered service will bring about. I would like to give particular thanks to Dr Janet Craze and the consultant paediatricians at the ORH Trust for the incredible work that they have done in devising consultants’ rotas that will enable there to be effective 24/7 consultant-delivered paediatric services at both John Radcliffe and the Horton.
I have two brief final points. First, Horton general hospital is not the only small general hospital in the country. Such hospitals exist because the geography is not convenient, and they usually have a particular purpose in serving a significant community. Will my hon. Friend the Minister support any initiative that would bring those smaller general hospitals together in an alliance to see how they can maximise their contribution to the NHS and, in particular, how they can become, as we hope that Horton will become, an exemplar of how best to integrate community primary and hospital services? Secondly, I very much hope that my hon. Friend, given his ministerial responsibility for hospital services, will find time to visit Horton general hospital. I know that such a visit would be much appreciated by staff and patients, by me and my hon. Friends, and by our constituents.
There can be no conclusion to this debate because much of the story of Horton general hospital is yet to be written. I am simply glad that by our collective endeavours, we have managed to “Keep the Horton General”. All the many thousands who have taken part in this campaign, in whatever way—by petitioning, writing letters, offering professional advice, or just being there—can take pride in what we have achieved. But let me be very clear: as far as I am concerned, the well-being and welfare of Horton general hospital will always be unfinished business.
The Minister of State, Department of Health (Mr Simon Burns)
I congratulate my hon. Friend the Member for Banbury (Tony Baldry) on securing this debate on the future of Horton general hospital. I know that he has campaigned vigorously in support of the hospital for several years, and I am sure that his constituents appreciate both his hard work and his dedication to protect good local health services in his constituency. I also pay tribute to the NHS staff across the whole of Oxfordshire, who provide such first-class care for his constituents.
As my hon. Friend will know, the Secretary of State has visited his constituency a number of times, and has seen for himself the excellent work carried out daily at Horton general hospital. I would be delighted to accept my hon. Friend’s offer to visit Horton myself, so that I, too, can benefit from knowledge of the experience that his constituents enjoy.
Steve Baker (Wycombe) (Con)
I, too, congratulate my hon. Friend the Member for Banbury (Tony Baldry) on securing this debate, and I note the Minister’s diligent concern for Horton hospital. Will he consider the case of Wycombe hospital, which is somewhat further down the route upon which the Horton had embarked, and our local services?
Mr Burns
I am grateful to my hon. Friend for drawing that to my attention. Given the constraints of time in this debate, if he were to be kind enough to write or to come and see me, I would be more than happy to discuss the situation with him.
My hon. Friend the Member for Banbury referred to the decision made by the board of Oxford Radcliffe Hospitals NHS Trust on Monday this week to maintain 24-hour paediatric services and a full obstetrics service at Horton general hospital. That is good news, and thanks in no small part to the strong opposition mounted by local GPs, clinicians and the public to the trust’s original plans that were proposed in 2007. In addition, my hon. Friend and my right hon. Friend the Prime Minister—in his constituency role—my former hon. Friends Tim Boswell and John Maples, and my new hon. Friends the Members for Stratford-on-Avon (Nadhim Zahawi) and for South Northamptonshire (Andrea Leadsom), should be congratulated on the determined way in which they have fought for their constituents in seeking to stop the original proposals, which would have meant paediatric in-patient services moving from the Horton to the John Radcliffe hospital in Oxford, with the problems that that would cause for their constituents.
Following the rejection of the original plans in 2008 by the independent reconfiguration board, Oxfordshire PCT set up the better healthcare programme to develop proposals on how safe, long-term services at Horton might be delivered. It established a community partnership forum to ensure wide engagement with the local community, which included representation from local GPs, patients, the public, Horton general hospital staff, councillors and Members of the House. I am aware that my hon. Friend the Member for Banbury played a long and active role in those deliberations.
I am pleased to note that local engagement has been such a key part of the better healthcare programme. I understand that the community partnership forum has been involved throughout, and that frequent briefings were held with GPs and the practice-based commissioning consortia. Clinical staff at Horton general and John Radcliffe hospitals have also been involved, to ensure wide clinical engagement.
The model of care that emerged from the better healthcare programme was for consultant-delivered paediatrics and obstetrics services to remain at Horton general. That will mean less reliance on middle-grade doctors, and result in Horton continuing to provide local, high-quality paediatric and maternity services. The Oxfordshire health overview and scrutiny committee agreed with that model.
In March, the proposals developed to implement that model were presented to a clinical review panel. The panel consisted of local GPs, representatives from the Royal College of Obstetricians and Gynaecologists, the Royal College of Paediatrics and Child Health, the Royal College of Anaesthetists, Cherwell district council and a PCT board member. Although I understand that the panel had some concerns, it concluded that the proposals were clinically safe and deliverable. Now that the PCT and trust boards have decided to go ahead with these proposals, the next step is for the trust to develop an implementation plan. That will involve recruiting the required number of additional consultants.
I am pleased that Oxfordshire PCT and South Central SHA have both assured me that the better healthcare programme has passed the four tests set out by the Secretary of State, which have been a strong feature of the way the programme has been organised. As my hon. Friend will appreciate, the four tests to which I refer are the new tests that the Secretary of State has laid down to ensure that when reconfiguration proposals are made, local GPs and clinicians—and local communities—are fully consulted before any decisions are made, so that they can have a say in the health care that they need.
My hon. Friend asked a number of questions that I will seek to answer now as far as I can. He asked about the timetable for the transition to GP commissioning and the future role of primary care trusts. As he knows, we have only been in government a matter of weeks and a tremendous amount of work needs to be done to begin to realise our vision for an NHS based on putting patients first so that quality of care is the priority in the service. In that context, we will set out our vision for the national health service shortly. Until we do, I am not in a position to respond in detail to those two specific questions.
My hon. Friend asked about the independent NHS Board. The board will set outcome objectives, allocate resources and provide commissioning guidelines free from political interference. Again, I beg my hon. Friend’s patience as we will set out further details of the NHS Board shortly. I am sure that he appreciates that I cannot go into detail at this stage and while we are putting together our proposals to bring before the House and the nation.
My hon. Friend also raised the idea of an initiative to bring together an alliance of general hospitals to help provide the best integrated primary, community and hospital care. Like him, I believe that it is vital to have first-class integrated health and community services, and I assure him that we are looking at how we might best achieve that.
I applaud the determination that my hon. Friend, and my other hon. Friends—I am pleased to see them in their places tonight—have shown in their championing of local services in Banbury and in other areas affected by these proposals. His constituents, like those of all hon. Members, deserve good local health services that have the full support of local GPs, clinicians and the local community and provide the highest standards of quality and care. By seeking the support of GPs and local people for any changes made, by basing any changes on clear evidence, and by ensuring that all changes improve patient choice, the enhanced services in Oxfordshire will inevitably lead to better care for my hon. Friends’ constituents, not only in that area but in those parts of south Northamptonshire and Warwickshire that form part of this hospital area.
In conclusion, I am pleased that the plans that have finally been devised through local involvement and commitment have solved a potential problem. It shows that, by consulting with local stakeholders and the local community, one can achieve the sort of configuration that meets the needs of local people as well as the needs of a local national health service. In particular, I congratulate my hon. Friend on his tremendous work and the leadership that he has provided in ensuring that the local community, working together, achieved the successful outcome determined last Monday. I wish him and the local health service in Banbury and the surrounding area every success in ensuring that these proposals work, and work well, for the benefit of the local community.
Question put and agreed to.
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(13 years, 10 months ago)
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Mr David Winnick (Walsall North) (Lab)
It is pleasant to serve under your chairmanship, Dr McCrea. Let me say straight away that it is unfortunate that this debate is necessary. All of us in the last Parliament hoped that when we were re-elected, the issue described as “MPs’ expenses” would have been dealt with once and for all. Enough controversy occurred in the last Parliament. Let me make it clear to the chair of the Independent Parliamentary Standards Authority, and the interim chief executive, that I have no wish to conceal from the public in any way the amount of money that we claim. I am sure that that applies to other colleagues, whichever party they belong to. Indeed, I was one of those who strenuously opposed the attempt to exempt Parliament from freedom of information legislation. If we claim public money—and it is public money—the public are entitled to know what we claim. That is not at issue, and it is important that that is understood.
It is perfectly understandable that in the closing stages of the last Parliament, as you know, Dr McCrea, IPSA was unanimously agreed to without any vote. My right hon. Friend the Member for Blackburn (Mr Straw), who is present in the Chamber, put the reasons why a new body should be set up, which we all understood. However, what has occurred since we returned after the election has put these issues back on the agenda. The reason for that is simple: the system that IPSA introduced, without any consultation with Members, is complex and difficult. When it comes to legitimate claims—obviously, all our claims should be legitimate—for constituency offices and related bills such as council tax, rent, telephone, electricity and so on, it is difficult to get any sense out of IPSA.
The person whose title is “independent expenses compliance officer” was quoted yesterday in the press as dismissing the complaints as coming only from older MPs. I am not here to apologise for my age. I am no more responsible for that than I am for the colour of my skin, my racial origin or my gender. However, over a third—35%—of the Members are new to the House of Commons and they cannot be dismissed as “older MPs”. Presumably, those MPs coming to the House for the first time are somewhat younger than me—I would be surprised if that was not the case—but it is not a matter of saying that they should “get used to it”, because that is nonsense. Criticism coming from new Members is no less than that coming from those of us who have been re-elected.
Mr Kevan Jones (North Durham) (Lab)
I think that I am correct in saying that my hon. Friend was elected to this House for the first time in the 1960s. In The Guardian yesterday, Mr Alan Lockwood commented that most MPs were happy with the system and he made some pejorative statements. If he were to hear a complaint against my hon. Friend, or if my hon. Friend made a complaint about IPSA, does he think that he would get a fair hearing?
Mr Winnick
I am not going to take up what the independent expenses compliance officer said. I do not think that his comments deserve any response from me; they speak for themselves. However, if the situation has been difficult for returning Members—as many of us are—how much more difficult has it been for new Members? It must be an outright nightmare for them, and that is set against a background in which they would find it far more difficult to criticise the system because their local paper might say, “Look what they complain about the moment they are elected.” At least returning Members have constituency offices, however difficult it is to get IPSA to agree on rent and related matters. New Members have to start from scratch, without being able to go to IPSA and say, “This is what we want to do. Is it legitimate? Is it within the rules?” Those are elementary questions, but they will not get any answers because, at the moment, the system does not provide for anything of that kind.
Mr Tom Harris (Glasgow South) (Lab)
Does my hon. Friend find it perturbing that although it is virtually impossible for Members of Parliament to get a face-to-face interview with a senior IPSA official, it is extremely easy for almost any member of the press to do so?
Mr Winnick
I take that point entirely. If IPSA spent as much time trying to resolve the genuine difficulties of new and returning MPs as it gives to the press, that would be an advancement. The national press will say, as in one recent article, that MPs are too obsessed with their own position. However, what we want to do is on behalf of our constituents; it is not about our salary. Perhaps our salary has not been paid in full due to a technical fault, but that is not the subject of today’s debate. We are not going to town about that, far from it. If we want to have constituency offices and to get matters resolved, it is so that our constituents can come to our constituency offices and we can pursue their complaints. IPSA gives the impression that our concerns are all about ourselves, and that is what it tries to get over to the media.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I congratulate my hon. Friend on securing this debate; it is a subject that I feel passionate about. Is it not wrong that long-standing, loyal staff find themselves in the predicament that, as a consequence of the ceiling that has been set, they might be made redundant?
Mr Winnick
I would like to make some progress as I know that a number of colleagues wish to speak. IPSA’s justification is that the system works. I do not claim to be an expert in computer technology. My secretary makes the claims. I am not sure that when she was appointed, many years ago, that was one of her jobs. Be that as it may, it could be argued that whether or not we are acknowledged computer experts, that is the system.
Let me, however, give some illustrations in order to challenge what IPSA has said. One new MP—not of my party—told me that since he was elected, 80% of his time has been spent being an administrator. He did not consider that to be the reason he stood for election. If my party had won that constituency, it is likely that the Labour Member would be in precisely the same position.
Another colleague—not a new Member—said that he had spent four hours trying to submit a claim for the cost of petrol to and from his constituency. Four hours, and then the system crashed. On “Newsnight”, which some colleagues will have watched, a newly elected Conservative MP was shown using a computer. She said that trying to deal with the computer system set up by IPSA was far more complex than working as a GP in the national health service. Why should that be the case? Why should MPs, be they Conservative, Labour or Liberal Democrat, have to do that? We should not be spending hours and hours on such matters; we should be getting involved in the things that we were elected to deal with in the first place. It is indefensible that IPSA should have set up a system that is so difficult and complex, and which, particularly for new Members, has made life a nightmare.
Emily Thornberry (Islington South and Finsbury) (Lab)
Is my hon. Friend aware that 20 central London MPs have, on a cross-party basis, signed a letter to Sir Ian and held meetings with IPSA to highlight the historical problems that we have had in balancing our budgets—a difficulty greatly exacerbated by the changes in the rules? The penultimate sentence of our letter states that
“no thought has been given to the needs of central London MPs when designing this scheme of allowances.”
Mr Winnick
I am sure that that is an important and interesting intervention.
Phil Wilson (Sedgefield) (Lab)
On computers, I managed to get access to the expenses system using my own password—
Phil Wilson
However, the expenses that appeared on the screen were those of another MP. A member of my staff managed to get through to IPSA to point that out and was told that it was a computer glitch that would be sorted. In my view, that is not a computer glitch but a gross intrusion into another Member’s privacy, and it needs to be looked into before we go any further.
Mr Winnick
My hon. Friend’s point is valid, and I hope that it will be noted by IPSA. I am not sure whether IPSA is represented here today—I shall talk about its senior personnel in a moment.
Another of my hon. Friends said that trying to deal with IPSA was like dealing with a brick wall. That sums up the experience very well. IPSA has provided a helpline, but if there ever was an anti-helpline, that is it. In many instances it is impossible to get through, and if one does, one gets no information but is told to send an e-mail. One would have thought that if a helpline is provided, it should be a genuine one. Time and again, colleagues have complained that they send e-mails to IPSA and spend a great deal of time doing so—as Members of Parliament, we should not be spending anywhere near as much time on that as we do—but they receive no response at all. One would hope that one could phone somebody, apart from the helpline, and get information, but that is out of the question. IPSA will not give out another phone number.
Allegations have been made about rudeness to staff. I do not blame the staff employed by IPSA for the problems. They are not responsible. If any colleague, from whichever party, has been rude, that is wrong and I would be the last person to defend them. Responsibility lies with the chair and the chief executive of IPSA and not the staff, many of whom, apparently, are interns who were employed only because of their technical knowledge of how to work the computer system. They are not in a position—they admit as much—to give advice to any Member.
Mr Russell Brown (Dumfries and Galloway) (Lab)
My hon. Friend, like those others of us who were here before the last election, will easily recognise the difficulties that everyone encountered last year, when the whole expenses and allowances fiasco was dragged through the press. I have every reason to believe that those involved in setting up the IPSA system visited the Scottish Parliament and spoke to the staff in the allowances office there, who are held in high esteem. The point was raised: why do we not have such a system? It now appears that IPSA visited and paid no attention whatsoever to the advice and help that was given.
Mr Winnick
I would like to have the response of the chair of IPSA to my hon. Friend’s very important point about the Scottish Parliament.
Regarding submissions, if IPSA says that it is absolutely vital that the system is online, so be it, but I do not see any reason why that is necessary. Why can we not make submissions in writing, with all the documentation? Of course the documentation should be checked thoroughly—there should be no repeat of the embarrassment and shame that was brought on Parliament as a result of the abuses, although we should bear in mind that most of those involved in the abuses are no longer in the House of Commons—but no reason has been given why submissions cannot be made in writing. If approved, they could immediately be put on the IPSA website. In that way, those who cannot sleep at night unless they know what their MP is claiming can be satisfied. All the information will be on the website, so everyone will know the details immediately a claim has been submitted and approved.
Mr Winnick
I will give way to my hon. Friend, who does not usually like to get involved in controversy.
Mr Skinner
I think my hon. Friend is now at the kernel of the subject: the online system. We have heard from my hon. Friend the Member for Sedgefield (Phil Wilson) that he reported a breach of security—that is what it was—when an e-mail was sent to him in error. Does my hon. Friend the Member for Walsall North (Mr Winnick) agree that that is not an isolated case? I have a letter here that was sent to me on 2 June. It belongs to another Member of Parliament. I have sent it to IPSA and told it about the mistake, and I have heard that several other Members have had similar e-mails, not destined for them. That is a serious breach of security. We all know that three Ministers in the previous Government lost their jobs because of dodgy e-mails, and the IPSA system will end in tears if we are not careful. This debate is not about IPSA itself, as my hon. Friend said at the very beginning, or about its being an independent body. We all welcome that, and voted for it. It is about the fact that the system is not secure. Already, in just a few weeks, we have seen many breaches of security. IPSA must look for a different system to get the show on the road, and then everybody will be satisfied.
Dr William McCrea (in the Chair)
Order. Interventions will have to be interventions, not speeches.
Mr Winnick
My hon. Friend has touched on an important question, which I mentioned earlier: why are we having this debate at all? Why was the issue not resolved in the previous Parliament? Why are we back to the point where the media can say that MPs are discussing what they call their expenses again? My hon. Friend has mentioned other matters on the Floor of the House, and IPSA should take them up immediately.
I take the view that the most senior people in IPSA—the chair and the interim chief executive—should understand the widespread concern that is reflected in the attendance at this debate. This is not an attempt to undermine IPSA or to undermine the concept of what we claim becoming public knowledge as quickly as possible. It is an attempt to get those responsible to recognise that there are genuine difficulties, which it is up to them to resolve.
The chair of IPSA receives £700 per day, plus what are called “reasonable expenses”. Whether or not those expenses have to be claimed online, I do not know. That is the equivalent of more than £100,000 a year for a three-day week. The chair is a distinguished public servant—I do not question that for a moment—but he has a responsibility to get a grip on the situation. The interim chief executive is paid somewhere between £105,000 and £115,000 per annum. That is quite a sum, and one would hope that someone in such a senior position and with such a substantial salary would recognise the considerable disquiet, to say the least, among Members of Parliament and staff. The Unite parliamentary branch has expressed much concern that some of its members could be made redundant as a result of the changes.
Angela Smith (Penistone and Stocksbridge) (Lab)
I put on record that I am here today only because of the inordinate amount of time that I spend on IPSA matters when I should be seeing to the interests of my constituents. Is it not the case that the system has been badly thought through and hastily and sloppily introduced, and that the impact is not just on MPs but on staff, not just in terms of redundancy but in the fact that IPSA has completely overlooked the payment of maternity and sickness leave?
Mr Winnick
I totally agree.
I mentioned IPSA’s chair and interim chief executive. A communications director is also being advertised for, with a salary of up to £85,000. Apparently, one is not enough, and the intention is to appoint two others. Inevitably, one asks oneself why on earth IPSA requires three, or indeed any, spin doctors. My debate is about Government policy on IPSA, and I know that the Minister will do his duty by explaining what that policy is. However, it would be interesting to know why it is necessary to have three spin doctors, with the salary of the most senior being advertised as £85,000.
Helen Goodman (Bishop Auckland) (Lab)
Does my hon. Friend agree that there is a serious impact on Members’ families as well as an effect on staff? One of the most serious issues, in addition to all the points about administration, is that once children reach the age of six the entitlement to accommodation is cut off and spouses are given no travel allowance. Does my hon. Friend agree that IPSA is behaving not only independently but above the law? Is it not clear that that discriminatory rule will impact on not only the way we do our jobs but who can be elected and who can do the job?
Mr Winnick
My hon. Friend could not have set out better the effect on family life. We could go back to the situation that we had many years ago when only those with independent means could become Members of Parliament. That would be a very undesirable state of affairs to say the least, and I am sure that that view is not confined to Labour Members. I see no reason why family life should be undermined in that way.
Joan Walley (Stoke-on-Trent North) (Lab)
May I just go back to my hon. Friend’s point about communication officers? Does he agree that the real issue with IPSA is that there are no channels of communication? There is no way of having contact to resolve issues about parts of the policy that it is has imposed without consultation and that are not fit for purpose.
Mr Winnick
I mentioned how difficult it is to get in touch with IPSA, apart from with its interns, whom I would be the last person to criticise. I have not seen the chair or the chief executive. Where are they? Do they come to the House of Commons? They apparently have very luxurious accommodation in central London, but why do they not come here? Why can we not meet them? Have they imposed some sort of rule that means that they cannot meet Members of Parliament? Parliament has been back for two or three weeks, but anyone who has seen the chair or the interim chief executive is fortunate. I would not recognise them—I might try to remember them from their photographs, but that is about all.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Last week, I received a letter telling me that I had not submitted my bank details to IPSA so that I could be paid. That struck me as a little odd as I was actually paid, and the money was put in my bank. Today’s edition of The Times contains the statement that many MPs have not submitted their bank details to IPSA. First, I would dispute a communications policy that allows such information to be divulged. Secondly, I deeply resent the implication that MPs are somehow engaged in a conspiracy to avoid giving IPSA their bank details and getting their pay. Lastly, I would ask that we apply what pressure we can, perhaps collectively, to get the National Audit Office to look at these procedures to see whether they give the public value for money.
Mr Winnick
That is a good point. I spoke about the compliance expenses officer, who is supposed to be an independent watchdog, but that person is appointed by IPSA and occupies its offices, so I do not know how much of a watchdog he is.
I have yet to find a single Member of Parliament of any party who is in favour of what IPSA has done—if there is one, they should quickly put their hand up—and I am not likely to find one among the 47 colleagues who have come along today, presumably to support the criticism of IPSA.
To a large extent, IPSA is working with the mindset that we got into such a position in the previous Parliament—that we were so embarrassed and shamed—that the public will not be on our side. That is a possibility. If that is IPSA’s mindset, it is unfortunate. However, I hope that I have made it clear today that we are not complaining for ourselves, but because what has happened since we returned after the election is undermining the work that we do as Members of Parliament on behalf of our constituents. That is our concern: our constituency offices and the bills to be paid. The system that is in operation should not be so complex or difficult that, as I mentioned, a colleague has to spend, unbelievably, four hours trying to process a petrol claim.
The public should understand that this is not a matter of a few pounds. Normally, when people talk about expenses, it might be a matter of a cab fare—not for us, of course—a meal and the rest of it. However, when our expenses—the constituency rent, the bills, our rented accommodation and the rest—are totalled up, they come to quite a substantial sum. That sum is perfectly legitimate and above board, and I am not aware that anyone has suggested otherwise. We hope that it will be processed properly and without taking too much time.
I hope that IPSA’s chair and interim chief executive understand that our criticism is justified and that we have merit on our side. I also hope that they will come to grips with the situation as quickly as possible and end this rather embarrassing position, which has seen us having to come here to discuss the issue again. Following what happened in the previous Parliament and the setting up of IPSA, we had all hoped, as I have said, that this issue had gone for ever.
Dr William McCrea (in the Chair)
Order. I draw Members’ attention to the fact that I will start the winding-up speeches at 10.40 am. I want to get as many of the Members who requested to speak into the debate as possible.
Sir John Stanley (Tonbridge and Malling) (Con)
I wish to declare an interest as one of the many Members of Parliament who have been deemed to be a London-area MP with a constituency outside London. I also wish to state that I am among the many MPs of all political parties who were not asked to pay one penny back by Sir Thomas Legg.
I warmly congratulate the hon. Member for Walsall North (Mr Winnick) on initiating the debate; he has done a great service to parties in all parts of the House. New Members, in particular, might well ask how it is that they arrived in the House on 6 May to find the expenses scheme creating such enormous difficulty for them and, indeed, for returned Members. It is therefore worth stating that that occurred because the final IPSA scheme was published only on 29 March. On the very same day, it was brought into being, when the Speaker laid it before the House without debate, consideration, the opportunity for amendment or a vote. I hasten to say that that comment represents no criticism whatever of the Speaker; that was the procedure laid down by the House in the Parliamentary Standards Act 2009. That is why we are in this situation, debating a scheme that has hitherto been wholly undebated and that is incapable of amendment or vote by Members of the House.
I want to focus on one fundamental issue, which has thus far, I believe, received no consideration inside or outside the House, although I drew it to the attention of IPSA’s chair, Sir Ian Kennedy, in my letter to him of 21 December last year. That issue is the interface between parliamentary privilege and IPSA’s decisions. I should make it absolutely clear that the aspect of parliamentary privilege to which I am referring has nothing whatever to do with the application of the criminal law to MPs’ expenses. I am referring to a quite different aspect of parliamentary privilege—the privilege of freedom from obstruction in the performance of parliamentary duties.
I have taken advice from the Clerk of the House as to the ambit of that privilege. He has drawn my attention to page 75 of “Erskine May”, under the heading “What constitutes privilege”. He has also drawn my attention to page 143, under the heading “Obstructing Members of either House in the discharge of their duty”, the first paragraph of which reads:
“The House will proceed against those who obstruct Members in the discharge of their responsibilities to the House or in their participation in its proceedings.”
He has also drawn my attention to the report of the Joint Committee on Parliamentary Privilege, at paragraph 264, where, among the contempts of Parliament that are listed, are
“assaulting, threatening, obstructing or intimidating a member or officer of the House in the discharge of the member’s or officer’s duty”.
I do not, of course, suggest that IPSA is in the country of assault, but there are serious issues to be raised about obstruction.
The Clerk of the House has made it clear to me that the privilege of freedom from obstruction applies only to work in connection with parliamentary proceedings. It does not apply to constituency work. However, he has also confirmed to me, in writing, that the protection of MPs from obstruction in connection with parliamentary proceedings applies whether the House is sitting or not. So, just as the IPSA scheme and any obstruction occurring under it applies throughout the year, the protection from obstruction for MPs applies equally throughout the year.
The issue before the House is whether IPSA is obstructing Members of Parliament in the discharge of their parliamentary duties, other than their constituency duties, by, for example, forcing them to spend many hours a week travelling, when they could be working in connection with their parliamentary duties; or whether in countless other ways, as we heard from the hon. Gentleman and in interventions, it is obstructing Members in the efficient and effective discharge of their parliamentary duties.
Helen Goodman
The right hon. Gentleman makes a fascinating and pertinent point. Is he aware that some of our colleagues have been told that they cannot recoup the cost of going to conferences on subjects that are of relevance to their work in the House and their constituencies? Is not that precisely the sort of issue that would be covered by the points he has made?
Sir John Stanley
I am grateful to the hon. Lady for making that important point.
No one can say with certainty at the moment whether IPSA is violating the privilege of freedom from obstruction; that is a matter for the House of Commons only. Equally, no one can reasonably deny that the issue must be addressed by the House, as early as possible in the life of this Parliament. We are in an unprecedented situation. Never before in the history of Parliament has a statutory body outside Parliament been created with the ability to introduce rules that directly impact on the ability of Members of Parliament to perform their parliamentary duties. It is clear that the boundary between the authority of IPSA and the ambit of the parliamentary privilege of freedom from obstruction needs to be defined. It is at the moment wholly undefined. For that reason, the issue must be placed at an early date before the Select Committee on Standards and Privileges. I intend to achieve that, with, I hope, the support of other Members. I hope the Minister will agree that the issue of the boundary between the authority of IPSA and the privilege of freedom from obstruction needs early consideration by the Committee.
Ann Clwyd (Cynon Valley) (Lab)
I congratulate my hon. Friend the Member for Walsall North (Mr Winnick) on bravely initiating the debate on behalf of other Members. Many of us have felt totally frustrated in the past months, particularly during the expenses scandals, and I blame all the party leaders for failing to protect Members of Parliament. They vied with one another to wear the most painful hair shirt. They have thrown us to the dogs.
This is my 26th year in Parliament and I have never felt as humiliated as I was during the expenses scandal and during the general election. I had nothing to apologise for, but in our constituencies people shouted “You’re all the same; you’re all crooks.” I object very strongly to that. I am not a crook. The majority of my colleagues are not either.
Because of IPSA I have spent many hours on accountancy, clerical work, and repeating that clerical work because forms have not been received or have been lost, and I should not have had to do that. Also, when one is doing that work from constituency offices, the online system often breaks down and cannot be accessed. Members spend a lot of time hanging around waiting for it to come back. I agree that it would be much better if the work could be done in writing. We all know that we are asked to repeat things; we are asked to send original receipts, which then get lost. We must keep photocopies of the originals and produce those again.
Mr David Hanson (Delyn) (Lab)
We have an online computer system, but I also submit every receipt in writing and must establish my own internal office system to track the fact that I have sent the receipts. I submit the information in writing and online, and therefore duplicate the process. I am not against computer systems, but I want to find a way in which my right hon. Friend and I can do things once, not twice.
Ann Clwyd
I agree; and, by the way, I want to say to the press that we are not whingeing MPs. I object to that title. We are raising matters that it is legitimate to raise because they affect our performance as Members of Parliament. If anyone describes me as a whingeing MP again—and I do not know if any members of the press are responsible for such expressions—I ask them please to come and see me.
Andrew McDonald said in a letter to me dated 9 June that IPSA had met almost 600 MPs face to face at the induction sessions. I must have been at a different induction session, because the person dealing with my induction was a civil servant from the Department for Work and Pensions who is not even a member of IPSA. Where were the people who should have met me face to face? Were they the people who smiled and nodded at me on the way into the induction session? Will they please introduce themselves next time as members of IPSA, so that I can acknowledge them? It has been impossible, as we have already heard, to talk to somebody responsible at IPSA. Instead, we are asked to submit things in writing, which is time-consuming.
IPSA is hosting training sessions around the country for MPs’ staff. Again, I object that there is not one training session in Wales, so my member of staff is expected to travel to Bristol for it. That cannot be right.
Mr Kevan Jones
Does my right hon. Friend agree that the problem with the so-called induction system or briefing session was the fact that it was designed only to show us how to use an incompetent computer system? First, if we raised any questions, staff could not answer; secondly, the default position with IPSA seems to be, “Put it in an e-mail.” My right hon. Friend may have experienced the fact that even if we send e-mails, we get no replies.
Ann Clwyd
My hon. Friend is absolutely right. The comments made by other Members show that we have all shared these experiences. Indeed, I can hardly sit down now in the Tea Room without somebody talking to me about IPSA. Of course they do, because it takes up such a great amount of our time, but it should not be taking up our time in that way. The organisation cannot even get our salaries right; it says that that is an administrative error, but with all the staff or accountants that it has working for it, how on earth can it make an administrative error? I suggest that it is totally incompetent if it cannot get the simple matter of our salaries right.
Mr Richard Bacon (South Norfolk) (Con)
As with the hon. Member for North Durham (Mr Jones), the young man who came to explain the system to me could not answer any of my questions. Does the right hon. Lady agree that it was not his fault? He had been an administrative back-office person in the private office of the former Lord Chancellor, the right hon. Member for Blackburn (Mr Straw). Those who are responsible are those who put him into that job without giving him the answers.
Ann Clwyd
That is disgraceful. It puts unfair pressure on those people. We expect answers and if we do not get answers we obviously feel frustrated. I have not yet screamed or shouted at anyone, or banged the table, but I am getting to the point of saying that I would not have come back to Parliament if I had realised what a hassle the system would be for me and my staff. I would not have returned. That is a shocking thing to have to say, because throughout my time here I have enjoyed being a Member of Parliament; to spend my time now having to do this kind of thing irritates me beyond explanation.
I note that the Leader of the House is here. He will know that a few weeks ago in business questions I raised this matter in response to a question asked by my hon. Friend the Member for Walsall North. My hon. Friend did not receive an answer to his questions; he was told that no one was responsible for answering on behalf of IPSA. I then discovered that the Deputy Prime Minister would have policy responsibility for IPSA; the Leader of the House told me that in reply to my question. If the Deputy Prime Minister is responsible for IPSA policy, he should be here listening to this debate. I am sorry he had to send his right hon. Friend to take the flak on his behalf. I would like to know what “policy” means. If answering questions on IPSA is not part of policy, what is?
Mr Winnick
The reply to the questions I tabled to the Leader of the House was that no responsibility falls on the Government for what are basically day-to-day matters. Downing street then said that it was the responsibility of the Deputy Prime Minister. I put the same questions to him, but got the same response. It is not its fault, but the Table Office now blocks all questions on the workings of IPSA. The organisation is a law unto itself; it is impossible, except at business questions, to raise issues by way of parliamentary questions. That in itself is pretty disgraceful.
Ann Clwyd
I totally agree with my hon. Friend. I hope that we allow enough time for the poor man who has to answer the debate to give a comprehensive reply.
I read again in the paper this morning that MPs will be given face-to-face advice surgeries with officials, starting in September. At the moment, advice is given largely via telephone helpline and e-mail. None the less, despite the complaints of MPs, Sir Ian said that it is not a complicated expenses system. Who is he kidding? It is complicated, and I object very strongly on behalf of my fellow Members that the system has been imposed upon us and that nobody seems to be accountable.
Mr Donohoe
Is my right hon. Friend aware that we cannot talk to IPSA but have to speak to an agency in Manchester called Calyx? When we ask a question, all the staff there can do is to say, “We’ll call you back; we have to get in touch with IPSA.” Surely that is ridiculous.
Ann Clwyd
It is all ridiculous. We must have answers today, because we are not going to put up with it. Of course it is right that the expenses system should be transparent. We all agree with that—nobody disagrees—but we disagree with the way that IPSA is operating and the extra stress that it causes Members of Parliament.
David Simpson (Upper Bann) (DUP)
Further to what the right hon. Lady said about information being given in different regions, an information day was held in Northern Ireland on Monday. I believe that four MPs were notified about it—a total disgrace, given the other difficulties that we are expected to deal with—and as a result, hardly anyone turned up.
Bob Russell (Colchester) (LD)
I congratulate the right hon. Member for Tonbridge and Malling (Sir John Stanley) on raising the real threat to the operation of this Parliament and to the ability of democratically elected Members to do the job for which they were elected. I sincerely hope that the Minister was listening and will give feedback and take action. I hope that the leader of the council—[Laughter.] It could almost be a council, could it not? I hope that the Leader of the House hears what has been said and takes immediate action. Our work is being seriously interfered with and Parliamentary privilege is therefore being compromised.
I have not yet found a Member of Parliament who thinks that IPSA is doing a good job, but we should acknowledge and appreciate that its staff—those who are trying to do the job—are wading through treacle, just as we are. It is down to the Government—my Government—to put it right.
I am not technically proficient, so it goes way over my head, but those MPs who do know how to operate the computer system are spending many hours on it—or their staff are doing so. We had a simple system before and a few Members made it go wrong, but that was to do with second homes. I am not aware of anything seriously affecting the way that our staff operated. Why should they be penalised? Why should they suffer because of the sins of MPs? Why should new MPs have to tolerate a system that would not be tolerated in any other walk of life?
I have been to IPSA—I doorstepped it. If I can do that, I am amazed that no investigative journalist has done so. I can tell colleagues that the accommodation is luxurious—the best that I have ever seen and better than anything in a Cabinet Minister’s office. The work done there could easily be done from an industrial estate in Romford. IPSA does not have to occupy very expensive offices in central London.
I repeat: we should not criticise IPSA staff. It is their bosses who created this monster. It is not fit for purpose. This is not a question of MPs wanting to line their pockets; it is a question of MPs being able to pay the bills, so that they can operate their constituency offices and their staff can get on with their jobs. I honestly believe that if the job had been handed over to Tesco, it would have been done more efficiently, because Tesco knows everyone who goes in its shops and what they purchase. If every MP were issued with a House of Commons credit card, at the end of the month the printout would say what had been purchased and it would be deducted automatically. No money would go out of or into an MP’s personal account.
It is an affront that I have found it necessary to open a separate bank account. I do not see why the private bank account of my wife and I should be called upon to pay the office costs of an MP and that money then paid back into our private account. It is a real affront. Please, let us take up the excellent research undertaken by my right hon. Friend the Member for Tonbridge and Malling (Sir John Stanley). We have the Leader of the House and the Minister here, and I can guarantee that the Deputy Prime Minister will hear about this at 5 o’clock tonight.
Barbara Keeley (Worsley and Eccles South) (Lab)
It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate my hon. Friend the Member for Walsall North (Mr Winnick) on securing the debate.
It is almost a year since the Parliamentary Standards Act 2009 went through its Commons stages. I remember it well. The Act created the Independent Parliamentary Standards Authority and gave it a number of administrative and regulatory functions, including payment of MPs’ allowances, dealing with allowance claims and revising the allowance scheme for MPs. The key aspect of the Act is that it gave IPSA those functions in relation to Members’ allowances, yet when IPSA published the first scheme for consultation, it changed the word “allowances” to “expenses”.
Most right hon. and hon. Members understand the anger and annoyance generated in the public by the term “MPs’ expenses” following the scandal of last year. It therefore seems to me to be incorrect and somewhat provocative of IPSA to describe allowances designed to support MPs in carrying out their parliamentary functions as expenses. We could debate the different definitions, but the definition of “allowance” is money defined or set aside for a purpose—in the case of MPs, to pay essential costs such as staff salaries and national insurance, rent, business rates and utility costs. It includes the sense that the sum specified in the allowance may or may not be used, but IPSA seemed to react to the term “allowances” by suggesting that if it made an “allowance scheme”, MPs would use all of the allowance allocated. That has not been the case in the past.
There is a wide variety of definitions of expenses, but a common one is that of costs incurred by an employee that are payable by an employer. As other Members have said, that does not fit the situation of MPs as we are not employees of the House. I strongly feel that “expenses” has overtones that work to hamper Parliament’s recovery from the scandal generated by the discredited system used in the previous Parliament. As my hon. Friend the Member for Walsall North has said, we all want to get over it. In my view, IPSA would be well advised to describe the scheme as an allowance scheme, as the 2009 Act laid down.
Interestingly, IPSA uses a different definition of expenses when it comes to its own reporting. It states on its website that it will publish all expenses and hospitality incurred by the IPSA board and senior staff. If it used the same definition of “expenses” for its own staff, it would report its office costs and the salaries and other support costs of its staff, as well as personal expenses. What it actually publishes is travel and accommodation costs.
What was called the office costs allowance is now split by IPSA into two allowances: constituency office rental and general administrative expenditure. The previous allowance was more than £22,000 and could be supplemented by transfer from other allowances if office running costs were higher than the allowance. The IPSA scheme split the allowance into two parts and reduced it by £1,300. One part of the allowance has to be used to pay office rent, business rates, utility bills and office insurance, and the other for office furniture, computers and printers, phone systems and bills, stationery and postage. Why does IPSA feel that it is right to reduce the total amount of allowances for running an MP’s constituency office?
The Committee on Standards in Public Life looked at the previous allowance and, in its report, recommended no change. Not only has IPSA reduced the allowance, but it has arbitrarily split it and insisted that office rental and associated costs must somehow fit into the reduced half, with the other part of the allowance not able be used for rent, rates or utility bills. Apparently, the level of rental used by IPSA to set the constituency office rental cap is about £5,000 a year, which is meant to pay the annual rent of offices for the MP and up to three and a half staff, plus filing space, printers and space to meet constituents. It is not adequate. The cap is said to be the average office rent paid in the previous Parliament. The concept of an average rent is strange—rents vary up and down the country and probably half of the MPs in that Parliament had a higher cost than the £5,000 average. Many MPs are able to rent office space at low cost from constituency associations or have subsidised offices from their local authority, but for other MPs such subsidised and low-cost offices are not available. There is a danger that IPSA’s splitting the allowance and setting such a low cap on the office rental element could drive MPs out of their current constituency offices and into unsuitable premises.
Helen Goodman
My hon. Friend is absolutely right. It is even more absurd to put things over which no one has any flexibility into one budget. We sign up to all the things included in the rent five years beforehand—they are not under our control—and all the flexible things are in another budget. Putting those two budgets together would make management of the money far easier.
Barbara Keeley
My hon. Friend makes a very good point. My hon. Friend the Member for Walsall North referred to new MPs setting up their offices from scratch. Some new colleagues have told me that they cannot afford the offices used by their predecessors. The rent will last for a number of weeks and then they will be pushed out of those offices.
On the same day that my right hon. Friend the Member for East Ham (Mr Timms) was stabbed at a constituency surgery, I challenged a person whom I thought was breaking into a property neighbouring my constituency office. The police advised me that challenging would-be burglars is not a good idea and that I should desist from doing so in future. My current constituency office is a place in which I feel that my staff and I are safe—it is not a shop, it is not on the ground floor and we have good security protection in the building—but I am very aware of the possibility of crime in the area and the other security threats posed to MPs and their staff.
Ian Mearns (Gateshead) (Lab)
I am an MP for a new constituency following a boundary change. It would plainly have been the wrong decision for me to try to inherit the premises occupied by my former colleague, David Clelland, which are on the outskirts of the new constituency. In Gateshead town centre, there is a significant transport hub that feeds virtually every part of my constituency, so it would be right for me to establish a new constituency office there. However, the IPSA recommendations on rents do not take account of town centre locations, where rents are necessarily higher because of market conditions. That precludes my establishing a constituency office that is handy for my constituents to access, unless I subsidise it out of my own salary.
Barbara Keeley
That is a well made point.
I am short of time, so I want to end my remarks on that aspect by saying that I cannot get another office that I believe would be safe for my staff at the rent that IPSA has used to calculate office costs. IPSA is considering my case, and presumably that of other Members in my situation. I hope that it will be true to its word and not force me and other MPs out of our constituency offices. If it forces us into cheap premises in unsuitable areas, what does that say about security and safety considerations? Following on from my hon. Friend’s intervention, I am now thinking about finding ways to subsidise my office costs. That is the position we have been pushed into.
In summary, why has IPSA changed the terms laid down in the Parliamentary Standards Act 2009? Why does it describe our offices and staffing costs and other essential elements of MPs’ costs as “expenses”, given that the word has such a particular resonance with the public? Why has it caused a great deal of doubt, uncertainty and problems to MPs by reducing the office costs budget and splitting an allowance that worked well into elements with caps that are too low to work properly for a number of MPs and that, by forcing MPs into cheaper office premises, could have very serious implications for the safety and security of MPs and their staff?
Dr William McCrea (in the Chair)
We have 10 minutes left, and three Members are trying to catch my eye. I leave it for Members to decide whether they wish to allow others to get in.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
I congratulate my hon. Friend the Member for Walsall North (Mr Winnick) on securing this debate. In anticipation of press reporting of this debate, may I say that we get it—but we have had it? Also on press reporting, I would really welcome Mr Kennedy’s coming out of his luxurious bunker to tell us whether a member of staff said to an MP, “Don’t shout at me because it wasn’t me who fiddled my expenses.” I very much doubt whether that was said by a member of IPSA, because the staff are extremely helpful if they can be. I raise the matter because it relates to the whole question of staff budgets. IPSA has effectively cut £5,000 from staff budget levels. That means that 175 MPs will have to reduce their staff, which is unacceptable.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
As a new Member, I inherited the staffing structure of my predecessor. He and I and our constituents have been served by those staff with both dignity and diligence. If there is no change in the staffing levels, I will have to sack someone. Does the hon. Gentleman not agree that that is unfair?
Jim Sheridan
That is grossly unfair. The worrying aspect is that the hon. Gentleman may even be taken to an industrial tribunal, and who will pay the cost of that? IPSA has also denied our staff the opportunity to be awarded performance-related bonuses. What we want to know—we have been trying to find this out and it has been very difficult—is whether IPSA staff receive performance-related bonuses. If they do, what is the criteria for them and how much do they get? As for redundancy, we cannot pay staff a basic redundancy, and we have little opportunity to enhance that, which is causing us concern.
There is also the question of gender in this place. Maternity pay for our staff now comes from a contingency fund, and it is approved or rejected at the sole discretion of IPSA. There is no possibility of an appeal or anything else. Again, that is extremely worrying.
I am conscious of the time, but let me finish by referring to the question of the stand-in Deputy Prime Minister, the hon. Member for Colchester (Bob Russell), who asked why we could not have a credit card. I asked IPSA that question myself, and it came back and said:
“Your email asks whether IPSA can consider an alternative system for processing expenses, based on a credit card similar to the travel card. The system used by IPSA has been assessed to be efficient and cost effective for the purposes required. A significant advantage of the system is that it has been specifically designed to help MPs by preventing them from making mistakes at the initial stage of inputting an expense claim - this automatically reduces the level of incorrect claims and therefore reduces associated administration costs.”
If we had a simple credit card system that is transparent and accountable—that is what the general public wants and what we want to give them—we would not need all these compliance officers, communications officers and press officers. We have created an administrative monster. If we had a simple credit card system that is, as I said, transparent and accountable, we would not need all of that.
Mr Richard Bacon (South Norfolk) (Con)
I strongly endorse the point made by the hon. Member for Paisley and Renfrewshire North (Jim Sheridan). If we can have a House of Commons travel card for our train or plane tickets, why can we not have it for anything else? The hon. Gentleman made a very good point.
People will not be able to take up the excellent suggestion of my right hon. Friend the Member for Tonbridge and Malling (Sir John Stanley) about privileges until the Standards and Privileges Committee is established. There is one other thing that Members can do now. Many people have said that IPSA is not accountable, but that is wrong. It spends public money, which, therefore, makes it accountable. The IPSA chief executive is an accounting officer. The Comptroller and Auditor General is an officer of the House of Commons; he is the head of the National Audit Office. His address is 157 Buckingham Palace road, London SW1 W9SP. I encourage all Members of Parliament to write to him with their own experiences, because he is responsible. He is charged by Parliament, under the National Audit Act 1983, with ensuring the effective, efficient and economic use of public funds. In due course, he will need to take an interest in this question. It is a simple suggestion, but people should encourage the Comptroller and Auditor General to look at IPSA, because eventually, if there is enough pressure, he will have to look at it, and IPSA will then have to account for how it is spending public funds. It is that simple.
Emily Thornberry (Islington South and Finsbury) (Lab)
I promise to be extremely brief. I appreciate that many Members do not have a great deal of sympathy for us London MPs because we have the huge advantage of being able to go home every night and see our families, but we do have particular difficulties. Historically, we have had problems balancing our budgets. The current rules mean that the office limit of £12,761 is simply far too low for London MPs. The amount of money allowed for staff is too low for central London. IPSA suggests that we spend 20% more on our staff, but not a penny more is given to us to be able to employ them. The requirement for staff pensions creates new pressures on that tight budget, and the money allowed for staff bears no relation to the needs of the constituency.
It is the opinion of central London MPs that there should be an objective test, perhaps based on the index of multiple deprivation, on the basis of which we should be allowed additional case work. We have confessed to each other that, over the years, we have been putting large amounts of our own salaries into our staffing budgets. Frankly, this is the last straw. We are quite sure that IPSA intends to support Members of Parliament in their work, but it has got a number of the issues completely wrong, and that needs to change. We are pleased that IPSA has agreed to an early review, but we ask it to
“develop an objective method of assessing constituency need. Assess how many staff would be needed to meet that need. Fund that number of staff. Commit to funding increments for staff with long service. Commit to funding London weighting for London-based staff. Develop an objective method of assessing local rent levels. Fund a constituency office large enough to hold the assessed number of staff plus volunteers.”
We are asking for that not for ourselves but for our constituents. Our constituents would not believe it if we told them that MPs’ expenses meant that we could not do a proper job for them.
Mr Jack Straw (Blackburn) (Lab)
I express my gratitude to my hon. Friend the Member for Walsall North (Mr Winnick) for raising this very important issue. It is important not only to every colleague in the House, but, indirectly, to every constituent. It will become very apparent from this debate that concern about the structure and administration of the new allowance system goes right across the House. It is a matter of concern regardless of party or of previous experience. In his important remarks, the right hon. Member for Tonbridge and Malling (Sir John Stanley) said that IPSA was the first body ever to be created with power effectively to adjudicate over the conduct of Members of Parliament, and that is true. However, it is worth reflecting on why this time last year, the whole of the House of Commons, all three party leaders, and some of us caught up in a vice by those party leaders, were under such pressure to establish a separate and independent allowance system.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I want to raise one issue that probably has not been mentioned yet. We are talking about value for money for the public purse and the taxpayer. As a matter of public record, at the moment the cost of my accommodation in London is £252.54 a month. Under the IPSA system and the proposed changes, that figure will rise to about £1,200 or £1,400 a month, so the cost to the taxpayer will be four or five times greater. Does the right hon. Gentleman think that that represents value for money?
Mr Straw
From what I have seen, IPSA itself recognises that there are a number of anomalies in the system—although I do not remotely speak for IPSA. Those include the anomaly that if a colleague lives in a second home that they now own they cannot make a claim in respect of that second home. They could, however, rent the home out to a third party and then use an IPSA allowance to rent further accommodation. That is plainly irrational and I gather that it is going to be changed.
Bob Russell
Will the right hon. Gentleman please confirm that the public anger during the last year was directed at MPs’ second home allowances and not at our staff, our constituency offices and the office costs? IPSA has created problems that were not there before.
Mr Straw
I was going to come on to that very important point.
Just to go back slightly, it is true that this is the first time that there has been a body adjudicating on the conduct of Members of Parliament. However, the reason for that is not an invention of the board of IPSA; it was because of the egregious and outrageous conduct of some Members of the previous Parliament. We know what happened. We also know that the Commons, during a period of years, although it was never presented with the full facts, failed to take—
Jim McGovern
I am grateful to my right hon. Friend for giving way. When he mentions the “outrageous conduct” of Members of the previous Parliament, does he not agree that it is a fundamental principle of British justice that someone is innocent until they are proved guilty?
Mr Straw
Of course I accept that point. The truth of the matter was—we know this—that quite a number of our former colleagues, although they were of course a minority, were being unjustifiably imaginative, to say the least of it, in their expenses claims, especially for second homes and associated expenses. Because of variable decision making by the Fees Office, bluntly the system came crashing down and confidence in the body politic was brought to the lowest ebb that I have ever seen in my political lifetime.
It was because of that situation that the party leaders agreed in May 2009 that we should set up a separate authority, and the House endorsed that decision. It then fell to me as the Justice Secretary at the time and to a team of very good officials to try to hold discussions with the other parties and to bring forward what became the—
Mr Straw
If my hon. Friend will allow me, no, I will not give way. We brought forward what became the Parliamentary Standards Act 2009, which gained Royal Assent at the end of June last year.
As my hon. Friend the Member for Walsall North and, I think, my hon. Friend the Member for Bolsover (Mr Skinner) and others have said, there was and is, I believe, widespread agreement that we could no longer continue with a system—
Mr Straw
No. We could no longer continue with a system of allowances whereby we set the allowances ourselves. And yes, my right hon. Friend the Member for Cynon Valley (Ann Clwyd) is absolutely right to say that all of us felt humiliated by that situation, and still do. It was and is a collective humiliation, but we cannot place responsibility for that on the board or the staff of IPSA. I am afraid that we have to look to ourselves.
There is now, however, this other factor, which hon. Friends and other colleagues have referred to this morning, that almost every one of those who transgressed the rules is now outside this House, so the 400 returning Members and certainly the 260 new Members are now paying the price and the penalty not for their own offences, because they have not committed those offences, but for the offences of predecessors who have now left the House. That is a point that I continually make to members of the IPSA staff and board. They have got to recognise that, collectively, the Members of the new Parliament are not the culprits; those culprits, with perhaps one or two minor exceptions, have left Parliament.
Mr Straw
I am just putting on the record what Parliament itself agreed. We then had to get an interim chief executive of IPSA appointed in September and a board appointed in November. In addition, the Committee on Standards in Public Life itself decided that it wanted to second-guess what the new IPSA board was doing. That led to further pressure on the establishment of that board. All the time there was that imperative, and I do not remember any colleague from any part of the House saying that we should not have pushed forward with that timetable to try to get the new system established, at least in embryo, by the beginning of this calendar year, with a view to it coming into force at the general election.
Jim Sheridan
If my right hon. Friend had known then what he knows now, would he have done anything different?
Mr Straw
No. If we are going to have an independent authority, we have got to give it some independence.
There are two fundamental problems. One is the structure of the allowance system that the authority has decided on; that is something that it decided on. Having done that, the second problem is the system of administration.
Mr Straw
I have only two minutes left.
So far as the structure of the allowance system is concerned, my view is that the authority has failed to take account of the reality of Members’ work and it needs to change that. It has failed to take account of the fact that we are in a wholly different position from most people, because we do not have an office provided for us; we are expected to provide that office ourselves, and we have to do so. That is why I believe the authority has made an error in assuming that a system for incidental expenses, which could operate for staff in a normal organisation, can be brought in to operate for the complete administration of an office. None of the people who are running that system has ever been in the position of having to run a complete office system altogether.
Secondly, there are major problems about the treatment of families. I have no interest in that issue; my family is grown up. But the fact that travel for spouses and children over the age of six is not properly supported is unacceptable.
I make two final points. First, on the administration of the system, I strongly believe in and support what the hon. Member for Colchester (Bob Russell) said about the importance of direct payments. There was no scandal that I can remember about the system of office administration—none whatever. It would have been sensible for IPSA simply to have taken over the direct payment system, which is transparent anyway. By the way, it is not the IT system that will stop abuse of the system in future; total transparency alone will do it. The elaborate system set up to stop abuse is not needed. Unless people are suicidal, there will be no more abuse.
As I perceive it, IPSA staff and Members of Parliament have been talking past one another. IPSA made an error in not ensuring that high-grade staff were available at an early stage to talk people through the system.
Mr Straw
No, I have no time.
I hope that all members of the board of IPSA have sought to register themselves and make claims in order to see how the system operates, rather than looking over somebody else’s shoulder. I think that that would be instructive for them. Ensuring personal contact and a phone system that is not Kafkaesque in its operation is critical, as is, above all, responding to the entirely legitimate concerns and complaints raised by hon. Members from all parties.
Colleagues may recall that an amendment to the Parliamentary Standards Act 2009 was made in the Constitutional Reform and Governance Act 2010, which was passed just before Parliament dissolved. The amendment established a general duty on IPSA to
“have regard to the principle that members of the House of Commons should be supported in efficiently, cost-effectively and transparently carrying out their Parliamentary functions.”
I hope that the board of IPSA is applying itself not only to its duties to administer the allowance system but to its clear statutory duty to support the conduct and work of Members of Parliament.
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
I do not have a great deal of time. I will try to address as many of the issues raised by right hon. and hon. Members as possible as I go along, but I may not be able to take many interventions if I am to make progress. For those Members who have mentioned it, I will also try to set out exactly what the Government’s role is in policy on the Independent Parliamentary Standards Authority, IPSA’s own responsibility and, to respond to the point made by my hon. Friend the Member for South Norfolk (Mr Bacon), what other avenues of accountability exist to ensure that the system is run in a sensible and cost-effective manner.
I congratulate the hon. Member for Walsall North (Mr Winnick) on securing this debate and on how he has conducted it. He reminded us why we are here and emphasised the importance of transparency and accountability for the costs that we incur while doing our jobs, including for the IPSA staff trying to administer the system. He described that well, setting a tone for the debate that I hope will be reflected in the coverage of it. He cannot be accused—to use the words of another hon. Member—of not getting it. He absolutely does get it, and his interest seems to lie in ensuring that a workable, sensible system is in place to enable Members to do their jobs.
Mr Harper
Let me make some progress. The fact that there are some 47 Members in Westminster Hall today—the largest number I have ever seen—indicates the concern that exists on both sides of the House. I am sure the IPSA board will pay attention to that, listen to this debate and take note.
To start off on a good foot—before I go on, probably, to disappoint everybody—it is worth saying for the benefit of those who did not see the coverage this morning that at its board meeting yesterday, IPSA made a number of changes that I think Members will welcome. IPSA has agreed to make one-to-one, hands-on help with the expenses system available to MPs who need it. IPSA has recognised the system’s complexity and will deal with it. As the right hon. Member for Cynon Valley (Ann Clwyd) mentioned, IPSA has also said that it will offer MPs one-on-one advice surgeries with IPSA officials who understand the scheme.
Mr Bacon
If it is a bad system, it will be like the Rural Payments Agency, which finally sent people to meet farmers face to face. What we want is a system that works. As a colleague said, a credit card system, which would be totally transparent, would be much simpler, cheaper, more efficient, more effective and more economical.
Mr Harper
If my hon. Friend will let me get to the end of my list, he may hear some positive news. To pick up that point, IPSA has also said that in its review of the scheme, it will consider a direct payment system. It is therefore incumbent on Members—[Interruption.] I am sure that IPSA will have listened to the advice from my hon. Friend and the hon. Member for Colchester (Bob Russell) about a credit card system. There are alternatives, but I think IPSA recognises that a direct payment system for office costs is a sensible venture, and it will consider that system during its review in the autumn.
Mrs McGuire
Does the Minister have any idea how much it has cost to reinvent the wheel on direct payment of office costs? Many of us already had such a system in place under the previous Administration and did not handle any cash in our offices.
Mr Harper
The right hon. Lady makes a good point. Under the old system, with which Members of the old Parliament will be familiar, no money passed through our hands. That system was completely transparent. I think IPSA will want to bear that in mind as it conducts its review. Members ought to tell IPSA what they think was powerful about the old system—[Hon. Members: “How?”] I am sure that they will, and I am sure IPSA will listen.
In the four minutes remaining to me, I will explain clearly to Members the methods for accountability and what the Government are and are not responsible for.
Mr Harper
I will not take any more interventions. I have only four minutes.
The shadow Secretary of State, who was responsible for taking some of the measures through the House, explained clearly the history behind them, the reason why they were introduced and the consequences of moving to an independent system. He also explained why it was necessary. The details of IPSA’s internal workings are for the chairman of its board and its senior management to explain, not the Government. I will not discuss individual details of how the expenses scheme works.
However, the Speaker’s Committee for the Independent Parliamentary Standards Authority has an oversight role. It must agree IPSA’s budget and lay it before the House. Members will be aware that the Speaker’s Committee on the Electoral Commission, an analogous body, answers both written and oral questions in the House from Members. I understand that at its first meeting on 30 June, the Speaker’s Committee for IPSA will consider whether that is a suitable model for enabling IPSA to answer Members’ questions about its internal workings.
My hon. Friend the hon. Member for South Norfolk, an experienced and well-respected member of the Select Committee on Public Accounts during the last Parliament, made the point that IPSA is subject to audit by the National Audit Office and therefore also by the Public Accounts Committee. I would expect the new Select Committee on Political and Constitutional Reform to take an interest in the matter as well. Those bodies will deal with the scrutiny oversight arrangements and ensure that IPSA is discharging its duties in a sensible way.
Sir John Stanley
Before my hon. Friend sits down, will he answer the fundamental question that I put to him? Does he agree that it is necessary and desirable that the Standards and Privileges Committee should consider the interface and boundary between the authority of IPSA and Members’ parliamentary privilege of freedom from obstruction?
Mr Harper
It is not for a member of the Government to tell the Standards and Privileges Committee—when it is set up—what it should consider. The Chairman and members of that Committee are perfectly able to decide that. However, it is worth remembering and reiterating the point made by the right hon. Member for Blackburn (Mr Straw) that under the Parliamentary Standards Act 2009, IPSA has a statutory duty to ensure that it supports Members in carrying out their parliamentary functions efficiently, cost-effectively and transparently. IPSA is legally obliged when running the scheme to ensure that it is helping us do our jobs as Members of Parliament. That was put into the Act from the beginning.
As I am about to run out of time, I will just make the point that the Government support the independent system of regulating our parliamentary expenses that has been in place since the election. We want to enable IPSA to get on with doing the job it is legally obliged to do in order to help us do our job of serving the public, but we will keep its role and functions under review. I am grateful to the hon. Member for Walsall North for securing this debate. It has been helpful, and I am sure that members of the IPSA board will take note of all the concerns raised. My right hon. Friend the Leader of the House, who was here earlier, has been speaking with IPSA regularly about any concerns raised by Members regarding their ability to do their job, and I know that he will continue to do so.
Alleged War Crimes (Sri Lanka)
(13 years, 10 months ago)
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Siobhain McDonagh (Mitcham and Morden) (Lab)
I am grateful for the chance to highlight again the appalling treatment of Tamil civilians by the Sri Lankan Government. Many hon. Members share my interest in the subject, and although the debate is short, I will take as many interventions as I can. I pay tribute to the former hon. Member for Enfield North, my great friend Joan Ryan, who has always been one of the most powerful and passionate supporters of human rights and who continues to care deeply about what has happened to the Tamil community.
Before I begin my speech properly, I want to go over some old ground, as there have been several very good debates about the Sri Lankan Government’s treatment of Tamils in the past 18 months or so. In that time, hon. Members persuaded the previous Government to support a number of measures, including an end to GSP plus—the generalised system of preferences, which is a preferential trading agreement between the European Union and Sri Lanka. GSP plus was stopped because the European Commission conducted a major study of human rights in Sri Lanka and found a variety of abuses, including the lack of a free press, unlawful killings, torture, disappearances and so on. For similar reasons, the Commonwealth decided not to make Sri Lanka the host of the next Commonwealth conference, largely as a result of the British Government’s leadership. I would welcome the opportunity to hear confirmation from the new Government that they support the decisions on GSP plus and the Commonwealth conference. Those decisions have been debated several times in the House of Commons, and many hon. Members have spoken in favour. Can the Minister confirm that the present Government will support them?
The reason why I called for the debate is that since Britain acted against Sri Lanka’s human rights record, even more disturbing questions have emerged about Sri Lanka’s activities. I am referring to evidence of war crimes. I shall quote from the International Crisis Group report of 17 May, which is called, very starkly, “War Crimes in Sri Lanka”, but first I shall mention a report by Desmond Tutu and Lakhdar Brahimi, who are members of The Elders, a group of eminent global leaders brought together in 2007 by former South African President Nelson Mandela, who is a hero to many of us here. Their report states:
“There is a growing body of evidence that there were repeated and intentional violations of international humanitarian law...in the last months of the war.”
They note that President Mahinda Rajapaksa has decided to appoint
“a commission on lessons learnt and reconciliation”
and call that
“a step in the right direction”.
However, they say that it is “not nearly enough.” They go on to say:
“There is no indication, as yet, that the commission intends to hold anyone to account for any violations of domestic or international law.
Without a clear mandate for legal accountability, the commission has little chance of producing either truth or reconciliation. Nor will victims and witnesses feel safe in giving evidence.”
Keith Vaz (Leicester East) (Lab)
I congratulate my hon. Friend on all the excellent work that she has done on this issue. In the last Parliament, the then Government appointed a special envoy to try to cut through the difficulties of talking to the Sri Lankan Government. Does my hon. Friend agree that that is perhaps one appointment that the present Government can make to show their determination to try to deal with the horrific consequences of the war?
Siobhain McDonagh
I agree. I thank my right hon. Friend for all his work on behalf of the Tamils and I ask the Minister to address the point that he raises.
Mike Gapes (Ilford South) (Lab/Co-op)
Does my hon. Friend share my concern that the United Nations Human Rights Council failed to carry out its duty to investigate war crimes and abuses on both sides in the conflict in Sri Lanka, and that that is an indictment of those members of the UN system that blocked it—specifically, China, India and Russia?
Siobhain McDonagh
I agree. As I have often admitted, I am a novice in international issues. When dealing with these matters, I have been shocked by the behaviour and procedures of the UN.
Desmond Tutu and Lakhdar Brahimi believe that an independent international inquiry is needed. They say:
“In our experience in South Africa and other countries, these kinds of inquiries work best alongside a full and open reconciliation process. This would allow the suffering—and mistakes—of all communities during decades of war to be acknowledged.”
What happened to Tamil civilians in Sri Lanka was disgraceful, but equally disgraceful is the fact that what took place there was so hard to document because of the restrictions on monitoring and reporting and the lack of a free and open press.
Mr Lee Scott (Ilford North) (Con)
I congratulate the hon. Lady on securing the debate. Does she agree that however an international investigation is conducted, one of the most major things that needs to be dealt with now—indeed, it should have been dealt with a long time ago—is that not one displaced person should still be in a camp, not one person should still be suffering and everyone should be returned to their homes in safety? That should happen immediately.
Siobhain McDonagh
I agree.
Independent analysis was extremely difficult, but the ICG report is the most comprehensive investigation so far into what happened. It concludes:
“The Sri Lankan security forces and the Liberation Tigers of Tamil Eelam…repeatedly violated international humanitarian law during the last five months of their 30-year civil war ...Evidence...suggests that these months saw tens of thousands of Tamil civilian men, women, children and the elderly killed, countless more wounded, and hundreds of thousands deprived of adequate food and medical care, resulting in more deaths.”
Mr Andrew Love (Edmonton) (Lab/Co-op)
I associate myself with my hon. Friend’s words about the former hon. Member for Enfield North, who was indeed a true champion of the Sri Lankan Tamil issue. The evidence that my hon. Friend has presented is overwhelming. In the light of the failure of the United Nations to do anything in relation to human rights in Sri Lanka, is it not now incumbent on the west and particularly the United Kingdom to take a lead in having an independent investigation into these war crimes?
Siobhain McDonagh
I agree, and I hope to deal with that point in my speech.
To be fair, we already knew that these things were happening. However, the ICG goes further than previous studies and convincingly argues that there are
“reasonable grounds to believe the Sri Lankan security forces committed war crimes with top government and military leaders potentially responsible.”
Of course, the report also accuses the LTTE and its leaders of war crimes, but it says that
“most of them were killed and will never face justice.”
It adds:
“While some of the LTTE may go on trial in Sri Lanka, it is virtually impossible that any domestic investigation...would be impartial given the entrenched culture of impunity.”
Robert Halfon (Harlow) (Con)
Does the hon. Lady agree that it is an absolute priority now for the Government of Sri Lanka to release the people who are still in the camps, who have been there for so long; to ensure the freedom of journalists; and to begin constitutional change in earnest to bring about a political settlement?
Siobhain McDonagh
I agree, but we know from experience that expressing pious desires does not work with the Sri Lankan Government; we have to be tough and do something about it.
As a result of the evidence that the ICG has found, it argues:
“An international inquiry into alleged crimes is essential given the absence of political will or capacity for genuine domestic investigations, the need for an accounting to address the grievances that drive conflict in Sri Lanka, and the potential of other governments adopting the Sri Lankan model of counter-insurgency in their own internal conflicts.”
That is serious stuff. The report goes on to say that there is
“credible evidence that is sufficient to warrant an independent…investigation”.
That includes the intentional shelling of civilians, the intentional shelling of hospitals, such as those at Ponnambalam and Putumattalan, and the intentional shelling of humanitarian operations, notably operations from the UN’s PTK—Puthukkudiyiruppu—hub.
The report adds:
“The consequences of the security forces’ shelling were made substantially worse by the government’s obstruction of food and medical treatment for the civilian population, including by knowingly claiming the civilian population was less than one third its actual size and denying adequate supplies.”
The evidence cited by the group is substantial, including
“numerous eyewitness statements...hundreds of photographs, video, satellite images, electronic communications and documents from multiple credible sources.”
The ICG complains that the Sri Lankan Government
“declined to respond to Crisis Group’s request for comment on these allegations.”
The House has already looked into many other allegations. A variety of news outlets and broadcasters have described terrible actions in the last days of the civil war. Few could not have been moved by the terrible pictures on Channel 4 of imprisoned Tamil soldiers being shot in cold blood. The ICG admits that it has looked at only a small number of the alleged violations. It has not looked into, for example,
“the recruitment of children by the LTTE and the execution by the security forces of those who had laid down their arms and were trying to surrender.”
Despite that, the ICG states:
“The gravity of alleged crimes and evidence gathered...is not a case of marginal violations of international humanitarian law...There is evidence...both sides condoned gross and repeated violations that strike at the heart of the laws of war.”
It is therefore hard not to agree that the allegations should be looked at independently by an international inquiry.
I praised the previous British Government for taking action against human rights abuses in Sri Lanka, but the ICG is much more critical of the wider international community. It concludes:
“Much of the international community turned a blind eye to the violations when they were happening. Some issued statements calling for restraint but took no action as the government continually denied any wrongdoing. Many countries had declared the LTTE terrorists and welcomed their defeat. They encouraged the government’s tough response while failing to press for political reforms to address Tamil grievances or for any improvement in human rights.”
The report therefore places the onus on the international community to make up for its past and to conduct a full investigation into the last year of hostilities.
Many of my constituents had family members who were caught up in the hostilities. Some of their friends and families are dead, or spent many months in temporary camps for internally displaced people that were little more than concentration camps. Many Members still get Tamils coming to their surgeries with their stories. I do not believe that any of us can have been unmoved by the testimony of our constituents.
Barry Gardiner (Brent North) (Lab)
I agree with the powerful case that my hon. Friend is making. One of my constituents who returned to Sri Lanka was detained on arrival in Colombo, and I have written to the Foreign Secretary this week to ask for the Government’s intervention in the matter. Does my hon. Friend agree that that case illustrates how the Government in Sri Lanka are continuing to persecute Tamils in every way that they can, and that there is no possibility of the diaspora being able to return while such detentions and interrogations continue?
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I associate myself with my hon. Friend’s comments. Will she also ask the Minister to explain the Government’s policy on its relationship with India and China in respect of an independent investigation into the alleged war crimes? If there is to be sufficient international pressure to get such an investigation, they clearly have a key role to play. What will the Minister do to raise the issue with those key neighbours of Sri Lanka?
Siobhain McDonagh
I thank my hon. Friend for all the work that he did while in government, particularly his work with the EU to get suspension of GSP plus. I hope that the Minister will take his questions on board.
Stella Creasy (Walthamstow) (Lab/Co-op)
I give testament to the substantial amount of work that my hon. Friend has done, not only in securing this debate but in her work with the Tamil community in London. I certainly have benefited from it working with the Tamil community in Walthamstow.
Does my hon. Friend agree with the comments made by my hon. Friend the Member for Brent North (Barry Gardiner) about the continuing persecution of the Tamil community in Sri Lanka and use of camps for displaced persons, and that it is vital that we keep up the pressure on the Sri Lankan Government over how they are acting now, as well as seeking an international inquiry, if we are to gain any kind of redress for the Tamil community and ensure that their human rights are protected? Does she also agree that it is vital that the Government commit to continuing not only the suspension of GSP plus but the aid that was being given to help those who were displaced and put into the camps? The previous Government committed to such aid to help people not only to go home but to build lives full of prosperity and peace, which we want for everyone in Sri Lanka.
Dr William McCrea (in the Chair)
I draw to Members’ attention that interventions are to be short.
Siobhain McDonagh
Thank you, Dr McCrea, but may I say how absolutely right my hon. Friend’s comments are? I may not get through all my speech, because we do want the Minister to be able to address all of our concerns. There are so many Members here because they are concerned about their Tamil communities and their extended families in Sri Lanka.
Children are being separated from their parents, people in hospitals are being bombed and soldiers are shooting indiscriminately. On previous occasions, Conservative Members argued that it would not be constructive for Britain to threaten to take action against Sri Lanka. They said that economic action would not help. However, in the past few weeks, the Sri Lankan Government have been acting in ever more paranoid ways.
Gotabaya Rajapaksa, the Defence Secretary, recently appeared on the BBC threatening to execute Sarath Fonseka, the army commander who delivered victory over the Tamil Tigers, because he had suggested that top Government officials may have ordered war crimes during the final hours of the Tamil war. That is not the approach of a reasonable Government whose priority is peace and reconciliation. That was not the first time that we have seen compelling evidence of atrocious behaviour by the Sri Lankan Government.
In October, the European Commission published a report on human rights in Sri Lanka since the war. It stated:
“During the period covered by the investigation, there has been a high rate of unlawful killings in Sri Lanka, including killings carried out by the security forces, persons for whom the State is responsible and the police...extra-judicial killings were widespread and included political killings designed to suppress and deter the exercise of civil and political rights...Unlawful killings perpetrated by soldiers, police and paramilitary groups with ties to the Government, have been a persistent problem.”
In other words, there is enough evidence to conclude that war crimes could have taken place in Sri Lanka, and therefore they should be investigated.
Last year, when the Conservative party was in opposition, its spokesman, the hon. Member for The Cotswolds (Geoffrey Clifton-Brown), criticised Britain for seeking action against Sri Lanka for abuses. He complained that Britain
“voted against the $2.5 billion International Monetary Fund package in July and are now considering ending the EU’s special trade privileges”.
He asked:
“Is that really the most constructive way to persuade the Sri Lankan Government to promote a long-term reconciliation?”—[Official Report, 21 October 2009; Vol. 497, c. 895.]
I am sorry that the Conservative position at that time was that reconciliation required inaction. I hope that that is not the case now.
I believe that a boycott of Sri Lankan goods by British citizens will help Sri Lanka to resolve its past, in the same way that the boycott of South Africa helped that country to bring about peace and reconciliation. In my view, doing nothing will only make matters worse. As the ICG said,
“Now a number of other countries are considering ‘the Sri Lankan option’—unrestrained military action, refusal to negotiate, disregard for humanitarian issues—as a way to deal with insurgencies and other violent groups.”
It argues:
“To recover from this damage, there must be a concerted effort to investigate alleged war crimes by both sides and prosecute those responsible.”
Although Sri Lanka is not a member state of the International Criminal Court and it is therefore unlikely that the UN Security Council would refer the matter to it in the short term, the ICG’s conclusion is that:
“A UN-mandated international inquiry should be the priority, and those countries that have jurisdiction over alleged crimes…should vigorously pursue investigations.”
If countries such as ours do not take that action, disreputable Governments around the world may look at the Sri Lankan option and ask, “What’s to lose?” We must not let that happen.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
It is a great pleasure to serve under your chairmanship, Dr McCrea. I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing this debate and on the number of colleagues who have attended it. I appreciate that the issue raises a great deal of concern among Members and our constituents.
I appreciated the brevity of colleagues’ interventions and would be grateful if those who are already on the record listened to the bulk of my remarks before intervening. I am not sure whether I can compete with the hon. Lady’s speed and clarity, but I will do my best. This is the first occasion on which I have spoken on Sri Lanka as Minister, and I know how much interest the debate will generate in the community.
The United Kingdom has long-standing historical connections with Sri Lanka. Our two peoples are united by many ties of family and culture, as well as business, tourism and education. Our primary objective, therefore, is to support the development of a peaceful and prosperous Sri Lanka.
Let me turn immediately to the first of the concerns raised by the hon. Lady: the war crimes. Sri Lanka is now emerging from a prolonged and painful period of bloody internal conflict. We have seen immense suffering across all the communities in Sri Lanka, and the country’s development has been blighted by terrorism. Sri Lanka can now blossom and grow, and we want to work with the Sri Lankan Government and all their people to achieve that.
For any country emerging from conflict, there must be a balance between looking forward to new opportunities and development, and dealing with the past with honesty and compassion. The decades-long conflict in Sri Lanka has seen the country’s Sinhalese, Tamil and Muslim communities riven by mistrust and suspicion. There are serious allegations of the most atrocious violence and abuses having been committed by all sides over the past 30 years. Most recently, serious allegations have been made of war crimes by both Government forces and the Liberation Tigers of Tamil Eelam in the final stages of the conflict in early 2009. Our view is that the allegations will haunt the country for many years to come and will hinder much-needed reconciliation between the communities unless there is an honest process of accountability for the past.
President Rajapaksa made a commitment to the UN Secretary-General last year that he would take measures to address possible violations of international humanitarian and human rights law. He has now announced the establishment of a lessons learned and reconciliation commission. My right hon. Friend the Prime Minister has written to the President to encourage him to ensure that the commission produces recommendations that address the past allegations and allow all communities in Sri Lanka to live and work together in peace and security. I have today spoken to Foreign Minister Peiris to emphasise the need for a credible and independent process of accountability.
Siobhain McDonagh
We wish the Minister well and want him to make progress with his speech but, for us, the position seems incredible. Do the British Government actually believe that the current Sri Lankan Government have the wherewithal to carry out such a reconciliation inquiry, given that Sri Lanka is the most dangerous country in the world for journalists?
Alistair Burt
We take the view that the Government of Sri Lanka are committed to a process, understanding the extraordinary degree of international concern and recognising the need for credibility in what happens. The responsibility of an inquiry and an investigation is primarily with the Sri Lanka Government—something that we understand, as did the previous Government, and we are proceeding accordingly.
Barry Gardiner
In taking the matter forward, I ask the Minister to pay heed to the establishment in the diaspora of the transnational Government elections that took place recently? Will he give a commitment that the British Government will work with those who were elected from the diaspora in the United Kingdom to ensure precisely that all the views of the wider Tamil community are taken into account in the Government’s thinking?
Alistair Burt
We shall continue to listen to everyone in such circumstances. It is not for us to dictate how an inquiry should work or what voices it should listen to, but this Government will continue the policy followed by the previous Government and be open to the views of all those in the community.
Keith Vaz
I congratulate the Minister on his appointment; I am sure that his work will be a very valued addition to the Foreign Office. When he next speaks to the Sri Lankan Foreign Minister, will he raise with him the newspaper reports that a Chinese firm has been contracted to go into Sri Lanka to remove the evidence of those who have been buried there? It is a very serious matter, and it will obviously affect any investigation that takes place. Will he ask the Foreign Minister whether such reports are true? Has a Chinese firm been instructed to remove the evidence?
Alistair Burt
I shall make sure that an inquiry looks into the issue the right hon. Gentleman has raised.
The establishment of a lessons learned and reconciliation commission is a step in the right direction, but to be credible it needs to show itself to be a strong, independent voice. We urge the Sri Lankan Government to draw on the experience of other countries that have set up successful post-conflict commissions. I said very clearly to the Foreign Minister today that, no matter how painful they are, experiences in South Africa, Rwanda and, indeed, in our country have shown that the only way to deal properly with reconciliation is to be honest and open and to get absolutely to the heart of the matter. There must be proper public consultation, sufficient time to examine evidence and a clear and realistic mandate.
In particular, we hope that the commission can investigate fully the recent allegations of war crimes. We also encourage the Government to address urgently the issue of witness protection in Sri Lanka, mentioned by the hon. Lady. That will be essential if the commission is to get to the truth in its investigations. We recognise that it is for the Government of Sri Lanka to take the lead in addressing allegations of war crimes, but we also support the UN Secretary-General’s proposal for a panel of experts to advise on accountability issues. We trust that the Government of Sri Lanka will co-operate fully with the Secretary-General’s panel to help their own domestic process.
We believe that lasting peace will come about only when Sri Lanka addresses the underlying causes of the conflict and ensures that all communities are treated with fairness and respect. Following elections earlier this year, the President and Government of Sri Lanka have a renewed political mandate. We urge them to use the mandate to take meaningful steps towards long-term, inclusive political action. We welcome the commitment of the President in his joint declaration with the Indian Prime Minister on 9 June to develop a political settlement that is acceptable to all communities, in which the people of Sri Lanka can
“lead their lives in an atmosphere of peace, justice and dignity, consistent with democracy, pluralism, equal opportunity and respect for human rights.”
The United Kingdom stands ready to support Sri Lanka to make good on those commitments, and to take decisive steps to establish a long-term political solution to the island’s divisions.
I hope that the Sri Lankan diaspora in the UK can also play a role. The diaspora’s support following the humanitarian crisis undoubtedly helped to alleviate the hardship of many individuals and their families, and we thank them for their contribution. I hope the diaspora will find meaningful ways to engage with communities across Sri Lanka in pursuit of a lasting and agreed political solution.
Mr Love
I thank the Minister for his contribution, which is coming across very well. However, all the evidence emerging from Sri Lanka is that those wise words are unlikely to persuade the Government. That therefore leads me to GSP plus. Can he give us an assurance today that the British Government will continue to look critically at GSP plus in the light of what is happening in Sri Lanka?
Alistair Burt
The hon. Gentleman anticipates my next but one paragraph. Let me deal first with the humanitarian situation touched on by my hon. Friends the Members for Ilford North (Mr Scott) and for Harlow (Robert Halfon). A focus of much international attention in the past year has rightly been the humanitarian needs of nearly one third of a million Sri Lankan citizens who are displaced due to the conflict. We continue to support the humanitarian response in Sri Lanka as people strive to re-establish their lives. We have been concerned at the long delay in returning internally displaced persons from the camps to their homes, and the restrictions placed on their freedom of movement. We note the progress the Government of Sri Lanka have made in releasing IDPs from their camps to the home areas, but urge that this progress continue.
United Nations figures from 3 June show that some 60,000 displaced persons remain in the camps, compared with an immediate post-conflict figure of 280,000. However, many humanitarian agencies do not enjoy full humanitarian access to them once they return to their home areas. This limits the effectiveness of the assistance we and other donors are able to provide. Concerns remain about the situation of some 8,000 ex-combatants of the LTTE held in detention. Despite repeated calls by the international community, the International Committee of the Red Cross has not been allowed access to this population. We therefore urge the Government of Sri Lanka to establish clearly the legal status of these people and to allow the ICRC access in line with international norms.
As for the GSP scheme, in a meeting with the Sri Lankan Foreign Minister recently, my right hon. Friend the Secretary of State for Defence called upon the Government of Sri Lanka to make progress on human rights and reconciliation. We remain concerned about the human rights situation in Sri Lanka. There have been widespread and persistent allegations of human rights abuses by both state and non-state actors. There have been attacks on the media, including the murder and disappearance of prominent journalists. We support the EU statement made at the UN Human Rights Council last week, expressing concern about the situation of journalists and human rights defenders and the lack of adequate investigations of alleged violations of human rights. We urge the Government of Sri Lanka to ensure that human rights for all communities receive full protection.
Strengthening the mechanisms for the protection of human rights in Sri Lanka will be an essential part of building strong and durable peace and stability. We hope to see these translate into evidence on the ground that the Government are following through with those commitments, and building confidence in the rule of law and good governance. The UK supports the EU’s decision of 15 February to remove GSP plus trade preferences from Sri Lanka from August 2010. The European Commission report of 19 October 2009 on Sri Lanka’s failure to implement core human rights conventions, which are a requirement of the scheme, made this a clear decision.
We also support the moving of the Commonwealth conference, which the hon. Lady mentioned. We know that the Government of Sri Lanka are taking steps to address the Commission’s concerns. We encourage constructive engagement between the Government of Sri Lanka and the Commission, so that the concerns in the Commission report can be properly addressed. The GSP scheme brings significant benefits to all in Sri Lanka; we recognise that it plays a role in the ongoing development of Sri Lanka’s economy and that economic development has a role in the reconstruction process. We sincerely hope that Sri Lanka will therefore take all the necessary steps to ensure GSP plus is retained.
On the point made by the hon. Member for Edmonton (Mr Love), Des Browne did a very good job for us. We have not come to any decision on special envoys yet, but I know him very well and will certainly talk to him. It was disappointing that he was not well received by the Government of Sri Lanka, which might limit his effectiveness. We believe that this is an historic moment for Sri Lanka, but it will only get somewhere if it moves forward. Listening to the concerns expressed by Members and by the international community will be a welcome sign for the reconstruction and reconciliation that we all wish to see among all communities led by the Government in Sri Lanka.
Tax Avoidance
(13 years, 10 months ago)
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Dr John Pugh (Southport) (LD)
It is a pleasure to serve under your chairmanship, Dr McCrea, and I welcome the Front-Bench speakers to the debate. I have a high degree of respect for them both and I hope that between us, in this relatively informal environment, we can start the ball rolling on what is a serious topic for this Parliament: tax avoidance.
Let me put the Minister at ease by saying that I am not going to discuss the capital gains tax proposal or any of the media coverage of it. It is a key aspect of the coalition agreement. All I will say is that the thrust for change comes from the desire to close a loophole that allows for tax avoidance, where people receive economic rewards as capital rather than income so as to avoid higher rates of taxation. Obviously, that is a move for the privileged few that potentially costs the Exchequer millions. Recently, there have been both decent and some dodgy arguments in the media about the mooted capital gains tax proposals. I am prepared to acknowledge that a number of sensible points have been made apropos the need to encourage long-term investment rather than short-term gain, and the need to privilege savers above speculators. There has been much learned discussion about tapers, capital relief and so on. I remain fairly sanguine about the matter and will leave the Minister to his pre-Budget deliberations—provided that, within the coalition, we do not lose the essential goal of successfully attacking tax-avoiding abuse.
Tackling tax avoidance is important to the coalition, particularly in the present circumstances. If the central problem of this Parliament is reducing the structural deficit, there are essentially not two but three ways to help to do that: we can cut spending, which none of us wants to do unless necessary; we can increase taxation, which none of us wants to do unless necessary; or we can ensure that tax revenues are more often and more efficiently collected and not avoided, which all of us would be perfectly happy to do were it the panacea for all our ills. Unfortunately, in the present circumstances, it is not.
If the coalition is not ruthless in its pursuit of avoidance and evasion, now more than ever, we will stand accused of harming or at least being indifferent to the industrious and needy, to the advantage of the devious and the privileged few. That is scarcely fair or in line with the themes announced by the coalition of fair taxation and fair reward. So far in the history of this Parliament, little has been said by the Government about tax avoidance. I understand that the Minister has answered a few questions, both oral and written, but by and large he has given answers that I would describe as holding answers that refresh the position that we understand to be in place—that Her Majesty’s Revenue and Customs does not take lightly the matter of tax avoidance and there is a big gap to be plugged. There is a big gap, because potentially large sums are to be obtained by a clampdown. The Treasury estimates the tax gap of tax avoided or evaded to be about £40 billion. The Tax Justice Network—not uninformed people—gives a figure of £120 billion. The truth is probably that we do not know the precise figure, and perhaps we should split the difference.
The reality is that we have made some progress in getting large sums back to the Exchequer as a result of a serious attack on tax avoidance. That is to the credit of Ministers in the previous Government, who recognised that a serious attack was necessary. The figures for 2008-09 provided by the Treasury suggest that about £12 billion of extra revenue was collected because of the forthright approach taken to tax avoidance. The figure expected for 2010-11—the Minister will be able to tell us whether we get anywhere near it—is a whopping £16 billion. Those are significant sums.
A distinction is often drawn between avoidance and evasion. I do not want to trespass into the area of evasion, as that is a different issue, although at times it is quite difficult to define the difference. Somebody said that the only real difference or line between evasion and avoidance is the thickness of a prison wall.
Dr Pugh
It is a different sort of accounting, let us put it like that. Evasion characteristically involves not only non-compliance, but a breach of tax law and often an element of downright and explicit dishonesty. However, in truth, some forms of avoidance are almost equally morally reprehensible if looked at from an ethical point of view rather than a technical or legal one. We think of past abuses of charity law, which people have explicitly used to make a fast buck with no real benefit to charity, thereby bringing the whole business of charity law into disrepute. We think of a genuine unwillingness on the part of some members of society to pay towards the maintenance of the society that enables them to thrive—the free-rider mentality that is found in certain sections of society and business.
On the other side, we must recognise that we are talking about an industry that does not hang its head in shame. It is staffed by clever and well rewarded people who are dedicated to not what they would call tax avoidance—although it is that in a sense—but, to give it another name, tax planning. As tax law becomes more sophisticated, the economic instruments with which tax planning is arranged become ever more complex and, because of the global reach of the economy these days, ever more global.
The demands for such services are huge and appreciable. There are some well rewarded people in the City whose life is almost entirely dedicated to some form of tax avoidance or tax planning—whatever they want to call it—which they regard as an entirely legitimate enterprise. One should not be too pompous about this. Few people volunteer to pay more tax than is due, or avoid opportunities that come their way to defray their own tax burden. Some people are capable of availing themselves of clever, post hoc rationalisations that run along the lines of: if they spend the money rather than paying it in tax, it will be spent to greater social benefit. That is not a plausible argument, but it is a comforting moral argument if one’s conscience bends in that direction. Such people argue that they can spend their money better than the state can for the social benefit of people in their community. That is a bit of sophistry with which we need not detain ourselves.
Who has not had a discussion with a tradesman about paying in cash, while remaining completely oblivious to the consequences that might befall the Inland Revenue? Are we not sometimes encouraged by the state to modify our economic behaviour by being offered tax breaks and incentives?
Mr Gregory Campbell
I congratulate the hon. Gentleman on securing this debate. He touches on a matter that I have raised for many years. In areas of high unemployment, there is a tendency for the black economy to thrive. There is a tendency for small to medium-sized employers to employ people on the basis that he has just outlined, giving a cash payment of £100 or £150 per week for several hours per day or whatever. The raising of the income-tax level to £10,000, which the Liberal Democrats and my party have been advocating for some time, will help but not completely eradicate the desire of some to employ people on the side, in the black economy, for a few pounds per week, rather than doing it legitimately, which would raise more income for the state and bring people from the black economy into proper, better paid jobs.
Dr Pugh
The hon. Gentleman is right to suggest that the black economy needs a whole toolkit of approaches. I happen to have with me the report from the Public Accounts Committee entitled “Tackling the hidden economy”, which contains a number of rational, sensible and workable proposals, which will enable people to earn a living and at the same time pay taxation legitimately and fairly. Obviously the fairer the system is, the more prone people are to do that.
Tax avoidance properly, though, is the apparent attempt to frustrate the intent of tax law. That is fundamentally what it is. It is normally done by organising economic transactions in a way that ensures that whatever wealth, investment, profits, income or rewards people have or aim for, they escape the charge that the state would ordinarily impose on them. The state does not do that for idle purposes, but for the common good. Tax avoidance is therefore morally reprehensible. MPs flipped their homes and were rightly criticised in the media, but it was not the intention of the expenses scheme—or the capital gains tax regime, for that matter—to ensure that that would happen. People in this place availed themselves of a loophole. That is an almost classic case of tax avoidance, but one could give sundry examples, in various exotic formats.
The previous Government did an appreciable amount of work, endeavouring to ensure that tax avoidance, when spotted, gets dealt with. They fought what I would describe as a long guerrilla war against exactly what we are talking about: loopholes. I pay tribute to the right hon. Member for East Ham (Mr Timms), who was a kind of platoon commander, for prosecuting that guerrilla war with some success. He tried to track down the loopholes and closed them where possible. I think that most hon. Members here, while reading through very dull tracts of successive Finance Acts, will have recognised that those provisions are there simply as part of the ongoing skirmishing between the tax planners—tax avoiders—and the Inland Revenue. By and large, however, what we have seen so far have been post hoc reactions to abuses that have been identified in charity law, with repo arrangements, or with controlled foreign companies—we had an awful lot of debate about controlled foreign companies in the last year of the previous Parliament, as well as stamp duty and other matters.
The Inland Revenue has been involved in constructing complex defences against complex devices and schemes. Quite frankly, even though we pretend to understand them properly as we sail through the Finance Act, many of the schemes are not adequately grasped by many Members. It used to amaze me how the right hon. Gentleman had command—or seemed to, at any rate—of some very complex schemes and some very complex remedies for them. The basic strategy, however, is one of shutting the door after the horse has bolted, which normally leads to those people who wish to persist with mechanisms for avoidance simply adjusting the scheme in some marginal way, modifying it and presenting a new scheme that leads to a new ad hoc adjustment, when it is spotted—it is, of course, not immediately spotted and cannot be dealt with retrospectively. Again, I am reminded of guerrilla war. It is rather like the US forces trying to deal with an ever-elusive Viet Cong that springs up around them in the jungle. My analogy slightly breaks down, however, when one recognises that the resources available to the people fighting that guerrilla war far exceeded those of the Government in this case.
The problem is therefore difficult to deal with, and is made immeasurably more complicated by the global reach of modern international capitalism, with the plethora of tax havens and the associated absence of transparency. Again, I pay tribute to the right hon. Gentleman for having done a great deal of work on that. In the last few months of the previous Parliament, there was a slew of double taxation treaties that attempted to deal with precisely that problem, devised meticulously and with extraordinary detail by very clever people in the Treasury. Generally speaking, what we were hoping for—and sometimes got—was greater transparency and sharing of information, but again we were involved in the post hoc job of trying to close down complex tax arrangements that seemed to evade many jurisdictions when it came to the pursuit of tax liabilities. Interestingly, PricewaterhouseCoopers recently suggested that it would make it a heck of a lot easier if big international companies were to list in full their assets right across the piece on a global basis, and suggested that as a new standard for accountancy. I agree, but I think it fairly unlikely that many such companies will follow suit. Big organisations that keep their property arm in Liechtenstein or wherever will not be the first candidates for laying all their cards on the table.
It is worth making the point, in passing, that the British Exchequer is not the only loser here. A substantial amount of tax leakage is caused by people not paying tax in developing countries, and it is distressing to see organisations such as the Commonwealth Development Corporation, which was set up for laudable ends and with massive national and public support, putting an awful lot of money into development projects in the developing world, but having the money sourced or put through private equity companies, many of which are in offshore tax havens.
Ms Angela Eagle (Wallasey) (Lab)
Does the hon. Member, like me, support the moves towards country-by-country reporting, which were pushed by the previous Government but developed by the OECD? International corporations are encouraged to report both their profits and their assets on a country basis so that there is that level of transparency. Christian Aid, ActionAid, Oxfam and other development organisations support that, precisely to prevent the tax loss, about which the hon. Gentleman is talking, for countries that are developing.
Dr Pugh
I entirely support that, but I consider it a distant ambition that will take an awful lot of putting together over time, and will involve a large number of international bodies. It is, however, entirely the right direction in which to go, and is the direction in which we will all have to go eventually, if we are going to deal with the problem remotely adequately, even on a national basis. What I hope to do as I conclude is to suggest an improvement to what we are doing nationally. The former Minister in the room might correct me, but we have the anomalous situation in which the Exchequer building itself is owned by a sort of semi-bankrupt offshore company. We can see how the need for getting things right on an international basis is just as important as getting things right nationally.
I hope that I have done enough to demonstrate that there is a sort of futility to what we are doing at the moment, which I think is recognised to some extent within the Treasury. I genuinely do not believe that I am pushing at a closed door—it is at least half open—and in discussions with the right hon. Gentleman prior to this Parliament I sensed that. There is a sense in which continually trying to mop up after the errors have been spotted is perhaps not enough, and there have been two significant moves, which are worth remarking on and praising. The previous Government insisted on pre-disclosure of new tax instruments—a vetting system—which is a commendable step forward.
In recent finance legislation, however—I forget which clause of which Bill—I saw for the first time not just simply, “This scheme is wrong, this is how it runs and this is what we’re going to do about it,” but “Any scheme of this nature needs to fit in with certain principles and basic parameters.” I came across a quote from the right hon. Gentleman. He said that
“we need not just new powers but clearer norms for behaviour too.”
We are moving, therefore, to a system in which instead of a case-by-case examination of each scheme, we are laying down principles by which people can judge whether schemes will be acceptable.
I therefore urge upon the coalition Government a final, third step in addition to pre-disclosure and having principles: the introduction into tax law of a general anti-avoidance rule. Some think that that is a distinct probability; I think that it is a possibility. It would parallel moves made in many other countries. Most Commonwealth common-law systems, from Hong Kong to Australia, have something like this. I have argued for it in the past, and I have not been given a dismissive response by the Treasury. Basically, it says, “We have this under consideration, and we may well take it further.”
The advantage of a general anti-avoidance rule being embodied in law is that it would throw the burden of demonstrating the legality of new tax planning schemes on those promoting it by obliging them to show that the schemes will ensure a worthy economic benefit other than tax avoidance—the avoidance of tax law. It would have the added spin-off and economic benefit of ensuring that financial ingenuity would always be employed to the general economic benefit and not simply to dodge tax.
I am aware that, in principle, there are all sorts of downsides to having such a general rule written into law. I have no view of how it should be framed, but we can consider the dispensations of other Governments for advice on that aspect. The legislation certainly needs to be purposeful and clear. There need to be good pre-clearance and adjudication arrangements within HMRC should there be any doubts or disputes that seem incapable of immediate reconciliation. Also, just as in other Government arrangements, there needs to be a sensible and clear list of exceptions.
Given all that, we could certainly run with such a basic rule; indeed, it is recommended by charities and organisations such as Tax Justice Network. Not only can it be done, it is done. It does not encourage wholesale capital flight, as some suggest it might. For example, it has not done so in Hong Kong, which has somewhat of a reputation for financial dealings, and where British judges are involved in a relatively rare dispute resolution procedure based on such a principle.
The strong upside for the Exchequer is that, even on City estimates, it will raise significant revenue. It could be introduced here, and I hope that it will be. I would like to see it introduced as early as possible. It would simplify existing tax law. We are all in favour of that—it needs a certain amount of clarification and consultation. If we follow the road taken by Australia, Hong Kong and many other nations, our tax system will be less prone to the byzantine schemes dreamed up at Canary Wharf and less time will be consumed at the Treasury devising equally elaborate defences. However, we need to get on with it.
If our public finances are in the critical situation that we all think they are, and if, as we appear to be able to do, we can argue for immediate cuts, we must also be able to argue for an immediate and effective attack on tax avoidance if we think it is possible. We are probably talking not about the next Budget, but of the autumn when there will another opportunity. However, certain requirements need to be put in place before we can run an effective regime built around the principles-base that I suggest.
In the first place, HMRC needs the right skills base. I am not yet convinced that it has an adequate degree of specialism. In the past, I have tried to interrogate the Treasury, asking the previous Government how many people were employed on the rather more specialised forms of tax avoidance that we are talking about today than on ensuring general tax compliance. The general answer will be somewhere on the record. It was, “In a sense, that is what we all do all the time.” However, a definite cadre of specialists deals with the high-business end, where some of the bigger centres of tax avoidance are found. We need them still to be in employment at HMRC rather than being affected by staff cuts and other reductions. Indeed, their number needs to be supplemented, so that we have the right sort of tax officers, and tax offices.
It is suggested that cutting the number of local tax offices is not helping in that respect. The tax office in my town has disappeared; I am told that the net effect is that all sorts of local knowledge has gone, and that as a result there will be more tax avoidance. I do not know for sure whether that is true; high-ranking people at HMRC tell me a different story. They say that they now have clever software that does the job infinitely better than local knowledge. It enables them to pick out trends in accountancy and such matters, and it is far more sophisticated and far less consuming of manpower and far more effective in bringing in the shekels.
HMRC has nailed its colours to the mast, putting its faith in software rather than in manpower. I hope that it is right. However, we need some of the right people, and I am not convinced that we have enough of them. I would like more of them to help solve the enigma of why some extraordinarily profitable companies pay surprisingly little tax.
All in all, we need to aim for simplicity. We need a general provision of the kind that I have tried to outline, however inadequately, so that we can stop fighting what I believe is a losing battle. We can do better. We can fight the battle differently. We need to move rapidly towards a general anti-avoidance rule. Ultimately, as the hon. Member for Wallasey (Ms Eagle) said, we need global agreement built upon such pillars. The purpose of the debate is to ask the Government to take up this suggestion—or give reasons why they should not—and if they wish to do so, to get a move on, because clamping down on tax avoidance must be as important as anything else.
Nigel Mills (Amber Valley) (Con)
It is a pleasure to speak under your chairmanship, Dr McCrea.
Until the election, I was employed by one of the large firms of accountants, although I assure the hon. Member for Southport (Dr Pugh) that I was not involved in tax avoidance. My role was to seek up-front agreements with Her Majesty’s Revenue and Customs, which was generally more than happy to enter into such agreements with my clients. I am not guilty of the things of which he accuses accountants. I have practised as a tax adviser since 1996, so I remember the previous Government’s attempt to introduce a general anti-avoidance rule in 1997-98, and I can just about recall why that attempt failed.
I agree with much of what the hon. Gentleman said. It is clearly right to tackle tax avoidance and it is important that the new Government continue to do that job. I accept that the previous Government took many effective measures on that front—the move towards targeted anti-avoidance rules and the principles-based approach was the most effective way forward. However, if we are to get the deficit down, we need to increase tax revenue, so we need to attract taxpayers to the UK and encourage them to remain here. A general anti-avoidance rule in principle may not be a brilliant way of doing that.
Dr Pugh
I wonder whether the hon. Gentleman has any evidence of that. We have enough examples worldwide of such rules being implemented. We ought to be beyond the stage of simply suggesting that it can happen. We should be able to point to empirical data showing that that is exactly what has happened in places such as Hong Kong.
Nigel Mills
I am afraid that I do not have those data in front of me. Having worked with many businesses on where they want to locate head offices or functions, I know that one of the key determinants of their choice is the tax regime—its simplicity, the ease of compliance and the overall rate. The combination of difficulty of compliance, the rate and ease of getting certainty on tax treatment is what makes people choose where to go. The risk of a general anti-avoidance rule in that situation is that it makes certainty hard to get, and it would be bad to combine that with the UK’s very complex tax regime and some tax rates that are currently not over-competitive, although I hope that that will change. The combination of those three factors might make the UK an unattractive location for people to come to or stay. I am sure that many bodies can provide those data.
The key to tackling tax avoidance is to make tax law simple and understandable to taxpayers. The hon. Gentleman talked about tax avoidance being a way of frustrating the intent of tax law, but at times, it is important that the intent of the tax law is clear in the drafting and that the drafting achieves that intent. Often, commercial situations grow up that tax law does not specifically address, so the intent of Parliament is not easy to establish. If we get the drafting right, it might take away some of those problems. The hon. Gentleman alluded to the finance and Treasury rules, which are incredibly complex and have produced various loopholes that have been exploited in various ways. That is a case of very complex legislation that no taxpayers I can think of could understand, and that the vast majority of tax advisers—myself included—did not really understand. I suspect that a lot of staff at HMRC could not possibly understand it either. If we get that right, some avoidance opportunities will not come up in the first place.
The hon. Gentleman said that he was not the person to draft a general anti-avoidance rule. Where the previous legislation floundered was in the attempt to find words that achieved what was wanted without unnecessarily stopping or discouraging many things that we want people to do. The examples cited at the time were the various tax-advantaged savings schemes, such as individual savings accounts, which in theory would fall within a general anti-avoidance rule unless a lot of care was taken over the exemptions included. Getting the drafting right is extremely difficult, and a lot of detailed consultation will be needed if the Government want to proceed.
I have experience of dealing with some of the existing anti-avoidance legislation, which generally looks at a transaction’s main purpose or one of its main purposes, or at the main benefit or one of its main benefits—one has a choice of which way to go. The difficulty comes in defining “transaction”. What is a scheme of transactions? How many are related? Are we tackling individual components? Should the purpose of the individual components or of the scheme as a whole be looked at? Understanding what is being done becomes very complicated. For example, somebody could decide to buy a UK-headquartered multinational business. We would all say that that is a good commercial purpose, but it commonly needs to be done differently in various territories, depending on the tax needs of those territories. As a result, individual elements of the transaction might be created that look as though they are motivated by a tax benefit, whereas, overall, they are part of a main commercial transaction. We could create great uncertainty about those transactions, which might then fail because the businesses or individuals involved could not be confident that they would get the commercial benefits they were trying to achieve without being drawn into some huge, long tax dispute.
Ms Angela Eagle
The hon. Gentleman is making a fascinating speech illustrating precisely the problem that everybody has to grapple with, as the Minister will have to in due course. If one goes for a simple, declaratory and principles-based approach, one has to think about what is motivating people, which is difficult. The only other way of approaching it is the extremely complex and byzantine method of looking at what to do in each circumstance, which the hon. Member for Southport (Dr Pugh) was worrying about. The hon. Member for Amber Valley (Nigel Mills) is illustrating the fact that we get into difficulties whichever route is taken.
Nigel Mills
The hon. Lady is correct. The previous Government happened on what is probably the right balance, which is to have principles-based rules targeted at commonly exploited rules, so that taxpayers know when they are wandering on to dangerous ground and therefore need to deal with those rules, rather than having a general principle that might apply to every tax in every situation. The hon. Gentleman mentioned that it puts the burden on taxpayers to declare that what they are doing has a mainly economic benefit rather than being an attempt at tax avoidance. That is a huge burden to put on taxpayers. I am not sure that we should put the burden of knowing how to comply with a general rule in complicated and innocent situations on to every payer of every tax in the country. I am not sure if that is what he intends.
Dr Pugh
Some of us laboured long and hard over controlled foreign companies. I remember one difficulty was deciding how different transactions should be linked and/or broken up. Anyone reading the legislation, highly specific as it is, will have to do an enormous amount of work—no less than if they had to apply a general principle to their circumstances.
Nigel Mills
I have some familiarity with the controlled foreign company rules, or at least the previous version—I never had to get too close to the attempt to reformulate them. Yes, they are incredibly complicated and they were complicated before, although there was a purpose exemption in the previous rules that was in some cases helpful. I would not necessarily suggest that the new Government should exactly follow the approach that was taken to reforming those rules, because it was a long drawn out process which is, I think, still incomplete.
If we are to tackle avoidance without going down the general anti-avoidance rule route—if the Minister is minded to go down that way, I suspect that by the time he has gone through the full gamut of consultation, he will be backing off quickly—perhaps we should look at overall solutions for tackling the problem rather than proceeding on that basis alone. Targeted purpose rules in areas of tax that are commonly exploited are the better way to go. As a way forward in tackling tax avoidance, we want simple, clear legislation so that the intention of Parliament is clear and both tax authorities and taxpayers can understand the aim of the law and what the rules are. That will help to support the moral argument: if we all understand the right amount of tax to pay in a situation, everyone should be paying it. The present complexity gives people the veneer of an excuse when they structure transactions in an artificial way.
The hon. Gentleman mentioned tax havens. There is a lot of scope for tax planning using other EU nations that have very different tax regimes or much lower tax rates in some situations. I am sure that the Minister has found in his in-tray a load of pending or ongoing cases at the European Court of taxpayers claiming that they have suffered tax that does not comply with various EU treaties. Roughly how much tax is the Exchequer in danger of losing or having to pay back as a result of those cases? It is important when looking at tax law to make it compliant with systems outside the UK, but it is difficult to do.
My area of expertise was transfer pricing. We were forced to apply transfer pricing rules on transactions within the UK, rather than just cross-border ones, which added a huge compliance burden that, frankly, taxpayers were not desperately excited by and the tax authorities did not have anything at stake on. I hope that we can find better ways of writing tax law that do not add to that burden. Perhaps some tweaks to European treaties would have been a better way of sorting this and creating OECD-compliant tax law, rather than using a sledgehammer to crack a nut.
If we want to tackle tax-avoidance effectively, let us have simple, clear legislation, and where there is abuse, let us have targeted, principles-based anti-avoidance rules that state clearly that the intent of Parliament is to stop one-sided complex financing transactions that have no commercial benefit and get a big tax advantage. In that way, we will make the progress that the hon. Gentleman wants.
Ms Angela Eagle (Wallasey) (Lab)
It is a pleasure to take part in my first debate in Westminster Hall in the new Parliament and to serve under your chairmanship, Dr McCrea.
This has been a fascinating debate. It is entirely in keeping with the work that the hon. Member for Southport (Dr Pugh) has done on this issue and with the fact that he has sat on many a Finance Bill Committee that he has brought this extremely important issue to the attention of the House, and I congratulate him on initiating the debate. He put his case very well and demonstrated that he has spent many years considering these issues. He could see both sides of the argument and he managed to put both of them in much of his contribution. He also identified the free-rider mentality, which is the key thing we all want to crack down on and minimise.
The hon. Gentleman was generous enough to praise the previous Government’s record, and I thank him very much for that; that has not been noticeably present in our debates on the Floor of the House so far in this Parliament, which has diminished our debates in this difficult time for the country. I deplore the rewriting of history and the abuse that the previous Government’s record has received, particularly in the economic context, and it is nice that the hon. Gentleman did not sink to that low level.
I particularly thank the hon. Gentleman for praising the record of my right hon. Friend the Member for East Ham (Mr Timms), who would have been winding up the debate under more normal circumstances. I hope that Members will realise that my right hon. Friend is still recovering from the attack on him at his constituency surgery, and I am sure we all join together in wishing him a speedy recovery. He has been seen back around the House and he is well on the mend, but he is still a bit fragile.
I welcome the new Minister to his position. Those who slog away in opposition do not always end up inheriting the positions that they shadowed when their party is lucky enough to be magically translated into government, but the hon. Gentleman has managed to make that transition. Having experienced the Department he now represents, I know he is a very lucky man, and he certainly deserves luck. I therefore welcome him to the debate.
I want to spend a little time putting the previous Government’s approach on the record. I then want to ask the new Minister a few questions about his Government’s actions and their future intentions on this extremely important issue. I note the self-restraint that the hon. Member for Southport showed in not trespassing on the area of capital gains tax, but I wonder how long the restraint shown by the partners in this Conservative-led Government will last as we get further into this Parliament—I will certainly watch developments with interest. The hon. Gentleman has set a sterling example, although I notice that it was not particularly followed by the right wing of the Conservative party at Prime Minister’s questions earlier today—“interesting noises off” is all I will say about that.
We can all agree that the financial crisis of 2008 led to a radical shift, domestically and internationally, in the approach to tax evasion and tax avoidance. Following the crisis, the previous Labour Government made certain that the UK was at the forefront of the drive for radical change. Internationally, there was a rapid realisation that the lack of transparency in the international financial system presented previously unrecognised but severe systemic threats to the entire global financial architecture, that those threats had to be dealt with and that good progress had to be made quite rapidly. In the forum of the G20 and in the aftermath of the credit crunch in 2008-09, good progress was made, but that momentum needs to be maintained, and one theme of the questions I want to ask the Minister to deal with is how he sees its being maintained.
It is only human nature that when people are in the middle of a crisis, they suddenly put at the top of their political and economic priority list things that have been around for years, although they were never really at the top of the list. Suddenly, transparency, the exchange of information and the ability to supervise global institutions cross-border and globally acquire far more importance. Everybody is very exercised by them, and there are a load of international meetings at the OECD and the G20; indeed, that is what happened, as we can see. The crisis then abates, and people turn back to dealing with more domestic things. If we are not careful, the momentum for change—the momentum behind introducing transparency and opening up cross-border supervision—could wilt. It is important that the new Government continue the momentum that the previous Labour Government created in the aftermath of the crisis. I would certainly be interested to hear how the Minister sees the issue and what plans and actions he has in train to ensure that that momentum is maintained.
The hon. Member for Southport touched on the fact that, domestically, the huge bank bail-outs that were necessary to deal with the immediate threats that the crisis caused to our economic well-being have brought two important truths home to us all. If those truths had not been brought home to us before the election, they certainly would have been once we had spent months on doorsteps in our constituencies listening to our constituents’ experiences and opinions. The first of those truths is that there is growing hostility among the majority of our hard-working constituents who pay all their taxes towards those who avoid paying their fair share. That phenomenon is growing and is more noticeable than it has been, and it will only continue to grow if it is not addressed by policy and Government action. Secondly, where tax revenues have been hard hit by the downturn and the recession caused by the irresponsible greed of a few, there is an even greater responsibility on the tax authorities to collect the tax that is due. That responsibility can only be reinforced when next week’s Budget takes a scythe to the public services that many of our most vulnerable citizens rely on.
The previous Government measured the tax gap and published estimates of it, setting it at £40 billion, as the hon. Gentleman rightly said. He had some other estimates, and the Trades Union Congress has a much larger estimate, as does the Tax Justice Network, which the hon. Gentleman mentioned. For the sake of argument, however, let us say that the tax gap is £40 billion. We know that it is impossible to collect such sums and completely to close the tax gap so that it does not exist at all, but we could certainly do with some of the revenue that is due, but which is not being collected. Even if we closed the tax gap by half, we would avert real pain and suffering among those who are often the most vulnerable in our society and who particularly rely on services provided through public expenditure. In that context, it is even more important than it has been that we do all we can to ensure that we close the tax gap.
As the hon. Gentleman again pointed out, and as the hon. Member for Amber Valley (Nigel Mills) also described in his speech, that is easier to say than to do: it is easier to speak in principle or theory about tax laws that work and are simple for everyone to understand, and that no one tries to game, than it is to bring them about. But just because it is difficult—some might say very difficult—it does not mean we should not keep striving. With the policies established after the credit crunch by my right hon. Friend, we have made considerable progress towards such an approach. I should be interested to learn how the new Government intend to build on the solid foundations left by the previous Government, and to take things further.
It is not morally acceptable for a small minority to think that they can opt out of their obligations if they can buy the right advice or pay for sophisticated tax avoidance products. It is about time for all political parties to adopt and voice that moral approach more. Like benefit fraud, tax evasion undermines the confidence of ordinary taxpayers in the legitimacy of the system. It should be far less acceptable, socially as well as morally—it should not be thought reasonable and polite—to admit in company to earning a living by helping well-off people and companies to avoid their tax liabilities in the jurisdictions where they operate. I do not say that the vast majority of taxpayers or tax accountants do that, but some do, and the practitioners in question probably know who they are. The hon. Member for Amber Valley is nodding, and we can talk to him later—he does not have to say anything on the record. We know the practice when we see it, and it should be far less acceptable morally, and in company, than it has been in the past. We need that switch to happen.
Dr Pugh
I accept entirely what the hon. Lady says, and her reference to the free rider principle. We can identify free riders, but it is rather like identifying people who do not pay their bus fare; it does not mean to say that there is an easy way to do it. I refer her to an interesting discussion at the Public Accounts Committee with the landlord of the Treasury, whose office is based, I think, in Bermuda. All the people we interviewed and all the senior staff enjoy the advantages of London society, and the benefits that that bestows on them, but avoid tax by virtue of having a name plate—well, a little more than that, but not much more—in Bermuda.
Ms Eagle
The hon. Gentleman will be able to discern from the tenor of my remarks that I agree with him.
I hope we all agree that the world has changed and that there will be no hiding place for tax cheats. The previous Labour Government had a record to be proud of and it is important that the momentum we managed to create should be continued, especially internationally. In 2004 we introduced a requirement to disclose tax avoidance products in advance, to a storm of protest. In 2009 we strengthened the regime, and that has transformed the fight against avoidance. As the hon. Gentleman explained, that protects more than £12 billion of revenue.
The March 2010 Budget made the disclosure regime broader, increased the penalties for non-compliance and gave Her Majesty’s Revenue and Customs access to more information on those who use the schemes. The package was designed to tackle tax avoidance, non-compliance and offshore evasion and to protect £18 billion of revenue. Last year HMRC identified £12 billion in extra tax due—another point to which the hon. Gentleman referred—seized £57 million in assets and £9 million in cash forfeitures and successfully prosecuted 171 cases. Will the Minister set targets or expectations in HMRC to increase the rate of prosecutions, and perhaps achieve better figures this year? We also legislated to give HMRC more effective powers to ensure that the sanctions it could use would be effective and proportionate. There are to be more onerous reporting restrictions in future for those who are caught evading tax of more than £5,000, and as the amounts evaded get higher the consequences under the current law for those who are discovered doing it get worse, and end up with naming and shaming.
Internationally, and as the hon. Member for Southport also recognised, as president of the G20 we led a global clampdown on tax havens and offshore evasion. That is an important aspect of what we must do if we are to close the tax gap. The hon. Gentleman mentioned in passing the 100 tax information exchange agreements signed by OECD countries in the past year, including those the UK has agreed with Jersey, Guernsey, the Isle of Man and, perhaps more interestingly, Belize. In 2007 the offshore disclosure facility gave the customers of five major banks the opportunity to put their tax affairs right, yielding more than £400 million in tax revenue due. Last year, as part of the Budget process, HMRC served notice on more than 300 other financial institutions to hand over details of those who cheat on their tax by hiding income in offshore accounts.
We also concluded the ground-breaking Liechtenstein disclosure facility, which is expected to bring in nearly £1 billion in lost tax revenue. That agreement goes far beyond the tax information exchange agreements we have been discussing, and could be a model for future agreements. I should be interested to hear what the Minister has to say about that. Under the agreement, UK taxpayers with money in Liechtenstein accounts must demonstrate that their tax affairs are in order, and must have letters to that effect from HMRC; otherwise, their Liechtenstein accounts are closed down. They must then settle with the UK tax authorities. Thanks to progress made by the previous Labour Government, there are fewer places for large amounts of money to be sent if Liechtenstein accounts are closed down, and there are fewer places to hide.
We also persuaded the OECD to develop best practice guidelines on country-by-country reporting, as was also mentioned earlier—an excellent initiative that was put on the agenda by the development community, and in particular Christian Aid, ActionAid and Oxfam. Tax evasion costs developing countries billions of pounds each year in lost revenues, and is a barrier to social and economic development and growth.
Ahead of next week’s emergency Budget, I want to ask the Minister a few questions. Will he recognise the excellent work that the previous Government bequeathed him in this important area, and tell us how he intends to build on it? Will he set a target for the tax gap; and what percentage of the fiscal consolidation that we all expect, given the softening-up process of the past few weeks, does he expect closing that gap to represent in the Budget? Will he maintain the hidden economy advisory group to inform that vital work? It was in the middle of extremely important work—particularly on creating routes back to legality for those who might have been in an illegal position, and to allow them to settle their tax.
Does the Minister agree that, in an international setting, maintaining the momentum to clamp down on tax havens and non-compliant jurisdictions is vital, and does he therefore share my disappointment with the perfunctory mention that the entire agenda received in the recent G20 communiqué? Why did it receive such a perfunctory comment at the G20 Finance Ministers’ meeting? I hope the Minister can reassure us that that does not mean this important area is to be less of a priority.
Does the Minister intend to pursue new disclosure facilities, similar to the ground-breaking example we have managed to negotiate in Liechtenstein; and what progress has been made between the UK and the authorities in Belize, given the recent signing of the tax information exchange agreement? How much lost tax revenue does he expect to raise as a consequence of that agreement? I look forward to his response.
Dr William McCrea (in the Chair)
Before I call the Minister, let me say—I do not think that I am out of order here—that we wish the right hon. Member for East Ham (Mr Timms) a speedy and full recovery, and that we look forward to him taking part in many debates in the House.
The Exchequer Secretary to the Treasury (Mr David Gauke)
It is a great pleasure to serve under your chairmanship, Dr McCrea. Let me begin by endorsing your words with regard to the right hon. Member for East Ham (Mr Timms). It was a great privilege to shadow him for a number of years, and I look forward to his return. I know that he has a formidable intellect and is a fine parliamentarian, so he will be a very testing person to have as a shadow. He is also a very good man, and I wish him well. I endorse the words of the hon. Member for Wallasey (Ms Eagle).
I congratulate my hon. Friend the Member for Southport (Dr Pugh) on securing this debate and on his excellent contribution. He has the benefit and experience of serving on many Finance Bill Committees. The second excellent contribution was from my hon. Friend the Member for Amber Valley (Nigel Mills), who, I suspect, will serve on many Finance Bill Committees. He brought great expertise and considerable practical experience to the debate.
We had a thoughtful debate on some of the matters relating to the general anti-avoidance rule, and I shall say more on that during the course of my remarks. The quality of this debate has been extremely helpful, and I am very grateful to my hon. Friend the Member for Southport for highlighting this particular issue, and for giving me the opportunity to say a bit more about tax avoidance and the tax gap.
I am grateful to the hon. Lady for her kind remarks in respect of my position. I had the pleasure of shadowing her to some extent. I did not directly shadow her position, but we served on Finance Bills together. She has demonstrated today that she is as tenacious in her Opposition role as she was as a Minister, and I hope to be able to answer her questions.
The issue of the tax gap, which incorporates tax avoidance but does not consist solely of it, is important for the Government. As earlier speakers have mentioned, it has been brought into even sharper relief by the dreadful state of the public finances, which we have inherited from our predecessors. As the hon. Lady pointed out, there is a public mood for people to do the right thing and to play by the rules, and that includes paying the taxes that are due under the law. Those who do not do that have very little public sympathy. The hon. Lady said that she felt that the previous Government are being traduced and unfairly criticised over their record. Although I would be the first to point out the failings of the previous Government with regard to the public finances, there are elements of both HMRC and the previous Government that I want to address in a fair manner, and their record is not all bad.
We are grateful to HMRC for publishing, for the first time, tax gap figures across all of its regimes in December 2009. It was the right thing to do and we welcome that greater transparency of information. Tax gap figures for VAT have been published for some years, but this was the first time that figures for direct taxes had been published. As we have heard, HMRC estimated the UK tax gap to be around £40 billion in 2007-08. That figure is net of the amounts collected through HMRC’s compliance activity.
The tax gap is the result of several different factors, ranging from tax evasion and organised criminal attacks on the tax system through to errors made by customers. One of the largest factors contributing to the tax gap is avoidance. Tax avoidance is estimated to contribute around 17.5%—around £7 billion—of the total tax gap. It is worth making that point at the beginning because, although those contributing to this debate today have not fallen into this trap, there is sometimes a conflation between the tax gap, which is a considerable figure, and tax avoidance, which is still a considerable figure but is only part of the £40 billion figure. None the less, £7 billion is a substantial sum, and this Government are determined to reduce it as far as possible.
As our coalition programme for government says, we will make every effort to tackle tax avoidance, which will include considering the Liberal Democrat proposals. I hope that my hon. Friend the Member for Southport will forgive me, but with the Budget in six days’ time, I do not intend to pre-empt anything that my right hon. Friend the Chancellor may say on that day. My hon. Friend rightly says that my previous responses in this area have been more like holding answers, and perhaps they have, but I hope, given the proximity of the Budget, that he will understand why. For that reason, and that reason alone, I do not intend to wander down the path of capital gains tax, which he gently mentioned. I have no doubt that my hon. Friend will be paying attention to what the Chancellor has to say next Tuesday.
I will say a word or two about the general anti-avoidance rule, which was well debated by both my hon. Friends. They managed to tease out some of the issues as well as outline some of the questions that have to be asked. The hon. Lady talked about the balance between principles and something that is much more targeted. One of the questions that we must consider is whether it enables us to reduce targeted anti-avoidance rules. Do we know the answer to that until we know what the attitude of the courts is? That is clearly something that is worth exploring. Does it require a clearance regime in order to make it work? If it does—in some countries it does and in others it does not—what resources will be necessary? My hon. Friend mentioned HMRC resources in that area. In total, HMRC has something like 17,000 tax professionals. Not all of them work exclusively on tax avoidance matters, but many of them do. There is a question, therefore, over how resources are deployed.
Nigel Mills
If the Minister was minded to proceed down that line, a clearance mechanism would be essential to avoid creating huge uncertainty for taxpayers. Having had much experience of dealing with the clearance system, I can say that it would take huge amounts of resources to deal with the amount of clearances that we would get for a general anti-avoidance rule. Almost everybody would want to get that certainty. In any remotely complicated transaction, there would be some element of doubt in the situation. There is a real risk in the case of a purpose transaction. For example, someone may say, “My intention here is commercial and not to avoid tax.” They want HMRC to write back and say, “Yes, we agree.” However, they would have to give a lot of information to achieve that response. There is a risk that if the transaction changes slightly, the claim becomes invalid, or that a hugely long and detailed inquiry would be needed covering many aspects and many different taxes, and that would take a huge amount of time and a lot of resources to complete, which will discourage the transaction from taking place at all.
Mr Gauke
I am very grateful to my hon. Friend for that intervention. At this point, given that we will have a Budget next week, I will say that there are a number of issues here. The Government are not hostile to exploring these areas. The coalition agreement is very clear in saying that we want to look at the Liberal Democrat proposals, which included a general anti-avoidance rule. However, my hon. Friend is right to raise some of the complexities and difficulties that may exist and that may need to be overcome. That is a debate that I think the Government, across the board, welcome and want to take forward.
Dr Pugh
Again, we have a situation where a proposal is put forward and, as it were, speculative possibilities that could result from that proposal are alluded to. Presumably in any process of investigation, however, one looks at how things actually pan out in the real world in other places. Clearly, if it was the case that, in every regime where a proposal such as this one was introduced, there was this massive clearance backlog, rather like the Independent Parliamentary Standards Authority—heaven forbid—one would never implement such a scheme. In fact, there is no obvious reason why a scheme such as the one that IPSA has should be as complex and as poorly managed as it actually is.
Mr Gauke
That tends to be the way of things now, I understand. There is a need for a sensible debate in this area, and today we have heard two excellent contributions, from my hon. Friends the Members for Southport and for Amber Valley, and I for one am very grateful for those contributions.
The hon. Lady raised a number of points and I hope that, in the course of my remarks, I am able to address those points. As far as building on the previous work undertaken by the previous Government and by HMRC, the underlying point that I want to make is that this Government take tax avoidance very seriously. We want to use HMRC’s resources as effectively and as efficiently as possible to ensure that we address this particular matter and so that those who do the right thing and who pay the taxes that are due do not find themselves essentially subsidising those who have not paid their taxes properly. Again, further details will be announced in the Budget.
The hon. Lady raised the specific point about whether one should have a target for the number of prosecutions in this area, and so on. That is perhaps more symptomatic of how the previous Government tended to work, which was on the basis of having targets. However, in the number of meetings that I have had with HMRC officials in the five weeks or so that I have been in my post, I have said that we take tax avoidance seriously. We want to work with HMRC in developing proposals on how we tackle tax avoidance and on how we deploy resources most effectively.
That will continue to be the Government’s position, including on tackling matters such as the hidden economy, which the hon. Lady rightly raised as an important area, and on working on the international stage and engaging with other countries in finding ways to exchange information more effectively. The hon. Lady highlighted the Liechtenstein agreement and that is one agreement that we welcomed in opposition and that we continue to support. I am not in a position to say anything more about particular matters today, for reasons that I am sure she will understand, but we continue to encourage HMRC to engage with other tax authorities to ensure that those people who should be paying tax in this country do pay tax in this country.
The hon. Lady raised the issue of greater disclosure. We support that. She referred to the disclosure of tax avoidance schemes. We think that that was a very successful initiative by HMRC and we wish to continue with that initiative and build on it. We will continue to encourage HMRC to engage with other tax authorities on double taxation treaties and tax information exchange agreements. I have shadowed Ministers in Committees on many statutory instruments on this particular matter and frequently asked how much these agreements will actually raise for the Exchequer, so I know that the answer is that it is not possible to provide the answer. Nevertheless, these agreements apply for Belize as much as for any other jurisdiction and we will continue to encourage HMRC to pursue those agreements and to look to progress as many of them as possible as quickly as possible.
Ms Eagle
In general, does the Minister view the Liechtenstein agreement, which is new, as an interesting model, in that it goes further than the tax information exchange agreements? I am not asking him to declare today which country is going to be next. I am just trying to tease out from him what he thinks about that approach, which was quite groundbreaking. We know the history of it, but something extremely effective came out of it. Does he see that general approach as a model that ought to be promoted around the world, to ensure that we begin to clamp down on jurisdictions and tax havens where people can hide money that is illegitimately held and untaxed?
Mr Gauke
I would say that there is something there for us to build on, and I think that that probably answers that question as effectively as I can.
The hon. Lady highlighted the issue of country-by-country reporting. Our view is that we certainly want to do everything we can to help developing countries to improve their ability to collect tax. The OECD informal taskforce on tax and development is currently exploring with non-governmental organisations and with industry whether country-by-country reporting would be effective in improving tax transparency. We shall certainly consider this matter very carefully to see what is the most effective way of doing things.
There is also something that the previous Government achieved, which the hon. Lady did not particularly mention but for which I think they deserve some credit, in ensuring that the tax capacity of developing countries can be improved. Again, we are certainly very interested to see what we can do to explore that issue.
Let me turn to one of the key points, which I think was raised by my hon. Friend the Member for Amber Valley, which is the need to do what we can to improve tax law so as to remove uncertainty. That is a very important point. We are committed to reforming the tax system to make it competitive, simpler, greener and fairer, and to ensuring that the quality of tax law is improved. The most effective way to tackle avoidance is, as far as possible, to stop it at source, rather than tackling it once it has happened. Prevention is better than cure.
A simpler tax system that presents fewer boundaries and complexities to be exploited is clearly preferable. As a Government, we are committed to making sure that, when we consider reforms to tax policy, we take into account from the start the impact on avoidance opportunities. We want a tax system that is noted for fairness and simplicity, and addressing tax avoidance risks is a key part of that.
Nevertheless, it is widely acknowledged, including by the Institute for Fiscal Studies, that tax avoidance requires a multifaceted response. There will always be taxpayers who attempt to achieve tax savings that were not intended by Parliament. We intend to be a reforming Government that put in place a better tax framework for business. As we do that, we will take the opportunity to construct a tax framework that reduces the risk of tax avoidance.
Of course, those are the longer-term objectives. In the short term, we will need to introduce specific targeted measures when an avoidance risk is identified. We will take that kind of action when it is justified, but our aim over time is, as far as possible, to move away from the need for short-term measures.
HMRC has published an anti-avoidance strategy that recognises that a range of responses is required. The strategy has three key elements: first, prevention; secondly, detection, and finally counteraction. Prevention focuses on developing robust law. HMRC clearly has a key role in recommending to Ministers changes to strengthen the legislative framework to defeat attempts at tax avoidance.
Another tool in preventing avoidance is deterrence. HMRC publicises details of avoidance schemes that it considers ineffective, to put taxpayers on notice that it will challenge their use of those schemes. For large businesses and the wealthiest individuals, HMRC uses real-time dialogue to obtain early information about transactions under consideration and influence behaviour. To be fair, progress has been made in recent years, and we welcome that. The regime for the disclosure of tax avoidance schemes, in particular, has proved invaluable to obtaining real-time intelligence on avoidance activity, as I acknowledged earlier.
Where HMRC detects avoidance, counteraction involves thorough and expert investigation and, where necessary, litigation. We believe that that range of responses strikes the right balance between providing certainty to taxpayers in their tax affairs and protecting the Exchequer against unacceptable threats to tax revenues. It also maintains flexibility so that the Government can respond quickly and in a targeted way where necessary. We also want to consider longer-term solutions to the problems of tax avoidance, and I hope that I will have all parties’ support as we do so.
Dr Pugh
The Minister has mapped out a strategy that we can all understand and appreciate. However, it would be helpful to know whether he has assessed the personnel requirements to fulfil that strategy. Are the staff currently in place in the Treasury, or will he need to acquire more? I ask because we are, obviously, in a time of head count reduction, and we do not want to remove the heads that are most useful in collecting tax revenues.
Mr Gauke
I am grateful for that intervention. My hon. Friend raises a perfectly fair point. Because of the crisis in the public finances, all parts of Government face great pressure to find savings. As we prepare for the spending review in the autumn, I have said to HMRC that I want it to focus resources on reducing the tax gap and achieving yield. I hope that during the months ahead, we can develop a strategy to ensure that HMRC has the resources that it needs in the right places to do so. Guaranteeing a certain yield or making estimates about a particular area of expenditure or the expansion of staff in a certain Department is not easy.
The hon. Lady acknowledged that there will always be a tax gap. To respond to her remarks, one can go only so far in making firm predictions about the tax gap reduction, as we must be sufficiently confident that any predictions will withstand the scrutiny of the Office for Budget Responsibility. However, that is not to say that I as a Minister am not keen to see what we can do to reduce the tax gap.
My hon. Friend mentioned the £120 billion estimate, although he did not necessarily say that he thought it was right. It is mentioned frequently among hon. Members and in the media. That figure was produced by the Tax Justice Network, or Tax Research LLP, which is essentially the same organisation. It is a striking figure, and is often repeated. It is very different from the £40 billion estimated by HMRC. The £120 billion figure has clearly focused attention on the matter, and that is no bad thing, but scepticism about it is widespread; indeed, I expressed some scepticism myself from the Opposition Benches a year or so ago. Given the disparity between the £120 billion and HMRC’s numbers, I have asked officials to review it.
It must be accepted that in preparing estimates, organisations external to Government have access to much less data than HMRC. The types of methodology available to them are therefore restricted. It is reasonable to assume that HMRC is clearly in a better position to make an assessment, but there is no reason why outside bodies should not contribute to the debate. However, having considered the methodology used to produce the figure of £120 billion, I must tell the House that even a brief analysis reveals that it is deeply and systematically flawed.
For example, Tax Research LLP estimates total revenue lost due to tax evasion at £70 billion. That figure is obtained by applying the percentage tax gap from VAT to direct taxes. There are two main problems with that. First, different tax regimes have different tax gaps. According to independent research by the OECD, for example, the operational experience shows that tax regimes such as pay-as-you-earn that withhold tax at source have far smaller tax gaps than other types. To apply the VAT gap percentage to taxes collected by PAYE or otherwise at source greatly overstates the tax gap, because the VAT tax gap is considerably higher.
Secondly, an element of double counting is involved, although, to be fair, that might not be apparent from the numbers used by Tax Research. The VAT gap already includes amounts due to tax avoidance and tax debt. Applying that percentage to direct taxes and then adding additional amounts for both avoidance and tax debt, as does Tax Research, results in the double counting of losses from the avoidance of direct taxes and non-payment.
The Tax Research estimate of tax debt is £28 billion. That is a snapshot figure of all tax owed to HMRC on 31 March 2009, which does not represent the actual losses to the Exchequer from non-payment. Almost all tax owed to HMRC is eventually paid, sometimes within days of becoming due. A proportion of debts outstanding are in staged repayment plans, such as those covered by the business payment support service. Only the tax debt written off as uncollectable by HMRC is an actual loss to the Exchequer from debt. That is therefore the amount that HMRC uses in its estimate of the tax gap, which in the 2007-08 tax gap figures was not £28 billion but £3 billion. Of course, we must take steps to reduce that figure further, and I am keen to encourage measures to do so, but we should get the number right.
The final and most significant point concerns tax loss due to tax avoidance, which Tax Research estimates at £25 billion. That estimate includes the use of legitimate reliefs promoted by the Government to encourage certain activities, such as capital allowances to encourage investment and research and development tax credits to encourage innovation. Tax avoidance is generally regarded as the use of legal structures and allowances to reduce tax bills in manners not intended by Parliament when enacting the legislation. It is simply nonsense to categorise as tax avoidance the use of allowances for purposes intended by Parliament.
If I have been unfair in setting out those points, I am sure that Tax Research will correct me, but that appears to be the methodology used. Furthermore, the Tax Research estimate does not provide HMRC with any credit for the significant amount of tax that it recovers by challenging avoidance schemes. The figure of £25 billion therefore seems somewhat wide of the mark.
I thank my hon. Friend for this debate. This Government take tax avoidance seriously. We must take every possible step to minimise tax avoidance. We cannot afford to let it undermine our efforts to reduce the deficit, and it is not fair that by deliberately creating schemes that avoid tax, some people pay less while the vast majority of the hard-working public pay their fair share. Action against tax avoidance will be a priority, alongside improving the tax law-making process, introducing robust legislation and targeting HMRC counteraction and investigation.
Bullying (Schools)
(13 years, 10 months ago)
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Annette Brooke (Mid Dorset and North Poole) (LD)
I start by congratulating the Minister on his appointment. We have had many exchanges in different guises, so this makes a little change today. I am extremely pleased to have secured the debate, so that I can raise further issues relating to the tragic case involving one of my constituents and also by chance—this is very timely—raise further awareness of a recent report from Beatbullying.
The significance and impact of bullying are undeniable. Indeed, it was the most frequently raised issue in calls to ChildLine in 2008-09, with a total of 26,134 calls. I am sure that that remains the case. There were considerably more calls from girls than boys, and it has been pointed out to me that boys possibly wait until they are very desperate before seeking help. Interestingly, the latest research from Beatbullying suggested that there was a higher tendency towards suicide among young girls aged 10 to 14, with 65% of bullying-related suicides committed by girls. Beatbullying concluded that bullying accounted for up to 44% of child suicides and further estimated that the actual number over a nine-year period could be as high as 78 in the 10-to-14 age group. There are undoubtedly many more cases in the 16-to-19 age group.
In the report, Beatbullying notes that in every child suicide case related to bullying, school was cited as the main place of persecution. In four cases, cyber-bullying, in which bullying takes place online by e-mail and on social networking sites, was also named as a factor leading to a child taking their own life.
The Minister will be aware that Beatbullying is campaigning for greater openness about and research on the causes of child suicide, so that our society can better understand why children feel driven to take their own lives. We can reflect on the depth of the issue with the number of tragic suicides, but of course if we add in the acute misery caused by bullying but not resulting in suicide, we are looking at simply enormous numbers. How many people in this room can remember not being able to sleep at night as a child because of cruel verbal bullying? I certainly can.
Parentline Plus, which receives thousands of calls and e-mails from parents concerned that their child is being bullied, points out that not only can bullying be harmful to children in both the long and the short term, but parents whose child is being bullied often also find the situation very traumatic and difficult to manage.
We shall never eliminate bullying, but we can do better. I visit schools and see excellent work with peer mentoring and other schemes. I have been very impressed by the work of CyberMentors. I understand that since its launch in March 2009, more than 600,000 young people have used the site. There is a great deal of excellent work by the voluntary sector—I apologise for mentioning only a few organisations by name today—and I ask the Minister to do all that he can to protect the funding of effective anti-bullying schemes. Indeed, we need to aim to have such schemes in all schools and, of course, to protect funding for services such as ChildLine and Parentline.
Like many other people, I am heartened by the coalition’s commitment to help schools to tackle bullying, especially homophobic bullying, but today I am hoping that the Minister will outline exactly what his plans are. Consistent recording by schools of instances of bullying is very important, but what action should follow on from that recording? Having policies in place is all-important, but what checks are there on their implementation? Should a specific governor have prime responsibility for this area? Is there a lead teacher, well trained in dealing with all aspects of bullying? What checks will there be on outstanding schools, which will not be inspected regularly in the future and could become academies? In the case of academies currently and in the future, who do parents complain to if they feel that the school is not responding to their concerns?
Often, we attribute the reasons for being bullied to some difference from others. Perhaps a child or young person has special educational needs. Autism comes immediately to mind. The behavioural characteristics and social naivety that accompany the autism spectrum disorders—for example, overly formal speech, unusual behaviour and obsessive interests—can make pupils with autism very vulnerable to bullying. Pupils with autism are particularly vulnerable to backhanded bullying, because they take friendship at face value and find it difficult to discern ulterior motives. It is the case that 40% of parents who have a child with autism say that their child has been bullied. The figure is even higher for children with Asperger’s syndrome, rising to 59%.
I should like to refer to a few stories from the Parentline website.
Mr Robert Buckland (South Swindon) (Con)
For children and young people with autism and related disorders, systematic bullying in schools can often lead to mental health disorder as well. The two conditions often run in a coterminous way. I wonder what the hon. Lady thinks about my view that schools, particularly mainstream schools, may need to develop more awareness of and more policies on autism and related conditions among students and pupils in their establishments.
Annette Brooke
I thank the hon. Gentleman for his intervention; I agree with his sentiments. This is a question of having a well trained work force all the way through. I become concerned when we talk about cutting the length of training courses, because we must allow more time for training in special educational needs across the board.
One parent said:
“My daughter is different—I think she has ADHD”—
attention deficit hyperactivity disorder—
“or autism, she just doesn’t seem to be OK around people. She is loving and trusting but the girls at school are tormenting her. She doesn’t complain—she goes back for more because she is desperate to make friends.”
Another person said:
“My granddaughter has been bullied over the last year at school and it got so bad that she took an overdose and was lucky to be alive…it took a long time for her to be gently integrated into school again but she was just getting on better and there was another incident this week where girls were threatening her. She has not been back since”.
The girl is now in a terrible situation: does she stay away from school and have her parents risk prosecution, or is she sent to school for more unhappiness?
I have a case in my constituency in which the parents in the end removed their child from a secondary school because they lost all confidence in the school dealing with the bullying that the child, who had autism, was facing. In sheer desperation, many parents end up home educating because of the bullying that their children experience, so support for home educators, not legislation and regulation necessarily, is all-important.
I have received a representation from the Juvenile Diabetes Research Foundation, which is calling on the Government to do more to raise awareness of type 1 diabetes after a survey revealed that a high proportion of children with diabetes are bullied. There is evidence that young carers are bullied. The list goes on and on with health conditions and disabilities, home situations and homophobic bullying. Homophobic bullying is worryingly prevalent. The issue affects all young people in every type of school. Just like other forms of bullying, it continues beyond the school gates on school transport and into young people’s homes through cyber-bullying with mobile phones and the internet.
Recent research by Stonewall with significant numbers of young people and teachers across the country concludes that homophobic bullying is almost endemic in Britain’s schools. Almost two thirds of young lesbian, gay and bisexual pupils have experienced direct bullying. Half of secondary school teachers who are aware of homophobic bullying say that it happens outside school premises. Secondary school teachers also say that homophobic bullying is the second most frequent form of bullying, and one in five say that pupils who experience it are subjected to cyber-bullying.
It is a complex subject, but we also have to look at the other side of the coin: the bullies, and the parents of bullying children. The parents of children who are being bullied often feel that too much attention is given to the bullies in schools, but, clearly, we have to tackle such behaviour. Why is it occurring?
As part of a programme of work to tackle bullying in schools in Stevenage, Parentline Plus works with the families of children who display the challenging behaviour of bullying. The project is enormously successful, and the organisation believes that part of the solution to bullying is providing parenting support to the families of children who bully, so that they can help their child change their behaviour.
The constituency case I wish to refer to involves a young man who was extremely good at sports, which was perhaps his difference. I must stress that the incident did not actually take place in my constituency—the parents have moved into my constituency. Ben, aged 11, committed suicide after being persistently bullied on a school bus taking pupils to and from school in a rural area. The bus driver joined in the verbal bullying.
Ben’s parents now live in my constituency, and I have been supporting them as they pursue changes so that, hopefully, a case like Ben’s will never arise again. They repeatedly raised the problems with the school, the local authority and the bus company before the dreadful tragedy occurred. Ben’s father asked what other situation exists in which an adult who is expected to be responsible for 50 or more children receives no training and has nothing more than a Criminal Records Bureau check.
In rural areas, children can be on a school bus for periods of an hour or more. When schools take pupils on educational trips, they are required to carry out risk assessments, provide first-aid cover and ensure the appropriate ratio of adults of the appropriate sex to pupils. Local authorities are expected to provide transport for school children, and there is a great deal of difference in provision among the various authorities. There are excellent authorities, yet our experience with what happened to Ben shows that some local authorities expect the bare minimum from their transport providers.
Mr Edward Timpson (Crewe and Nantwich) (Con)
The incident of bullying on a school bus that the hon. Lady describes is tragic, but, sadly, it is not an isolated one. I had a constituent whose son was the only child on the school bus who, because he was outside the catchment area, had to pay for the travel, so he always had to be last on to the bus. He was bullied as a result, and the parents had to withdraw him from the school. Does she agree that the role that the bus companies play in the strategy for dealing with bullying must be much more prominent when the local authority provides guidelines and contracts for how the bus companies go about their business?
Annette Brooke
I do agree with that, and I shall go on to elaborate on it.
The Department for Children, Schools and Families, as it then was, produced guidance in “Safety from Bullying on Journeys”, which highlights good practice. One of the schools mentioned, Purbeck upper school, is in my constituency, so I shall mention it briefly. Over 67% of the students travel to school by bus—it is a rural area. The students themselves did a survey. They worked with absolutely everybody and held a consultation. The issue was taken seriously by the student parliament, which came up with a travel plan. It drew up a student bus conduct code, which is obviously very good practice.
Despite all the work that has gone on and the new guidance, my constituent Mr Vodden continues to be concerned with the bad practice. He asks why we do not name all the authorities with bad practice.
Earlier this year, I carried out a survey in conjunction with 4Children on local authorities and their policies. It is one year on from the publication of Government guidance on tackling bullying on journeys, yet our survey shows that the majority of local authorities still do not have a safer travel policy in place.
The guidance states:
“Local authorities have a key role in co-ordinating the anti-bullying activities of partners in their area to ensure an effective joined up approach.”
The document goes on to state that the first key step is for relevant stakeholders to agree a safer travel policy.
However, the figures from the research say it all. Of the 67 local authorities that responded—quite a high number, for a long questionnaire—60% did not have a safer travel policy, and 52% did not have a safer travel team. Of those local authorities that did have a safer travel policy, only 50% said that it covered all forms of bullying, and only 38% said that it covered all forms of journey. The survey revealed what I had long suspected: paperwork and policies may well be in place but implementation of strong anti-bullying policies is not consistently happening, particularly for bullying beyond the school gates.
It is so important that as a society we learn the lesson that bullying must be tackled at all levels, and that appropriate training must be given to everyone involved, including school bus drivers. The implementation of anti-bullying policies outside the school gates has been incredibly slow, with many local agencies still not working together as well as they could. We must drive up efforts to stamp out bullying outside as well as inside schools to protect children from a daily misery that can lead to the tragic outcomes with which I began.
For a start, directors of children’s services, head teachers and governing bodies must have greater awareness of all the guidance that exists on bullying outside the school gates. I look forward to the Minister’s responding to all my concerns about bullying, both in and out of school. I am sure that he will tell me that we will never eliminate bullying, but I hope he will agree that we can and should do much better on the issue.
The Minister of State, Department for Education (Mr Nick Gibb)
I thank my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) for her kind comments. It is nice, after all these years, to call one another “honourable Friend”. I congratulate her on securing this important debate.
Tackling poor behaviour both in and, as my hon. Friend pointed out in her compelling remarks, out of school is one of this Government’s top priorities. I know that she has been a tireless advocate on this issue in her constituency and in championing the work of 4Children, Beatbullying—a charity I know very well—and others to improve pupils’ behaviour in the wider community.
Our coalition agreement places a sharp focus on robust standards across the education system, the highest quality of teaching and high standards of discipline in the classroom. Poor behaviour is a real concern. Pupils cannot learn if they are late to class or if their lessons are disrupted. Teachers do not want to stay in the profession if they feel intimidated by poor behaviour. Parents need assurance that their child’s school provides a secure, happy environment in which their child is focused on their education. However, the fundamental driver for dealing with poor behaviour is the impact on pupils themselves. The disruption and distress caused by bullying can be very damaging, as my hon. Friend said. Education is important, but children’s safety is paramount, so we have made an explicit commitment in the coalition agreement to help schools to tackle bullying, especially homophobic bullying.
As my hon. Friend said, the problem is not confined to the classroom. There has been much recent media coverage of extreme cases of poor behaviour, linking bullying to suicide. She cited the statistics and research produced by Beatbullying, and spoke about how bullying has directly affected some of her constituents. I, too, have met Paul Vodden, the father of Ben. The case of his son, who tragically committed suicide as a result of bullying on a school bus, highlights the catastrophic effects that bullying can have and the urgent need for action.
As my hon. Friend the Member for South Swindon (Mr Buckland) pointed out in his intervention, bullying can lead to serious mental health problems, and children with special educational needs can be particularly vulnerable to it. The Department for Education, through the anti-bullying alliance, is looking at the most effective way to deal with the bullying of children with special educational needs and disabilities. Although guidance on bullying on school transport was produced in April last year, we will look closely at the issue as we review the work on bullying and behaviour more widely. This is a top priority for our Government and, as my hon. Friend the Member for Mid Dorset and North Poole said, there is much room for improvement.
In a survey last year, 28% of pupils said that they had been bullied in the last year and 59% said that they feel that their schools deal with bullying well, which prompts questions about the other 41%—the four in 10 who feel that their schools should be doing more. Currently, a raft of guidance advises schools on anti-bullying policies, written policies and specific forms of bullying. It is lengthy and confusing, so we have asked officials to sharpen and strengthen it to ensure that it has practical value and, as my hon. Friend points out, is implemented in our schools. We also need to make sure that the law is clear so that teachers feel confident when they use the powers that Parliament has vested in them.
Schools have a duty to prevent and tackle bullying but in tackling bullying they need to address the specific problems that their schools face, based on intelligence about what is driving bullying and where it is taking place. I recently visited a school where pupils were desperate to get home at the end of the day and did not take part in any of the school’s extracurricular activities. The reason they were hurrying home was not that they wanted to watch “The Magic Roundabout” or “The Flintstones”, but that they were thirsty. Further investigation revealed that the reason they were thirsty was that they were not drinking any water during the day because they did not want to go into the school toilets where the gangs were hanging out. That problem was relatively straightforward to solve once it was known what was happening. Building that awareness and sharing information within the school is very important so that teachers know what is going on in their school.
We also need to be sure that teachers can confidently and effectively deal with poor behaviour. Trainees on initial teacher training routes need to demonstrate that they have met certain standards, including standards relating to discipline, behaviour management and bullying.
Andrew Percy (Brigg and Goole) (Con)
The Minister is talking very eloquently about the need to ensure that proper training is in place and I fully support that, but we also need to ensure that, once teachers have been trained and are in post, the pressures on them from above do not work against dealing with bullying. At present, the exclusion targets, the emphasis on social inclusion and the pressure on teachers within schools in some cases almost to deny that there are any behaviour problems work against the interests of the school and ultimately against the interests of pupils. We have to make sure that teachers feel able to deal with the problems and that means having proper powers in place to ensure discipline.
Mr Gibb
I am grateful to my hon. Friend for that important intervention. He is absolutely right. One of the things that I have discovered from visiting schools is the importance of support from the head teacher for teachers, so that when parents come into the school to complain about a teacher, the head supports that teacher—certainly unless there are serious allegations. If teachers do not know that they have the backing of the head teacher, it makes their job twice as hard as it need be.
We have committed in the coalition agreement to
“give heads and teachers the powers they need to ensure discipline in the classroom and promote good behaviour.”
We will introduce legislation in the autumn that will give teachers the right to remove disruptive children from the classroom without fear of legal action and give them greater powers to search pupils for particular banned items. The list of banned items will be extended beyond the list that my hon. Friend the Member for Mid Dorset and North Poole and I discussed during the Committee stage of the last couple of education Bills that went through the House. There will also be no-notice inspections for schools where behaviour is a serious problem.
All schools must look at behaviour and not be complacent. It is not always a given that poor behaviour happens in the most challenging areas. Over the past five years, I have visited nearly 300 schools around the country. I have been to schools in very affluent areas where behaviour is a real problem because the processes and policies for dealing within bullying are simply not sufficient. Sometimes, as my hon. Friend said, those policies are not implemented on the ground. It is all very well having them written down, but they have to put into practice. In contrast, a school such as Mossbourne community academy in Hackney—one of the most deprived parts of London—has an immaculate behaviour record.
In its inspection framework, in relation to behaviour, Ofsted draws a clear distinction between good schools and outstanding schools. In good schools, pupils are compliant with the rules, fearing the consequences if they misbehave; but in outstanding schools, pupils do not just comply, but take responsibility for their own behaviour. That is the gold standard that I am sure my hon. Friend and I both want to achieve throughout schools in this country.
I had lunch fairly recently with some pupils in the school canteen at Mossbourne academy, and I asked them about bullying. They told me that bullying does not happen in their school and said, “We’re not allowed to engage in verbal bullying.” They volunteered that information to me, which showed an acute awareness of what constitutes bullying and its impact on others. When such an approach works well, the effects are often seen in the wider community, too. On becoming an academy last September, a school in my constituency introduced a new blazer and tie uniform and shaped a clear ethos and identity for the school. Pupils’ behaviour improved in the school to such an extent that it was noticeable in the town. People have commented to me about the behaviour of young people in the town since the school had adopted that new approach to behaviour.
We must be clear about responsibilities outside schools. Under the Education and Inspections Act 2006, schools have powers to take measures to regulate the conduct of pupils off-site, including journeys to and from school. The best schools take that responsibility very seriously and use those powers when appropriate. A head teacher in Cumbria told me that he felt responsible not just as a head, but as a member of the local community. Any poor behaviour that he heard about in, say, the town during the weekend, he took up with pupils first thing on the Monday morning, and because it was a tight-knit community, he could often trace and track the perpetrators of the poor behaviour. Such behaviour creates a bigger challenge if the school is situated in a larger, urban city such as London, but the answer to the problem must be partnership.
Justin Tomlinson (North Swindon) (Con)
The Minister has set out some excellent actions to take within the school environment and now he is touching on actions to take outside that environment, such as on journeys to and from school, which the hon. Member for Mid Dorset and North Poole (Annette Brooke) spoke about; but does that apply also to social network sites and cyber-bullying, which are not under the direct control of schools or teachers?
Mr Gibb
I am grateful to my hon. Friend for raising such an important issue. Dealing with cyber-bullying is important, and we are working with industry to make sure that, when offensive material appears on a social network, it is removed instantly. There is good guidance for teachers on how they should tackle incidents of cyber-bullying that are reported to them.
Annette Brooke
When a parent makes a complaint about bullying to the school and that bullying has taken place on the school bus or outside the school, what will definitively trigger the school taking the complaint seriously? Such behaviour is out of sight, so it is easy to ignore it. The essence of Mr. Vodden’s argument is that the problems were not taken seriously.
Mr Gibb
My hon. Friend hits the nail on the head. My sense is that when schools do not take such matters seriously, that is a symptom of a deeper problem with the management of the school. I suspect that if we undertook a survey of schools’ attitudes to reports of poor behaviour from parents, we would see a direct correlation with the standards in those schools generally. We have to raise standards in the way schools are lead throughout the country. That is what we hope to achieve in our general policy of trusting professionals more and giving them more autonomy and more freedom to run their schools as they see fit. I believe that if we can get away from the culture that exists in some areas, we can reach a position where that professionalism means that every aspect of the school is run more professionally and that complaints are taken seriously by head teachers and teachers. It is also important to ensure that teachers understand their own powers and responsibilities, which is what we want to sharpen up and focus on when reviewing the guidance.
We believe strongly that there is a duty not only in schools but in local authorities to safeguard and promote the welfare of children. It is a collective responsibility that must be shared by those in the community, including the school, the staff of children’s services, the police, transport providers and so on. Sharing the responsibility among services is vital.
This has been an important debate. School and the routes to and from school—indeed, anywhere that pupils congregate—should not be places of dread, but places where children can feel safe, confident and focused on their education. The Government are committed to reducing bullying significantly and to securing for generations to come the progression, knowledge and supportive educational environment that will provide pupils with a platform for future success.
Electoral Administration Reform
(13 years, 10 months ago)
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Meg Munn (Sheffield, Heeley) (Lab/Co-op)
It is a pleasure to have you in the Chair today, Dr McCrea. I am delighted to have secured an Adjournment debate this afternoon on the reform of electoral administration. Before I start, I wish to congratulate the hon. Member for Forest of Dean (Mr Harper) on his new role in the Government and wish him well in his post. I hope he will be able to respond to my concerns and lay out the Government’s proposals for the reform of this important part of our democratic system.
Electoral administration sparked much discussion following incidents that arose during the recent general election. In total, many hundreds of people were denied their vote—something we should take seriously and should ensure cannot happen again. In my constituency on election day, a number of people were unable to fulfil their democratic right to vote. At one polling station in Woodseats, people who were queuing to vote in the general and local elections were turned away at 10 pm and the doors were locked, not because they had turned up late or were not on the electoral register, but because of administrative blunders. That polling station was responsible for 2,772 electors, but it had been allocated only one presiding officer and two poll clerks to officiate. The acting returning officer later disclosed that there had been queues throughout the day and that extra assistance had been provided, but obviously not enough. The problem of queues and people being turned away was repeated at three polling stations in the neighbouring constituency of Sheffield, Hallam, as well as in Chester, Hackney, Leeds, Lewisham, Manchester, Newcastle and Islington. Similar problems were seen across the country, which points to a problem in administration greater than that found in just one location.
Both the Electoral Commission and Sheffield city council undertook reviews into what happened on 6 May to find out why those problems were not anticipated. Each review investigated the processes that led to the deplorable challenge to the democratic system, and indicated possible changes for the future. The Electoral Commission review concluded that the substantial queues at a number of polling stations on 6 May came about for a wide variety of reasons. The most common factor was poor planning and an inadequate system, specifically
“unrealistic, inappropriate or unreliable assumptions; inadequate risk management and contingency planning”.
In addition, a number of reports suggested that many polling stations were not adequate venues for a continuous flow of voters.
Some polling stations where voters had difficulty were responsible for more than 3,000 people, while others had as many as 4,500 possible voters. That is contrary to the guidance issued, which indicates that numbers should not exceed 2,500. Guidance also recommends that, in addition to the presiding officer, there must be a poll clerk for the first 1,000 electors and one further poll clerk for the next 750, with an extra necessary for the maximum of 2,500 electors. Across constituencies, the Electoral Commission found that there were various levels of staffing. Some provision was effective; other provision, of course, was not.
The Electoral Commission heard that almost all the areas that reported problems with queuing had higher levels of turnout than expected. Some advised that polling staff were simply unable to cope with the demand. A contributing factor, certainly in Sheffield and a number of other areas, was the combination of local and general elections, which of course slowed the whole operation. Even where extra staff were deployed, the problems were not always resolved, even when several hours’ notice was given. A common problem was that polling station staff were not always clear regarding when they should contact the acting returning officer to ask for help; and when they did ask for help, it did not always result in prompt, decisive action. The Electoral Commission was made aware that in some areas, after the close of poll at 10 pm, presiding officers continued to issue ballot papers to people who were queuing within the polling stations. Legislation is clear that no ballot papers should be issued after the close of poll.
The Electoral Commission review concluded that there are a number of areas where change is needed. The time allowed for voting is generous—15 hours in general elections—but the rules for close of poll are restrictive and leave no leeway to allow people who have made the effort to vote to do so. The commission found that there would be benefits if the rules were revised, and that those within the polling station at its closing should be able to vote. That, I understand, requires primary legislation, and I urge the Government to ensure that that happens as soon as possible.
Dr Alan Whitehead (Southampton, Test) (Lab)
I am interested to hear my hon. Friend’s account of the problems that arose, and the role of the Electoral Commission in putting right a number of those and wider problems. On the question of the close of poll, does she accept that a one-clause Bill is perhaps required to amend the Representation of the People Act 2000 and thereby put things right? That should not be confused with wider reform of electoral administration, such as constituency management and individual electoral registration. Will she urge the Minister to say whether he will consider the early introduction of a one-clause Bill to put that right—perhaps in this Session—ahead of any wider review of the administration of the Electoral Commission that might take place?
Meg Munn
My understanding is that it is a relatively simple, straightforward matter, but that it does require primary legislation. Perhaps the Minister can give us more information. It seems that it could be resolved relatively easily, so that the problem of people waiting to vote at 10 o’clock should no longer arise.
Andrew Percy (Brigg and Goole) (Con)
I congratulate the hon. Lady on securing this important debate. The problem in my constituency was not so much voting on the day, but the issuing of polling cards telling people when to apply for a postal vote, which appeared way after the deadline actually printed on the cards. People in my constituency were disfranchised in a different way. I agree with everything the hon. Lady has said, but such legislation should include a provision that polling cards must be sent out before the deadline for postal votes.
Meg Munn
I am very interested to hear that, as I was not aware of that issue. Later, I will address a different way that that issue could be resolved.
Local authorities and acting returning officers should review their planning to ensure adequate numbers of polling stations and adequate staffing, and address the question of their location. Those local reviews should obviously reflect on the individual problems identified during the May elections, including the one just raised by the hon. Gentleman. I understand that the Electoral Commission will give more prescriptive guidance on those issues.
We should take the opportunity to modernise comprehensively this country’s electoral administration. We should ensure that we obtain a professional electoral administration that takes into account the recommendations made in the commission’s August 2008 review of administration. The Government could consider changes, such as advanced voting in a suitable location—for example, the town hall—for up to five days before election day, and perhaps a trial of weekend voting.
Justin Tomlinson (North Swindon) (Con)
When I was a councillor in Swindon, I was elected in all-postal elections and in elections involving internet and telephone voting—a form of advanced voting. Those very successful pilots took place over two years, and I would like to see that system introduced, as it would reduce the numbers coming through on the day.
Meg Munn
The hon. Gentleman raises an interesting point. Clearly, we should learn from those processes. I know there have been concerns about fraud, but I think all approaches should be examined. I am suggesting that people could vote perhaps just in one central place in the days before the election, in order to give another option and reduce the number of people turning out on election day.
Compiling the electoral register must be a higher priority, and acting returning officers must receive the resources necessary for that to be done. We know that many people—perhaps as many as 3 million—are missing from the register. It is time for greater effort to be put into producing accurate records. Local councils must use all available data banks to get electoral registers up to date, such as council tax lists and information from other local services—Sure Start, for example—that offer services to people who are otherwise hard to reach.
I also propose that the Electoral Commission be given a power of direction. At the moment, it can advise but cannot direct local authorities. There is no way to intervene if there is poor decision making at the local level, and a power of direction might be able to deal with the issues raised by the hon. Member for Brigg and Goole. The commission could look at what happened, make recommendations and direct so that it did not happen again.
Wider issues need to be addressed. I found on the campaign trail—I am sure this was also true for other Members—that many young people did not know how to vote, where to go, or how to find out about that basic democratic right. We should use advertising much more to reach out and inform people about the basics of voting. A 20-second advert could be sufficient to encourage more first-time and new voters to get out and vote. Too many people are afraid of looking silly by having to ask how to vote at a polling station; a quick advert could resolve that.
The Electoral Commission ran a successful campaign aimed at young people and students, using brands such as Kiss, Heat and Closer magazines, and 4Music. The message was, “Don’t be part of the silent generation,” and it encouraged young people to register to vote. The campaign resulted in some 540,000 registration forms being downloaded or posted, 2.3 million visits to the About My Vote website and 53,000 calls to the commission’s call centre.
We should also look at the design of ballot papers and how candidates are presented on them, an issue I have raised before in the House. In its 2003 report, the Electoral Commission stated that a randomised system for the names of candidates was the most attractive option, rather than an alphabetical system that provides an advantage to candidates with surnames beginning with A or B. I am sure my hon. Friend the Member for Southampton, Test (Dr Whitehead) agrees with that. When testing that approach, the commission also recommended that grouping party candidates together could assist both the electors and counting clerks.
As a Labour and Co-operative candidate, I faced an entirely unexpected issue during the general election. It became clear, just as nomination papers were due to be filed, that candidates standing for two parties could not use a party symbol. I had to choose whether to use one symbol and describe myself as standing for only one party, or to not use a symbol and use the names of both parties. That has not previously been an issue, and I have never had a problem before in describing myself as a Labour and Co-operative candidate. Indeed, I have been a Labour and Co-operative Member of Parliament throughout my time in the House. Legislation needs to be amended to ensure that Labour and Co-operative candidates can present themselves to the electorate in a clear way.
The method of challenging an election result—fortunately, I have never had to follow that path—is complicated, expensive and antiquated. Although I do not want to encourage frivolous attempts to frustrate the democratic process, I want the laws governing the electoral system to be understandable and easy to follow if the need to challenge arises.
We need an election administration system fit for the 21st century. The current system was designed when fewer than 5 million people had the vote; now, we have more than 44 million electors. Being able to vote is a fundamental part of our democracy. I understand—as I am sure the Minister does—the frustration and anger of those who were unable to exercise the most basic democratic right of giving their vote to the candidate of their choice. We cannot rewrite the past, but we can use this opportunity to ensure that the administration of our democratic system is brought up to date, and that we not only enable all our citizens to register and vote, but encourage them to do so.
Dr William McCrea (in the Chair)
I call the Minister, Mark Harper, who seems to be very popular in Westminster Hall today.
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
I am grateful, Dr McCrea, for my third Westminster Hall debate this week and the second under your chairmanship today. It is, however, slightly less popular than this morning’s debate, when almost 50 Members of Parliament turned up to talk about something completely different.
I am grateful to the hon. Member for Sheffield, Heeley (Meg Munn) for securing the debate, which gives us the opportunity to discuss some important issues, and for her kind and generous words at the beginning. She raises some important issues, and she will know that the issues in her constituency at the close of poll also affected the constituency of my right hon. Friend the Deputy Prime Minister, who has taken a close personal interest in the matter. Indeed, we discussed it when he and I met the chair of the Electoral Commission earlier this month. The hon. Lady can therefore rest assured that close attention will be paid to what we need to do as a result of the commission’s recommendations.
It is worth reminding hon. Members of the need to be clear about the role of the Government versus that of returning officers and the Electoral Commission, for a sensible reason. Clearly, the Government have no role in the administration of elections on the ground, which is what independent returning officers are for; we need to remember that there are good reasons for that. The Electoral Commission is also not responsible for running elections on the ground, but as the hon. Lady correctly says, it has a role in providing guidance for the people who run them.
It is worth setting out for clarity what the law says about the end of polling. The law is clear: ballot papers cannot be issued after the close of poll at 10 o’clock. Courts have considered the situation where people have turned up just before the deadline but were not able to cast their vote. It is clear that once someone has been issued with a ballot paper, they are allowed the time to cast it, even after 10 o’clock. After that time, no one should be issued with a ballot paper, even if they are inside the polling station. That is clear; the law has not changed. The guidance was also clear, and apart from a change in the close of poll from 9 pm to 10 pm, the law on when voting ends has not changed since 1949. It is therefore surprising that returning officers were not clear about what to do in those circumstances.
The Electoral Commission has issued an interim report on the matter, and one of its recommendations, which the Government are considering, is to look at whether the law should be changed so that electors in a queue before 10 o’clock should be issued with a ballot paper. That raises a range of issues regarding how the queue is managed and what resources will need to be put in place. There are constituencies, such as my own, where there could be nearly 90 polling stations, so clearly there are some issues with resources if we had to put in place provision for queue management at all the stations. There are a number of concerns, but the Government are considering them carefully, and we will decide whether to include the recommendations in our parliamentary reform Bill, which is scheduled for later this Session.
The hon. Lady mentioned the case of Woodseats library in her constituency. What happened in a range of situations in her constituency, that of my right hon. Friend the Deputy Prime Minister and elsewhere seemed to have been driven largely by poor planning. Returning officers either had too many voters in one polling district or did not staff the districts properly.
The hon. Lady highlighted an issue of the combination of polls for local and general elections, which seemed to take people by surprise, and where there was a underestimate of the turnout.
Mr John Leech (Manchester, Withington) (LD)
I welcome the Minister to his position on the Government Bench.
The Electoral Commission’s report highlighted one of the causes of the queues, which was that explanations had to be given to a number of people on why they were eligible to vote in the local elections but not in the general election. Early-day motion 1, which stands in my name, suggests a practical step to ensure that queues are kept to an absolute minimum on election day: we can make sure that a general election does not take place on the same day as another election. That would solve many of the problems related to the difficulty of explaining to people who do not realise that they can vote only in one election and not the other.
Mr Harper
The hon. Gentleman makes half a good point in that he puts his finger on what caused some of the delays, but allowing that to drive whether we have combined elections would be letting the tail wag the dog.
Returning officers would need to consider the problem of combined elections, which happen in many parts of the country perfectly successfully. In my constituency, the two previous general elections coincided with county council elections, and there were no problems. It is necessary for acting returning officers to think about these issues. They know from the register those areas where many voters might be entitled to vote in one set of elections but not the other—perhaps a general election but not local or European elections. It will be for them to consider whether there are many people with different franchises in their area, and to estimate how much time that will take and plan accordingly. The hon. Gentleman is right to say that not taking that into account led to some of the issues highlighted by the Electoral Commission. However, saying that we should not have two elections on the same day is not the solution.
Mr Leech
I thank the Minister for giving way a second time. The reality is that in Manchester, Withington the turnout was about 62%. That is still low by some standards, and significantly lower than in the Minister’s constituency. If for some reason the turnout had been as high as 70% or 80%, as it was in some constituencies, literally thousands of people would not have been able to vote. That cannot be allowed. One practical way to prevent it from happening again would be to ensure that the general election was held on its own, as a single election.
Dr William McCrea (in the Chair)
Interventions on the Minister must be short, if they are to be allowed.
Mr Harper
The Minister will try to ensure that his answer is shorter than the intervention.
The hon. Gentleman makes a good point; it should be heard not only by his returning officer but by returning officers across the country. However, most parts of the country have local elections almost every year. Another factor is that splitting up the two sets of elections would hugely increase the cost of holding them. As I said, the better solution is to ensure that returning officers think about such matters and plan accordingly, ensuring that they staff the elections properly and have properly sized polling districts. Those are all matters within their control. That is a more sensible solution.
Justin Tomlinson
On the specific point about evenly sized polling stations, we must also take account of the demographics of polling stations. In my constituency of North Swindon, the problems occurred in areas where there were predominantly younger families and working professionals, who voted in particularly high concentrations between 5 pm and 10 pm.
Mr Harper
My hon. Friend makes a good point. He spoke earlier about internet and phone voting. I am familiar with some of the e-voting processes that took place in Swindon. We shall consider the evidence, to discover the extent to which they drove up turnout.
I pick up on the other points made by the hon. Lady. She highlighted the problem of jointly nominated candidates not being able to use their emblem. That affected my party in Northern Ireland, where we had candidates standing jointly for the Conservatives and the Ulster Unionists, and the hon. Lady and other Labour and Co-operative colleagues. We are considering that; it should be relatively straightforward to correct the problem, and we are looking for an opportunity to do so. That point was drawn to our attention after the election.
Before concluding, I shall touch briefly on a couple of other issues mentioned today. My hon. Friend the Member for Brigg and Goole (Andrew Percy) spoke about polling cards. He is right that they should be issued in good time, and returning officers should ensure that that happens. In most cases they do so, but in the case that my hon. Friend highlights that obviously did not happen. Constituents were therefore not adequately warned about some of the key dates in the process. Again, that will be a learning curve for those returning officers.
I was asked about venues, a problem for a number of candidates. The choice of venue is a matter for the local authority and the returning officer. They need to consider the nature of the area, its demographics and the likely voting patterns, and to choose venues that are accessible and able to cope with the throughput of voters. If they need to create extra polling places in those areas because of the size of the ward or polling district, they are empowered to do so. It is also worth saying that for general elections, it is not a problem for local authority funding because the properly incurred and documented costs of a general election are funded from the centre—from central Government—so there is no excuse for returning officers to have any concern about such funding if things are done properly.
Returning to the issue with which we began, which both the hon. Lady and my hon. Friend have mentioned, there clearly were problems, and if nobody is able to cast their vote that should be taken very seriously. It is, however, worth putting that in context. There were problems at 27 polling stations out of 40,000, and the Electoral Commission has estimated that about 1,200 voters out of 29.6 million were affected. Although we take the issue of electors being unable to vote very seriously, given that most of the 40,000 polling stations worked well, we perhaps need to consider solutions for those stations where there were problems and, as my hon. Friend said, for areas where there might well have been problems if circumstances had been different, but without making a wholesale change.
The hon. Lady made a number of wider points about individual voter registration and the extent to which electoral registration officers are getting voters who are entitled to vote on the register. The hon. Lady knows that the coalition Government have made a commitment to speed up individual voter registration and, as my right hon. Friend the Deputy Prime Minister set out in the Chamber in his speech on the Loyal Address, we want to ensure not just that the register is accurate and that no one is on it who should not be, but that electoral registration officers do a better job of getting people who are entitled to vote on the register, so that they have the opportunity, come polling day, to cast their vote.
Meg Munn
In that context, I wonder whether the Government would also look at when the registers are compiled. There usually is a considerable time lapse between when they are compiled and when elections take place. They are also compiled at a time when the nights are getting darker and people might not want to answer the door.
Mr Harper
In considering individual voter registration and our commitment to speeding that up, Ministers are looking at exactly some of those issues: how the registers are complied; the other data sources to which local authorities have access to check accuracy; the extent to which rolling registration is used; and how the annual canvass is used. They are looking at all the options, to see which is the most effective way of ensuring that registers are both accurate and as complete as possible. That work is under way.
George Hollingbery (Meon Valley) (Con)
Does the Minister agree that there is also a case for ensuring that the data are stored in the same way by different councils? From our experience of compiling registers for mailings on three different district councils, councils very often store data in completely different ways, which make them astonishingly difficult to use effectively.
Mr Harper
My hon. Friend makes a good point, but at the moment the election registration process is very localised and that has a lot of strengths, but also a number of weaknesses. I am somewhat reluctant to suggest that an all-singing national database is the right answer, since Governments of both parties are historically not terribly successful at implementing them. He is quite right, however, that we should look at how the data are stored. Another issue is ensuring that when voters move around the country, between registration areas, the data move with them. There are many issues there, which Ministers are considering.
The hon. Lady also made some wider points about the timing of voting and options for advance voting. Ministers are looking at those matters. The hon. Lady will know that the Government have set out a comprehensive programme of political and constitutional reform, of which electoral administration and the delivery of elections are part. Ministers are considering all those issues as part of our commitment in this area. At this stage, I cannot make any particular commitments. I have listened very carefully to what she and other Members have said, particularly as the events of the last general election are still fresh in our minds. Ministers will have further meetings and receive further advice from the Electoral Commission as we consider how to take matters forward. I am grateful to the hon. Lady for securing this debate; it has been very helpful for the House to consider these matters.
Question put and agreed to.
Written Ministerial Statements
(13 years, 10 months ago)
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Bilateral Aid Review
(13 years, 10 months ago)
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The Secretary of State for International Development (Mr Andrew Mitchell)
The Government will honour the commitment to spend 0.7% of GNI on overseas aid from 2013. We are determined to ensure that this vital and important aid budget is used effectively and delivers value for money for the world’s poorest people. In this context I would like to inform the House that I have commissioned a review of the DFID Bilateral Aid Programme to ensure that we target UK aid where it is needed most and will make the most significant impact on poverty reduction.
The review will consider which countries should receive British aid, how much they should receive and which countries should stop receiving British aid. It will also consider which aid instruments are most effective at delivering poverty reduction in different contexts. Any savings generated will be redirected to more effective programmes in other poor countries.
I look forward to sharing the full results of the review with the House when it is completed.
North Review (Drink and Drug Driving)
(13 years, 10 months ago)
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The Secretary of State for Transport (Mr Philip Hammond)
A review of drink and drug driving regulation was commissioned by the then Secretary of State on 3 December 2009, to be undertaken by Sir Peter North. Sir Peter’s final report has been published today. This report covers a wide range of issues and makes 51 detailed recommendations, which we need to consider carefully with other Government Departments. In doing so, it is important that we fully investigate the economic and public service resource impact of any suggested changes to the law, taking account of the current financial and economic situation.
Copies of the report have been placed in the Libraries of both Houses.