House of Commons

Tuesday 15th February 2011 Commons Chamber

Tuesday 15 February 2011

The House met at half-past Two o’clock

Prayers

Tuesday 15th February 2011 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 15th February 2011 Commons Chamber

The Secretary of State was asked—

[Mr Brian Binley (Northampton South) (Con)]

1. What recent progress he has made on the preparation of guidance on the implementation of the Bribery Act 2010.

[Joseph Johnson (Orpington) (Con)]

3. Which bodies he has consulted in the preparation of guidance on the implementation of the Bribery Act 2010.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

6. When he plans to implement the Bribery Act 2010; and if he will make a statement.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

I am at present working on the guidance to commercial organisations to make it practical and useful for legitimate business and trade. It will be published once I am confident that it addresses the legitimate concerns of all those who took part in the consultation process and who have made representations to me. The publication of the guidance will be followed by a three-month notice period before full implementation of the Act.

[Mr Binley]

Does my right hon. and learned Friend agree that the offences in the Act should not prevent businesses from using legitimate and proportionate promotional expenditure or corporate hospitality? I welcome the fact that he is going to prepare guidance, but will he do so on the basis that there is some fear and lack of knowledge out there, which needs to be dealt with?

[Mr Clarke]

I agree entirely with my hon. Friend, and I have had meetings with organisations such as the British Chambers of Commerce and the Federation of Small Businesses, whose members are particularly frightened about the prospects. Ordinary hospitality to meet and network with customers and to improve relationships is an ordinary part of business and should never be a criminal offence. I hope to put out very clear guidance for businesses of all sizes to make that clear and to save them from the fears that are sometimes aroused by the compliance industry—the consultants and lawyers who will, of course, try to persuade companies that millions of pounds must be spent on new systems that, in my opinion, no honest firm will require to comply with the Act.

[Joseph Johnson]

Many of our competitors overseas will not be so keen to rule out bribery as a means of competing. What steps will the Secretary of State take to ensure that British businesses are not put at a competitive disadvantage?

[Mr Clarke]

Along with the United States and others, we are one of the leading countries in pressing for a drive against corruption in the world, because corruption is bad for all business, including British business when it tries to export to other countries. Because of the debate that is taking place about the Act, I have had to reassure my American colleagues that we are not falling behind and that we will implement the Act. It is very important that we put ourselves where we should be—in the forefront of stamping out corruption not only in the developing world but in international trade generally.

[Paul Goggins]

May I encourage the Secretary of State to get on and implement the Act as soon as possible? Will he provide an assurance this afternoon that when the guidance is published, there will be no loophole for joint ventures or subsidiaries that would enable British companies to turn a blind eye to corruption?

[Mr Clarke]

I give that assurance, and I can assure the right hon. Gentleman that I am trying to get on with it. I believe it is possible to satisfy those who think we should give a lead in helping to stamp out corruption in international trade and other aspects of international relationships, and at the same time satisfy honest businesses that do not want unnecessary costs and burdens put upon them. They want the situation explained clearly to them so that, as my hon. Friend the Member for Northampton South (Mr Binley) said, ordinary hospitality cannot possibly be affected by the Act.

[Robert Flello (Stoke-on-Trent South) (Lab)]

Although I welcome the Secretary of State’s announcement that the Act will eventually be implemented, his comments today sound like rather a watering-down of the proposals. Yet the Foreign Secretary said at the Dispatch Box just two weeks ago:

“Both parties in the coalition supported the Bribery Act when in opposition, we support it now, and it will be brought in rigorously, effectively and fairly.”—[Official Report, 1 February 2011; Vol. 522, c. 733.]

Can the Secretary of State reassure the House that that is how the Act will be applied?

[Mr Clarke]

First, there is no watering-down of the Act. All parties supported it when it went through the House, and we are going to implement it properly. It requires me to provide statutory guidance to businesses on what steps they should take to ensure that they are trying to prevent bribery, and that is what I am working on. I believe that it is possible to produce guidance and enforce the Act in a way that produces the rigour and fairness that the hon. Gentleman demands. There is no backing down from the principles of the Act at all.

[Mr Jim Cunningham (Coventry South) (Lab)]

2. What assessment he has made of the potential effects of his proposals for legal aid reform on the provision of face-to-face legal advice; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

We published initial impact assessments, including equality impact assessments, with our reform proposals, including the proposal to establish the community legal advice helpline as the single gateway to civil legal aid services. Face-to-face advice will continue to be available where it is appropriate.

[Mr Cunningham]

I am very interested in that reply. What does the Under-Secretary mean by “appropriate”? That seems to me to be a little get-out clause. I assume that he does MPs’ surgeries. If so, he knows that people need face-to-face contact with their representatives—in this case, solicitors—to help them out. The measures will hurt some of the poorest families.

[Mr Djanogly]

The hon. Gentleman needs to appreciate that we are not considering some future project—the advice line exists. It was used by 600,000 people last year and it is getting something like a 90% satisfaction rating. Poorer people can be called back so that they do not pay for the call. Those who live in remote areas often greatly appreciate the telephone call, and those who are disabled also much appreciate having access by telephone. I take the exact opposite position from the hon. Gentleman and say that the advice line will help vulnerable people.

[Mr John Leech (Manchester, Withington) (LD)]

Does the Under-Secretary accept that restricting advice on housing matters could result in more homelessness and additional costs to homelessness budgets in local authorities?

[Mr Djanogly]

No, I do not, because we are not proposing to remove legal aid when imminent homelessness is a possibility. Legal aid will be retained in that situation.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

Is the Under-Secretary aware that there is deep resentment in my constituency about the attack on the South Manchester law centre, which is hugely valued, and about the attacks on advice bureaux? Will he understand that the activities of the malign Legal Services Commission will remove access to legal services for people on limited means?

[Mr Djanogly]

Just to be absolutely sure, neither my ministerial colleagues nor I, as far as I know, have attacked the South Manchester law centre in the right hon. Gentleman’s constituency. If he would like to give me details of exactly what he is talking about, I would be happy to take it up.

[Alun Cairns (Vale of Glamorgan) (Con)]

Many senior barristers earn hundreds of thousands—if not millions—of pounds from the public purse in the form of legal aid. What plans has the Under-Secretary to introduce a form of cap to stop the funds running to such sums?

[Mr Djanogly]

We have no proposals to put a cap in place. The amount of work that is carried out will be just that. We are looking at the rates that are paid in certain circumstances, and people’s eligibility to receive advice in the first place.

[Mr Andy Slaughter (Hammersmith) (Lab)]

Citizens Advice, the main provider of face-to-face advice, faces cuts of up to 45% and law centres face cuts of 70%. Legal service funding is an essential part of the income of all law centres and most CABs, but, according to the Government’s own figures, it is being cut by 90%. I welcome the Business Secretary’s U-turn on reinstating debt advice for one year only. Will the Under-Secretary take the opportunity, in considering the many responses to his consultation, to perform his own U-turn and drop his plans to end social welfare legal aid? If not, does he accept that the whole country will become an advice desert, and that he will be known as the man who ended universal access to justice?

[Mr Djanogly]

Anyone who suggests that there is universal access to justice in the context of access to legal aid has missed, for a start, the restrictions that the previous Labour Government put on access. We need take no lessons from the hon. Gentleman’s party, which, on the day the election was called, cut criminal legal aid by 13%. We take no lessons from him.

[Anas Sarwar (Glasgow Central) (Lab)]

4. What assessment he has made of the likely effects of the planned reduction in the legal aid budget on citizens advice bureaux and law centres.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

We published equality impact assessments with our reform proposals. They considered impacts on the not-for-profit sector collectively, but not on individual types of not-for-profit organisation. We are working closely with colleagues across Government to formulate a coherent approach to that issue so that we can encourage and co-ordinate support for the valuable not-for-profit sector.

[Anas Sarwar]

The reforms mean that people are now expected to represent themselves in an increasing number of proceedings. However, the Government’s figures show that the success rate for people who receive proper legal advice and help before appearing in court is double that for those without representation, even though their cases have equal merit. Given that the Under-Secretary has already mentioned potential cuts for CABs and law centres, how does that fit with the principle of equal access to justice for all?

[Mr Djanogly]

The hon. Gentleman needs to appreciate that the not-for-profit sector, while being valuable, often offers legal advice in circumstances in which general help is needed. There are many different funding streams, and we are talking about the legal aid funding stream, whereby CABs, for instance, receive only 15% of their funds from the Ministry of Justice. That makes it a cross-departmental issue, which we are taking up on a cross-departmental basis—something that the Labour party failed to do throughout its period in government.

[Mr Robert Buckland (South Swindon) (Con)]

I am encouraged by the Minister’s emphasis on cross-departmental co-operation. Will he assure me that he and his colleagues will do everything they can to maintain the continuation of services such as the Wiltshire law centre and the citizens advice bureau in my constituency, which often find that legal and social issues cannot be distinguished?

[Mr Djanogly]

My hon. Friend says that some centres find that legal and social issues cannot be distinguished, but that depends on how they are funded. For instance, only 50% of CABs receive any Ministry of Justice funding whatever. That very much depends on whether a centre offers general or legal help. However, I repeat that we realise that advice provision needs to be looked at on a cross-departmental basis. We appreciate that there is an issue for not-for-profits, and we are determined to address it.

[Jeremy Corbyn (Islington North) (Lab)]

Is the Minister aware that the other funding streams he talks about are often from local government to advice bureaux, law centres and CABs? All over the country, they are being decimated. Many valuable voluntary advice services that give not legal advice, but wraparound, general advice, face enormous cuts. Thus, people lose out on benefits and opportunities, and often end up homeless as a result of a lack of appropriate advice at the necessary time.

[Mr Djanogly]

The hon. Gentleman makes a very fair point, and has clarified a point that I made earlier: there is a difference between general advice and legal advice. We appreciate that not-for-profits have an issue when we consider funding streams all added together. Those who attended the legal aid debate two weeks ago would have heard me make a plea to local government to support the general advice provided by their CABs. I repeat that plea today.

[Jeremy Lefroy (Stafford) (Con)]

5. What steps he is taking to ensure that prisoners gain the skills and experience required to find work after leaving prison.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

With the Department for Business, Innovation and Skills, the Ministry of Justice is undertaking a review of offender learning, which includes how best to provide learning that will improve prisoners’ employability. The Green Paper, “Breaking the Cycle: Effective Punishment, Rehabilitation and Sentencing of Offenders”, sets out our intention to make prisons places where many more prisoners work and gain employment experience.

[Jeremy Lefroy]

I welcome the Government’s emphasis on rehabilitation. Up and down the country, including in Staffordshire, many organisations work very hard and very effectively—and cheaply—on that. Will the Minister agree to meet me and colleagues from Staffordshire to discuss how we can continue to support such organisations?

[Mr Blunt]

I will be delighted to meet my hon. Friend and colleagues from Staffordshire. Prisons and probation trusts already work with a large number of community organisations, but the Green Paper makes it clear that we want an ever-wider range of community organisations and individuals to become involved in helping ex-offenders to lead law-abiding lives. The system change that we are making, which I am happy to discuss with my hon. Friends, will enable the big society to help us to deliver a revolution in rehabilitation.

[Helen Goodman (Bishop Auckland) (Lab)]

Does the Minister not understand that all his good intentions and fine words will be swamped by the massive spending cuts that his Department is taking? Closing three prisons and cutting the building programme will worsen overcrowding, and cutting 23%—some 10,000—of the front-line prison and probation staff will reduce the number of opportunities for prisoners to train and work. When will he come forward with a credible strategy?

[Mr Blunt]

We are about to come forward with a credible offender learning strategy. The budget will remain very much the same as that which we inherited, because we realise that that strategy is a priority. Unfortunately, a significant amount of the money spent under the previous Administration went to waste. If the hon. Lady reads the reports from independent monitoring boards, she will see repeated complaints about the quality of offender learning in prisons under the previous Administration. We will put that right.

[Nicky Morgan (Loughborough) (Con)]

7. What plans he has for the size of his Department’s budget for civil legal aid.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

We published impact assessments alongside our reform proposals setting out their potential financial implications. We estimated that the savings to civil legal aid would be around £255 million by 2014-15. Total civil legal aid expenditure was around £900 million in 2008-09.

[Nicky Morgan (Loughborough) (Con)]

We all appreciate the need to make savings, but citizens advice bureaux, including the Charnwood CAB in my constituency, play an important role—hon. Members on both sides of the House have drawn attention to their CABs. Mention has been made of the difference between legal and general help. May I suggest that the Minister consider, with the Department for Work and Pensions, simplifying the length of the forms that people need to fill in? The CAB currently helps benefits claimants who sometimes have to fill in forms of up to 52 pages in length.

[Mr Djanogly]

Yes, I can confirm to my hon. Friend that we are in discussions with the Department for Work and Pensions on exactly that matter, and more generally on improving early intervention, so that preferably people will not need to go to a tribunal at all.

[Valerie Vaz (Walsall South) (Lab)]

We heard evidence this morning that conditional fee agreements were driving up costs in clinical negligence cases. Will the Minister look again at Lord Justice Jackson’s view that legal aid in such cases should not be cut?

[Mr Djanogly]

We are indeed doing that. The consultation on Lord Justice Jackson’s recommendations closed yesterday, and we have had a large number of responses. We will look carefully at those over the coming weeks and come back with our response to the consultation. I agree that this is an important matter in terms of legal aid and conditional fees arrangements in so far as half of clinical negligence cases are funded by the former and half by the latter.

[Tom Brake (Carshalton and Wallington) (LD)]

On budget savings, has the Minister had a chance to consider how much might be saved in the legal aid budget by not allowing cases of unaccompanied children and young people whose asylum claims have failed to be dealt with under legal aid, and indeed those who have fled domestic slavery? Will he look again at whether the savings derived are appropriate, given the impact that it will have on these categories of people?

[Mr Djanogly]

In all those circumstances—the hon. Gentleman mentioned a lot quickly—I think that we will be retaining access to legal aid.

[Dr William McCrea (South Antrim) (DUP)]

Recently, Ministers drew attention to the staggering sum of £38 per head of population in England and Wales being spent on legal aid funding. That figure is £3 in France and £5 in Germany. Will he give us the comparisons with the rest of the regions of the United Kingdom, including Northern Ireland and Scotland?

[Mr Djanogly]

I can tell the hon. Gentleman that England and Wales spend more on legal aid than anywhere else in the world except Northern Ireland. In Spain, the figure is about £2.50, in France £3, in Germany £5 and in other common law countries it is more like £9 to £11. Some people say that our system is different, but actually other common law countries spend about a third of what we spend on legal aid. After our proposals, we will still be spending more on legal aid than any other country in the world.

[Mark Menzies (Fylde) (Con)]

8. How many prisoners with convictions for violent offences were released under the early release scheme between 2007 and 2010.

[The Minister for Policing and Criminal Justice (Nick Herbert)]

Between 29 June 2007 and 9 April 2010, 81,578 prisoners were released under the end of custody licence scheme. Of those, 16,335 were violent offenders. The scheme finished last year with the last release on 9 April.

[Mark Menzies]

Does the Minister agree that the consequences of the previous Government failing to get a grip on reoffending were that our prisons reached bursting point until the then Justice Secretary had to release prisoners early, thus putting the public at risk?

[Nick Herbert]

I strongly agree with my hon. Friend. By failing to plan properly for the necessary prison accommodation, the previous Government were forced to resort to the end of custody licence scheme. More than 1,600 of those 80,000 prisoners released committed further offences while on the scheme, including very serious offences. One of those offences was murder.

[Nick Smith (Blaenau Gwent) (Lab)]

How confident are the Government that fast-tracking the release of prisoners with sentences of imprisonment for public protection—IPP prisoners—will not put the public at increased risk of serious crime?

[Nick Herbert]

We will take no risks in this respect. All prisoners who have to be released under the IPP scheme will be properly risk assessed. I repeat that the problem with the previous Government’s approach was that these prisoners were released automatically simply because the previous Government had run out of space. However, that scheme was cynically brought to an end just before the last election.

[Mr Richard Bacon (South Norfolk) (Con)]

Of the 16,300 or so prisoners whom the Minister mentioned, how many were failed asylum applicants who were not deported?

[Nick Herbert]

I am afraid that I do not have those figures available for my hon. Friend. However, there is a separate issue about the number of foreign national prisoners in our jails, and it remains the Government’s policy to seek to remove them on release as soon as possible.

[Sadiq Khan (Tooting) (Lab)]

Can the Minister confirm that on four occasions—in 1984, 1987, 1991 and 1996—the previous Conservative Government released prisoners earlier and with far fewer safeguards? Let me also ask him about the early release of prisoners convicted of violent offences. He mentioned that those serving an IPP sentence will be released early. Exactly how many of the 6,000 prisoners currently serving an IPP sentence will be released early, and what criteria will be used?

[Nick Herbert]

I am happy to confirm to the right hon. Gentleman that none will be released early and all will continue to be risk-assessed.

[Sadiq Khan]

Let me ask the Minister to answer this question accurately then. Can he confirm that, as a direct consequence of the cuts that his Department has accepted from the Treasury, there are now fewer programmes for those on an IPP sentence, which means a longer delay before they go on a programme? Can he also confirm that the consequence of the cuts in front-line probation and prison officers will be less rehabilitation while in prison, and that another consequence of the cuts that he has accepted will be cuts to the Parole Board, which will mean a double whammy of more prisoners being released prematurely and less rehabilitation in prison?

[Nick Herbert]

The right hon. Gentleman has to get his attack right. One moment he seemed to be saying that we were about to release too many IPP prisoners; now he seems to be saying that we will release too few. Which is it? The fact is that there has been a growth in the number of IPP prisoners. Everybody accepts that IPP sentences have become de facto life sentences and that we have to address that, but there will continue to be a proper risk-assessment of any prisoner released from an indeterminate public protection sentence.

[Mr Steve Brine (Winchester) (Con)]

9. What assessment he has made of the adequacy of provision of language translation support for foreign national prisoners.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

Translation and interpretation services are provided locally through central contracts. It is for the local prison authorities to determine the extent to which translation services are needed on a case-by-case basis.

[Mr Brine]

Foreign national prisoners constitute about 15% of the total inmate population at HMP Winchester. A constituent of mine who is a member of the local monitoring board has raised concerns with me about the language translation support made available to foreign inmates there, particularly where deportation documents are issued. Does the Minister agree that putting in place efficient translation measures would help to improve the speed and efficiency with which inmates who have served their sentences and are awaiting deportation from our country are moved through the system?

[Mr Blunt]

I certainly would agree. We want to make it clear that we want absolutely no administrative hurdles put in the way of deporting foreign national prisoners back to where they belong.

[Mr David Hanson (Delyn) (Lab)]

Just for the purposes of planning for language services, will the Minister indicate what changes he expects in either the percentage or number of foreign national prisoners in this country over the next 12 months, so that we can judge his success in deportation?

[Mr Blunt]

All I know is that, having inherited the utterly dreadful position that we face—a position for which the right hon. Gentleman bears some responsibility, having held responsibilities in this area in the past—we are determined to make as much progress as possible. He understands, having presided over a doubling in the number of foreign national prisoners in our jails, just how difficult it is to get them sent home once they are here, but we will be making as much progress as we possibly can.

[Fiona Bruce (Congleton) (Con)]

10. With which third sector organisations he plans to work to deliver his rehabilitation revolution policy.

[The Minister for Policing and Criminal Justice (Nick Herbert)]

The voluntary sector has a critical role to play in delivering the Government’s rehabilitation revolution. We will open up the market to enable a greater number of independent providers, including from the voluntary and social enterprise sectors, to contribute towards reducing crime and reoffending. We have consulted widely with the sector to develop the proposals in our Green Paper.

[Fiona Bruce]

Excellent work is being done by local voluntary organisations, such as the Message Trust in Manchester, to help ex-prisoners stay away from reoffending. What can the Minister do to ensure that smaller charities are not excluded by large corporations bidding for payment-by-results schemes?

[Nick Herbert]

I want to reassure my hon. Friend that we certainly do not wish the smaller charities to be excluded from the rehabilitation revolution. The organisations that she mentions are not in the pilot scheme that we are running in Peterborough, where the social impact bond involves two key voluntary organisations, and we want that to continue in the other pilots that we are pursuing.

[Mrs Jenny Chapman (Darlington) (Lab)]

We obviously welcome the rehabilitation revolution, but is the Minister aware that there is concern among prison governors about the increased amount of time that inmates will be required to spend in their cells, thereby being unable to partake in any rehabilitation, because of the cuts to the prison budget? What assurances can he give prison governors that they will not have to increase the amount of time for which prisoners are just banged up?

[Nick Herbert]

I am afraid that prisoners were also spending too much time in their cells and not pursuing purposeful activity under the previous Government, when there were increases in spending, year on year. So this problem is not simply linked to spending. We are determined that prisons should be places of work and purposeful activity, so that we can focus on reducing reoffending.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

Assuming that payment-by-results schemes get beyond the pilot stage, what commissioning organisations do Ministers envisage deciding between private, public and third sector bidders, and how will the scheme function to provide contracts on a scale that charities and third sector organisations can undertake?

[Nick Herbert]

As we set out in the Green Paper, we are consulting on how the five pilot schemes should proceed in various sectors, in order to see how we can make payment by results work. The existing pilot, involving the Peterborough social impact bond, is also still running. Our intentions are to unlock the expertise of the independent and third sectors in order to reduce reoffending, and to examine how the public sector can participate in the schemes.

[Joan Walley (Stoke-on-Trent North) (Lab)]

In the corner of Staffordshire and Cheshire, we have a state-of-the-art community chaplaincy scheme, which has got reoffending down to 12 %, compared with the national average of 70%. In the meeting that the Ministers have promised to have with Staffordshire Members, will they undertake when considering rehabilitation to take account of the best practice shown by that scheme in Stoke-on-Trent?

[Nick Herbert]

Those are precisely the kind of schemes whose expertise we want to unlock, and we want to engage more of them where we can. The rehabilitation revolution will provide an opportunity to do that. The key is to upscale such projects and make them more widely available, which is why payment by results offers such an important opportunity.

[Pamela Nash (Airdrie and Shotts) (Lab)]

11. What work his Department is undertaking on the future of the Human Rights Act 1998.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

The Government are committed to establishing a commission in 2011 to investigate the creation of a British Bill of Rights. We will make a statement to Parliament on the precise terms of reference and the appointment of the commission in due course.

[Pamela Nash]

I thank the Secretary of State for that answer. The Prime Minister has made it clear that he wishes to replace the Human Rights Act with a Bill of Rights, while the Deputy Prime Minister seems determined to defend the Act. Will the Secretary of State make it clear today, once and for all, on which side of the fence his Department sits?

[Mr Clarke]

What my two right hon. colleagues agreed on in the coalition agreement was to establish a commission to investigate the case for a Bill of Rights. I am now discussing that with the Deputy Prime Minister and, as I have said, we will announce in due course the terms of reference for the commission that is to resolve the issue.

[Mr Peter Bone (Wellingborough) (Con)]

Yet again, the coalition Government are doing the right thing by looking at a Bill of Rights. The Secretary of State never wastes any time, so will he tell me when the commission is going to report and when we are going to get some action?

[Mr Clarke]

We have firmly and urgently committed ourselves to establishing the commission in the year 2011.

[Bob Russell (Colchester) (LD)]

12. What advice his Department provides to members of tribunals hearing appeals against decisions on the award of disability living allowance.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

The Ministry of Justice does not provide any advice to members of tribunals, because the judiciary is entirely independent of the Government.

[Bob Russell]

Well, I suggest that it is about time the Department did something. It has only to look at the case of Mr Robert Oxley, which I raised at Prime Minister’s question time last month. The Minister would do well to look at the records of the tribunal in Colchester, and particularly at the cases heard by Mrs Hampshire.

[Mr Djanogly]

I must emphasise to my hon. Friend that it is not for Ministers to adjudicate on judges’ behaviour, because they are independent of the Government. I can tell him, however, that tribunal members undertake annual refresher training, which enables them to carry out their duties effectively. Any appellant who is unhappy with the decision of a tribunal can appeal to the upper tribunal. If an appellant is unhappy with the conduct of the panel, or a member of the panel, they can make a complaint to the regional judge.

[Dame Anne Begg (Aberdeen South) (Lab)]

The tribunal system is under a lot of pressure, with an average wait of between 11 and 12 weeks. This is not only because of disability living allowance claims, but because more people will be coming into the tribunal service as the Government proceed with their migration of those on incapacity benefit on to employment and support allowance. The system is already experiencing stresses and strains. What are the Government going to do to ensure that people get the correct determination in as timeous a way as possible?

[Mr Djanogly]

We have been in touch with the Department for Work and Pensions to make sure that we have a better, more seamless system between the two Departments. We have also been dealing with the increase in tribunal hearings, which the hon. Lady rightly brings up, and have increased the number of judges and the number of medical staff. I am pleased to say that it is now within our sights to end the backlog.

[Mel Stride (Central Devon) (Con)]

13. What plans he has for community sentences.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

We want non-custodial sentences to reflect more clearly and closely the principles of sentencing. Community payback will be a more definitively punitive disposal—more immediate and more intensive. Restoration to victims will also have a higher priority, with compensation orders to victims becoming the first consideration for sentencers. Public protection will be delivered through curfews and reporting requirements and more flexibility for offender managers to deliver rehabilitation through interventions tailored to the individual circumstances of each offender.

[Mel Stride]

Community sentences are often seen by the public as a bit of a soft option. Can my hon. Friend provide some specific examples of how he will ensure that they are tough enough?

[Mr Blunt]

The Green Paper sets out our intention to make community payback more intensive, more immediate and better enforced. We also intend to provide tougher punishment and better public protection by increasing the duration of electronically monitored curfews. The maximum hours might be increased from 12 to 16 each day and the maximum length of a curfew from six months to a year.

[Chris Skidmore (Kingswood) (Con)]

14. What plans he has to increase the amount of work carried out by prisoners.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

We have set out our intention to make prisons places of work and industry in the Green Paper published on 7 December 2010, and our response to the consultation will be published in May this year. Achieving a significant increase in useful work, which is also economically positive for the Prison Service, victims and rehabilitation, is a high priority for this Government.

[Chris Skidmore]

Does the Minister agree that we need to get more prisoners working so that when they are released, they are more likely to get back into employment? How many hours does he suggest prisoners should spend working each week?

[Mr Blunt]

We would like get to a position where prisoners work an ordinary working week of 40 hours. No one should underestimate the difficulty of making that a reality across the entire prison estate, as prisons have different purposes and a different physical geography in each case. I am absolutely determined, however, to use all our endeavours to maximise the amount of productive work done in prisons. That is why I have said that this is a first-order priority, certainly for this Prisons Minister.

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

15. What assessment he has made of the likely outcomes of the planned reductions in the legal aid budget.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

Our approach to the legal aid reforms has been to focus resources on those who most need help in the most serious cases in which legal advice or representation is justified. I believe that the outcome will be a system that is more responsive to public needs, allowing people to resolve their issues out of court, using simpler, more informal remedies where appropriate, and encouraging more efficient resolution of contested cases where necessary.

[Shabana Mahmood]

My constituency is one of the most deprived in the country and is also 60% non-white. Given that the Government’s cuts to legal aid will disproportionately affect those on low incomes, ethnic minorities, people with disabilities and women, can the Minister explain how his plans for legal aid are in any way fair?

[Mr Djanogly]

I should point out that people on high incomes do not get legal aid. We need to change behaviour; there needs to be a less contentious approach to the law and early intervention, which means looking at new ideas such as mediation.

[Rehman Chishti (Gillingham and Rainham) (Con)]

With regard to the outcomes of the reforms, particularly in family law cases, will the Minister clarify and confirm that in such cases, divorcing couples’ equity and assets will be taken into account when determining legal aid so that those who can pay do pay?

[Mr Djanogly]

In public family law, legal aid will remain. In private family law, legal aid will be removed, because we believe fundamentally that the taxpayer should not have to pay for a regular divorce, a contact application or splitting up family assets. People should go to mediation to sort out their problems among themselves—not at the cost of the taxpayer.

[Meg Munn (Sheffield, Heeley) (Lab/Co-op)]

I have an example of a case in Sheffield where a 62-year-old grandmother used legal aid to go through the processes she needed to go through to care for her two grandchildren, who were otherwise at risk of going into care. Will the Minister assure me that grandparents in such a situation will be able to do that in future? Otherwise, the cost to the state of caring for small children will be considerably more than that of the legal aid.

[Mr Djanogly]

What I can tell the hon. Lady is that we do not propose to remove public family law legal aid, and that includes cases in which the state wants to take away someone’s children.

[Karl Turner (Kingston upon Hull East) (Lab)]

16. What plans he has for future funding for training for employees to work in young offenders institutions.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

The juvenile awareness staff programme, known as JASP, is the only training programme that is specifically designed for staff working in young offenders institutions holding those aged under 18. In partnership with the Youth Justice Board, the National Offender Management Service provides JASP training for staff working in public sector young offenders institutions. Funding from the YJB for JASP training is agreed for 2011-12.

[Karl Turner]

I am sure that the Minister shares my concern about the tragic case of Adam Rickwood, who committed suicide shortly after being restrained by youth detention officers when in custody in 2004. Can he assure the House that the savage cuts to his Department will not result in any diminution of safe restraint techniques in such institutions?

[Mr Blunt]

Let me take this opportunity to convey, again, our commiserations to the family of Adam Rickwood, who died in such sad circumstances. The short answer to the hon. Gentleman’s question is, of course, yes.

[Mr David Nuttall (Bury North) (Con)]

17. What plans he has for the future of sentencing guidelines.

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

Responsibility for the issuing of sentencing guidelines rests not with the Government but with the independent Sentencing Guidelines Council. It is for the council to decide on what matters such guidelines should be prepared for the courts.

[Mr Nuttall]

I thank the Minister for his answer, but I think that many people outside the House will look to it for leadership on the issue of sentencing. Will he give a clear steer to the council that we must never see a repeat of what we saw last month, when a judge was unable to do what he wanted and send a house burglar to prison because of the sentencing guidelines?

[Mr Blunt]

Let me caution my hon. Friend slightly against wholly relying on the account of that case that we read in the press. What we ought to know is that the judge was able to give that individual a very significant community sentence. Indeed, he concluded that a prison sentence would probably have been a rather lighter punishment, given all the conditions involved in the community sentence. However, the House will have an opportunity to make its views heard in due course when a sentencing Bill is introduced.

[Duncan Hames (Chippenham) (LD)]

19. If he will bring forward proposals to reduce the time taken by tribunals to determine the outcome of appeals against work capability assessments for employment and support allowance.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

The Tribunals Service has already acted to increase its capacity to dispose of more appeals. It expects to return to normal levels of work in hand for employment support and allowance appeals by the summer of 2011.

[Duncan Hames]

In Chippenham, 50% of such appeals are consistently upheld. Those cases need never have arisen if the Government’s assessor, Atos Healthcare, had had a sufficient incentive to get the decisions right in the first place. The cost to the Department and the taxpayer was about £10 million last year. Will the Minister discuss with the Department for Work and Pensions mechanisms by which the liability could be transferred from the taxpayer to the Government’s contractor?

[Mr Djanogly]

I can confirm that the Department for Work and Pensions has worked to improve the quality of the original decision making and its reconsideration process so that only appropriate appeals filter through to the Tribunals Service. I am in regular contact with the Department to discuss the matter.

[John Howell (Henley) (Con)]

20. Which organisations he consulted in preparing guidance on the implementation of the Bribery Act 2010.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

I refer my hon. Friend to the answer that I gave in reply to Question 1.

[John Howell]

I thank my right hon. and learned Friend for his comments on statutory guidance. During the Committee stage of the Bribery Bill, there seemed to be little appreciation among Labour Members that there were such things as legitimate promotional activities for companies. Will he ensure that the guidance is both clear and practical?

[Mr Clarke]

I agree with my hon. Friend. My hon. Friend the Member for Huntingdon (Mr Djanogly), who is now Under-Secretary of State for Justice, led for the Opposition at that time, and I believe that it was Conservative Members—including my hon. Friend the Member for Henley (John Howell)—who raised the problems that could be posed for legitimate businesses. It is because of those problems that we need the guidance, and the guidance must make it absolutely clear that ordinary, legitimate promotion—hospitality and similar activities in which people engage in order to project the quality of their company and its products or services, and to establish personal relationships with clients and customers—is all part of international trade. The Bill can be used to tackle corruption without damaging British business at a time of, we hope, revival in our international trade.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

21. What plans he has for the future of the prison estate. Our current plans are to build the prisons to which we are contractually committed, and we recently announced the closure of three prisons. The Ministry of Justice recently published a Green Paper outlining proposals for reforms to sentencing and rehabilitation. We are considering our long-term strategy for prisons in the light of these policy developments.

[Eric Ollerenshaw]

I thank the Minister for his answer. Is it possible to give an update on the planned closure of Lancaster Castle prison, particularly in regard to the redeployment of staff and future use of the castle?

[Mr Blunt]

The Ministry of Justice is in discussions with the Duchy of Lancaster, which owns the castle, regarding its future use after its closure as a prison. All staff at Lancaster Castle will be either redeployed to other establishments, retained at the prison to provide ongoing maintenance or offered the opportunity to leave the service on voluntary exit terms.

[Ian Lavery (Wansbeck) (Lab)]

Can the Minister tell the House what proposals his Government have for the future market testing of existing prisons in the UK?

[Mr Blunt]

We inherited a competition strategy from the last Administration, which is continuing. The strategy is being applied to prisons that are currently in the public sector, particularly Birmingham.

[Kris Hopkins (Keighley) (Con)]

23. What recent progress his Department has made in recouping outstanding financial penalties that remain uncollected by HM Courts Service.

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

We have published impact assessments and equality impact assessments alongside the legal aid consultation, and these set out in detail what we think the effects of the proposals might be. We must face up to tough choices, and our proposals focus resources on those who need help most for the most serious cases in which legal advice and representation are justified.

[Kris Hopkins]

I think that was the wrong answer to my question.

I hope the Secretary of State has made progress in collecting the money that criminals have been fined, and may I ask that once we have collected some of the money and we have made a contribution to reducing the deficit, we increase our prison capacity?

[Mr Speaker]

The Minister delivered his answer with admirable force and self-confidence, but I think it suffered from being the wrong answer, as he was, perhaps, not expecting to be responding to this question. If he can provide us with the right answer to the question now, we will be very grateful.

[Mr Djanogly]

I think the appropriate answer in the circumstances, Mr Speaker, is that we will look into this issue and get back to the House.

[Andrew Stephenson (Pendle) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

May I begin by making a topical statement, Mr Speaker?

Hon. Members will know that I am determined to deliver much overdue reform to the way in which the criminal justice system operates. Every year, 1.8 million criminal hearings and trials take place. The police, judiciary and others far too often find that the bureaucratic, inefficient system works against their best efforts, rather than for them. It is immensely frustrating that, for example, the key people in the system—the police, prosecutors and probation staff—are often unable to e-mail each other the crucial information they need to bring a prosecution; it all has to be done in hard copy. The average straightforward case heard in the magistrates courts takes 19 weeks from the offence being committed to the case concluding, and only four out of every 10 trials in the magistrates courts go ahead on the planned day. We cannot afford to maintain this sort of system that wastes the time of the police, victims and witnesses.

I am therefore working on radical plans to modernise and reform the criminal justice system and reduce these bureaucratic failings with my right hon. Friend the Home Secretary, my right hon. and learned Friend the Attorney-General, the judiciary, the criminal justice agencies and my right hon. Friend the Minister for Policing and Criminal Justice, who will take the lead role in co-ordinating our efforts. I look forward to receiving any representations on the subject and will report back to the House in the summer.

[Mr Speaker]

Order. I would be grateful if the Secretary of State did not also lay out the plans in the course of his answer.

[Andrew Stephenson]

I thank my right hon. and learned Friend for his very full answer. Many young offenders are drawn into a cycle of crime that sees them spend many years of their life in detention. What steps does he think will help young people to get a second chance?

[The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)]

The first thing is to have increased early intervention to avoid their needing a second chance in the first place. Then we need to ensure that young offenders are offered more of an opportunity to pay back their victims and communities, and to incentivise local partners to reduce youth offending and reoffending by using new payment-by-results models.

[Sadiq Khan (Tooting) (Lab)]

In this Saturday’s excellent Mary Riddell interview in The Daily Telegraph, the Lord Chancellor said:

“I slightly expect that some crimes will go up”.

I remind the House that in times of both growth and recession between 1997 and 2010 the level of crime consistently went down. I know that he is neither sloppy nor complacent, so can he tell the House what crimes he thinks will go up, why he thinks they will go up and what he is going to do about it?

[Mr Clarke]

During the period of the Labour Government, to which the right hon. Gentleman refers, acquisitive crimes against property fell particularly sharply. That was because of the growth of the economy and the boom, among other matters; these things are not too simple. The biggest fall in crime achieved when Labour was in office was on vehicle crimes, because the vehicle manufacturers greatly improved the security of the vehicles and made this more difficult. In this contentious and not simple area of what causes crime and what does not, I have always been inclined to believe that in times of recession the level of crime against property is likely to rise and in times of growth it tends to fall. That is why I have to be prepared to accommodate however many people are sent to us by the courts. What we are doing about it is making what I hope is a more effective system of preventing crime and of diverting people out of crime but punishing severely those who commit it.

[Mr Laurence Robertson (Tewkesbury) (Con)]

T2. According to Ministry of Justice figures, only 44% of people convicted of burglary offences actually get immediate custodial sentences. Does the Secretary of State think that that figure is about right or does he intend to take legislative steps to increase it?

[Mr Clarke]

As the Under-Secretary of State, my hon. Friend the Member for Reigate (Mr Blunt), said in reply to a question a moment ago, sentencing is a matter for the Sentencing Guidelines Council and for the judges, who hear all the facts of the case; they can hear a victim’s statement and they can hear mitigation for the accused. We keep an eye on percentages, of course, but the sentence in each case has to be the appropriate sentence for the facts of and the offender in the case. Although burglary is a serious offence that normally attracts imprisonment, it covers a wide range of circumstances, from someone breaking in with a hood over his head in the middle of the night to someone walking through an open door grabbing a knick-knack and running out through the door again. So we have to leave it to the judges.

[Jeremy Corbyn (Islington North) (Lab)]

T6. Has the Secretary of State considered carefully the representations that he will have received concerning clause 151 of the Police Reform and Social Responsibility Bill on universal jurisdiction? He will be aware that restricting access to the British courts in respect of crimes against humanity committed anywhere in the world will send a very bad message to the rest of the world and will make this country a more pleasant place for war criminals and those who have committed crimes against humanity to try to come to.

[Mr Clarke]

I must make it absolutely clear that the Government are not reducing, in any way, the importance we attach to the proper enforcement of the law against those guilty of war crimes or crimes against humanity. We are making a slight change to the circumstances in which a citizen can obtain an arrest. The prior approval of the Director of Public Prosecutions will be needed, in order to make sure that there is a reasonable prospect of prosecution in the case; that is not where we are at the moment. I assure the hon. Gentleman that nobody on either side of the House wishes to see this country downgrade the importance we attach to enforcing crimes against humanity and war crimes.

[Andrew Bridgen (North West Leicestershire) (Con)]

T3. It is reported that about 70% of prison inmates are believed to have two or more mental health conditions and that about one in 10 prison inmates have a serious mental health problem. What steps are the Government taking better to identify and help prisoners with mental illness?

[Mr Blunt]

As we made clear in the Green Paper, we will, with the Department of Health, have invested £50 million by 2014 in establishing a liaison and diversion service, both in the police stations and in courts, to ensure that people who should more appropriately be treated in the health service do not go to prison. Of course prisons and secure mental hospitals will remain the appropriate place for offenders who have committed serious offences and pose a risk to the public. Prison health services will continue to provide care and treatment for the majority of prisoners with mental illness, with the additional support of specialist mental health inreach teams.

[Helen Jones (Warrington North) (Lab)]

T7. On the planned national diversion service, will the Minister tell the House who will provide the mental health assessments in police stations and courts that will be necessary for that service to work? Have the necessary provisions to provide that service been included in the budget?

[Mr Blunt]

Those assessments are a matter of health rather than justice, so the Department of Health is leading on establishing the liaison for diversion services.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

T4. How does the Lord High Chancellor envisage promoting the big society in his Department, particularly in terms of shop theft and having some kind of community payback in relation to those who have stolen from society in that way?

[Mr Blunt]

I am very grateful to my hon. Friend who has done particularly good work in this area in getting policy changes under the previous Administration. We want to make restorative justice and compensation orders the first point of departure for such offences so that offenders are able to make good to their victims.

[Sheila Gilmore (Edinburgh East) (Lab)]

T8. Will the Minister reconsider his original thinking on the definition of domestic violence and the evidential requirement when deciding whether to make legal aid available in family law cases?

[The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)]

I have to tell the hon. Lady that we have just consulted on this—the consultation ended yesterday—and that we will consider carefully what people have said. We put a definition of domestic violence in the Green Paper and we will look carefully at how people have commented on that.

[Mr Gary Streeter (South West Devon) (Con)]

T5. In an effort to save legal aid, and following the vote in the House last Thursday, why not now exclude expressly from any legal aid application prisoners who seek to claim compensation from the Government for not having the right to vote?

[Mr Blunt]

As I understand it, the likely level of compensation would mean that prisoners making such claims would not be eligible for legal aid in any event. However, that will not prevent the situation with no win, no fee arrangements, as a substantial case list is being created by solicitors touting for custom.

[Mr David Lammy (Tottenham) (Lab)]

The whole House will be aware of the worst scenes of poverty in America. Will the Minister with responsibility for legal aid think again? Currently, both local authorities and his Department are cutting the money available for advice. Where will the people of Haringey, the constituency in which the baby P and Victoria Climbié cases occurred, get that advice?

[Mr Djanogly]

Let me tell the right hon. Gentleman that citizens advice bureaux and not-for-profit organisations have been able to do legal aid work for only 11 years. Before that, they just gave general advice. He must appreciate that when the previous Government allowed those organisations to do legal aid work, they did not look at the matter holistically. They did not look at the various funding streams coming together or at the waste in the system. Now that the money has gone, we are having to look at those things.

[Stephen Lloyd (Eastbourne) (LD)]

T9. I was delighted to hear over the weekend that the Department for Business, Innovation and Skills has managed to find an additional £27 million to pay for CAB debt advisers. Could any additional funding be found by the Ministry of Justice for groups such as the Brighton housing trust in my constituency, which plays an important role in providing housing advice of the kind that, if it is not dealt with at an early stage, ends up costing—

[Mr Speaker]

Order. We are very grateful to the hon. Gentleman.

[Mr Djanogly]

Yes, we are looking at various early interventions in relation to housing, welfare benefits, special educational needs and, importantly, private family law.

[Tony Lloyd (Manchester Central) (Lab)]

The Minister recognises that there is a need for advice on debt, benefits, housing and many other things. The problem faced by the constituents of Members on both sides of the House is that although the cuts to legal aid are happening now, his proposed solution seems a long way off. What is going to fill the gap?

[Mr Djanogly]

We accept that there are issues in terms of funding because a lot of advice is given as general advice and is mainly funded by local councils. We are in discussions across government about how we can approach the matter holistically to make sure that such provision stays in place.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

Does the Secretary of State agree that increasing the number of people in our prisons should not be an end of Government policy in itself, but rather that the prison population should reflect the number of indictable crimes committed?

[Mr Clarke]

I entirely agree with my hon. Friend, although determining how many prisoners we should have can become a completely false argument, as that is determined in any event by the courts reacting to the level of crime and proposing appropriate sentences. We are determined to use prisons so that not only do they punish the offender, but, where possible, we can increase the number of offenders who are persuaded to give up crime when released and cease to offend thereafter, which will reduce the number of victims. I think that the approach taken by the Under-Secretary of State, my hon. Friend the Member for Reigate (Mr Blunt), is the common-sense approach and in the public interest.

[Mr Tom Watson (West Bromwich East) (Lab)]

The Lord Chancellor should not allow himself to be pushed around by The Sun newspaper. Does he agree that the cause of public justice would be best served if News International spent less time traducing the characters of Ministers and more time revealing to the Metropolitan police the contents of the e-mails held in the data warehouse in central London?

[Mr Clarke]

I shall try to avoid following my right hon. Friend the Secretary of State for Business, Innovation and Skills in answering that question. Kelvin MacKenzie could confirm to the hon. Gentleman that I have not been pushed about by The Sun for as long as either he or I can remember.

I was amused to read the article by the leader of the Labour party in The Sun this morning, remembering his resounding promise not to try to out-right the Conservative party on the subject. I was reminded of an article by Tony Blair published just before the 1997 election and entitled “Why I Love the Pound”. When I read the Leader of the Opposition’s article this morning, I was relieved to see that he listed many things on which he agrees with me and did not indicate a specific area where he committed himself to doing anything different from what the present Government are doing.

[Henry Smith (Crawley) (Con)]

Crawley court house in my constituency deals with a large number of cases, including those emanating from Gatwick airport. Will the Minister agree to meet local magistrates, my local authority and me to see whether the court house could be part of a major town centre redevelopment that is shortly to get under way?

[Mr Djanogly]

Yes, I am indeed happy to meet my hon. Friend.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Will the Secretary of State think again about the compounding impact of the legal aid cut and Lord Justice Jackson’s proposals on victims of criminal negligence? It would be wrong for injured parties to have to fend for themselves, and if they pay for the compensation and the costs of cases, the wrongdoer will be getting away, which would be unfair.

[Mr Djanogly]

The hon. Gentleman makes it clear that Lord Justice Jackson’s proposals and our legal aid proposals are being run in conjunction. We were very concerned that they should so that practitioners would be able to compare the two—that is especially relevant in cases of clinical negligence—so we will be doing exactly that.

Armed Forces (Redundancies)

Tuesday 15th February 2011 Commons Chamber

15:32

[Mr Jim Murphy (East Renfrewshire) (Lab)]

(Urgent Question): To ask the Secretary of State to make a statement on redundancies in the Ministry of Defence.

[The Secretary of State for Defence (Dr Liam Fox)]

As a result of the strategic defence and security review and the comprehensive spending review, it has, sadly, been necessary to plan for redundancies in both the civil service and the armed forces. At all times this should be done with sensitivity to individuals concerned, and with an understanding of the impact that it will have on them and their families. There are two recent cases in which this has not happened. Let me deal with them both.

First, there are the 38 Army personnel who have received an e-mail, as reported in today’s press. This is a completely unacceptable way to treat anyone, not least our armed forces. The correct procedure was not followed. I regret this, and want to reiterate the unreserved apology already made by the Army and on behalf of the Ministry of Defence. Arrangements have already been put in place to ensure that it does not happen again, and the Army are already investigating the particular circumstances.

Secondly, there is the redundancy of trainee RAF pilots. It was always going to be the case that with fewer airframes we would need fewer pilots. The fact that people found out through the publication of inaccurate details in a national newspaper will, I am sure, be deprecated on both sides of the House, and can only cause the individuals concerned undue distress. I understand the concerns of those facing redundancy, and I understand the temptation of the Opposition to exploit issues for political advantage, but I hope that with issues as sensitive as individual redundancies, we can refrain from making a sad situation worse for the individuals and their families.

[Mr Murphy]

Yesterday I came to the House to support strongly the Government’s actions on Afghanistan, but today we are here for an entirely different reason: the revelation that dozens of soldiers with decades of service have been sacked by e-mail. It is a shame that Ministers had to be summoned to the Commons, when they should have immediately asked to come here voluntarily.

We all know that we cannot stop every redundancy in the armed forces, but this is no way to treat soldiers who have served in Northern Ireland, the Balkans, Iraq and Afghanistan. The Secretary of State says that we should not play politics with such issues. Sacking anyone by e-mail is always wrong; sacking members of our armed forces in that way is utterly unforgiveable. But, unfortunately, as the Secretary of State says, a pattern is developing. One hundred RAF trainee pilots were sacked by media leak, some only hours away from getting their wings.

What is worse about this sordid affair is that the Government’s response has been to blame everyone else. In the morning it was the Army’s fault; by lunchtime it was a civil servant’s fault. But it was not the Army that decided to cut the deficit this far and this fast; it was not a civil servant who decided to go into a rushed defence review. It is the Government’s fault. They are locked into a logic of rapid deficit reduction, which means that mistakes are being made, some of them serious.

The country wants straight answers to direct questions. When will the Secretary of State announce who will be affected by the further reduction of 17,000 in the armed forces? On the sacking by e-mail, despite the Secretary of State’s previous promises, why did the Ministry of Defence agree that a soldier currently serving in Afghanistan should be sacked, and will the Secretary of State take personal responsibility for making sure that that never happens again? On RAF sackings, how many of the RAF trainees were within hours of fully qualifying as pilots? Have all those affected now been officially informed?

In all these matters there is a fine line between callousness and complacency. This was a callous event; the Government’s response this morning was complacent. They must act, act now, and make sure that it is never repeated.

[Dr Fox]

The right hon. Gentleman should stick to agreeing with the Government; he is much more impressive on such occasions. What is sad today is not just the opportunism but the utter lack of humility, because we would not have had to reduce the armed forces or the civil service to such a degree if we had not inherited from the Labour Government a black hole in the MOD budget of £38 billion and a national deficit of £158 billion—[Interruption.] So before Opposition Front Benchers go about pointing fingers, they should look—[Interruption]—and the right hon. Gentleman should look, to the Government of whom he was a part, who left us economically wrecked. We will set out—[Interruption.]

[Mr Speaker]

Order. There is far too much noise in the Chamber, and I am disturbed to note that a lot of it is being made by Members on both Front Benches. It does not impress me; it does not impress others. It should stop, and the Secretary of State will be heard with respect.

[Dr Fox]

I am grateful, Mr Speaker.

The Opposition need to ask themselves why we have to make those reductions. It is because of the incompetence and the economic inheritance that they left behind. We will set out the programme of reductions in staff—the 17,000 mentioned—over the next five years. There was a great deal of inaccurate information in the newspaper story about the RAF trainee pilots. They are being briefed individually and collectively on the specific proposals that affect them. It is appropriate that that happens in private, not on the Floor of the House of Commons.

[Sir Menzies Campbell (North East Fife) (LD)]

The events of the past 48 hours are sad, sorry events at which we should all express some regret, not least in the case of the individual who is serving his country in a hot war on the other side of the world. Does the Secretary of State accept that such events have a resonance beyond the units, and indeed, beyond the services, in which they occur? Does that not place an enormous obligation and responsibility on him and his fellow Ministers—to some extent discharged by the fact that he has come to the House personally to respond to the urgent question—to ensure that everything possible is done so that something of this kind never happens again?

[Dr Fox]

Indeed. As I have said, we will take every measure to ensure that this does not happen, but we can never guarantee that individuals will not make mistakes; that is part of human nature. On the case that my right hon. and learned Friend mentions, the individual concerned was on assignment from Permanent Joint Headquarters working on an IT project in Afghanistan. He was on a temporary assignment, and not part of our regular forces sent into combat in Afghanistan.

[Several hon. Members]

rose—

[Mr Speaker]

Order. There is a lot of interest in this question, and I am keen to accommodate it, but short questions and short answers are imperative if I am to have any reasonable chance of doing so.

[Hugh Bayley (York Central) (Lab)]

What implication will the decision on the sacked RAF pilots in training have for the hundreds of jobs at RAF Linton-on-Ouse, outside York? Could some of those who are surplus to requirements as fast jet pilots be put on to helicopters instead, given the shortage of helicopter capacity that we heard about so often from the Secretary of State when he was in opposition?

[Dr Fox]

At all times we will endeavour to find alternative positions where available. I should say that with reductions of some 5,000 being made across the whole of the RAF, that will be relatively difficult to accommodate, but we shall try to do it wherever we can.

[Mr James Gray (North Wiltshire) (Con)]

The whole House will be grateful to the Secretary of State for being so straightforward in coming here to apologise for what is, without any question, a most disgraceful episode in our country’s history. Will he do two things? First, will he lay out precisely how he intends to make sure that this does not happen again? Secondly, the public will be asking for something for which they should be asking—a few hides to be flayed.

[Dr Fox]

A proper administrative inquiry by the Army is under way, and it will report in the usual way. It would be inappropriate to, in effect, try members of the armed forces on the Floor of the House of Commons.

[Angus Robertson (Moray) (SNP)]

Over 1,000 service personnel in the most defence-dependent community in the UK face redundancy or re-posting when RAF Kinloss closes later this year. Will the Secretary of State ensure that the correct procedures are followed with each and every one of these servicemen and women?

[Dr Fox]

As I have already said, we will at all times do what is required to help those who are leaving the armed forces in every way we can. That will, of course, include following the procedures that are very clearly set out.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

An unintended consequence of the introduction of NMS—the new management strategy—into the armed forces 20-odd years ago was that too often officers may be encouraged to see themselves as managers rather than leaders. Will the Secretary of State satisfy himself that within the chain of command that he has inherited, the military covenant is being properly served, particularly in relation to the 38 electronically sacked warrant officers?

[Dr Fox]

As I have said, the Army is already undertaking an investigation of its own, and I expect that to conclude fully in a matter of days. The inquiry will draw the appropriate lessons on whether the chain of command was appropriately followed in this case. It would be appropriate for the inquiry to come to conclusions, and not for us, without the full information, to do so.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

The Secretary of State’s tone in responding to the shadow Secretary of State was surprisingly strident. Just so that the House is clear, he is not actually blaming the previous, Labour Government for this abominable failure in procedure, is he?

[Dr Fox]

I would hate the hon. Gentleman to get the wrong impression. What I am blaming the Labour Government for is the financial mismanagement that left a black hole of £38 billion in the MOD budget, and a massive deficit to get rid of. Without those, we would not have had to make redundancies of this scale in the first place.

[Dr Julian Lewis (New Forest East) (Con)]

On the future loss of so many pilots of fixed-wing aircraft, I am sure that my right hon. Friend would never admit to acting under duress, even if his toenails were being torn out by the Treasury. However, can he at least reassure us that some degree of flexibility in the availability of future fixed-wing aircraft pilots will be preserved, just in case we need them in the next 10 years?

[Dr Fox]

All redundancies will be carried out under the compulsory redundancy process so that we have the correct shape of armed forces—and I can tell my hon. Friend that these days, even the Treasury conforms to the norms of human rights.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

Will the Secretary of State clarify for the House why no Minister appears to have had an oversight role in this process? In my 10 years in the private sector dealing with redundancy, it was normal practice for a senior manager to take on that responsibility.

[Dr Fox]

Indeed, senior managers have taken responsibility. I have already had a report from the line managers responsible. When I have had the full information I will be able to determine where the responsibility lies, and what action may need to be taken by the Army.

[Patrick Mercer (Newark) (Con)]

I am sure that the Secretary of State would agree that the sacking by e-mail of a number of senior non-commissioned officers is deeply regrettable—but it is no matter for Ministers. This is a straight lack of leadership inside the Army. I am amazed that we have seen nobody in uniform in the media apologising for this gross piece of conduct.

[Dr Fox]

I realise that my hon. Friend will have been busy with his duties in the House, but the Assistant Chief of the General Staff has been in the media explaining the Army’s position on this matter. It is entirely appropriate that any measures that need to be taken in response are taken by the Army, not by Ministers—as I am sure that my hon. Friend, with his years of experience, will understand.

[Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)]

The Secretary of State will know that not only members of the armed forces but civilian staff, too, are affected by redundancies. I have written to him about the uncertainty over the future of civilian staff at Massereene barracks in Antrim. I hope that he will look into that matter.

[Dr Fox]

Indeed I will, and I shall be happy to meet the right hon. Gentleman if there are particular cases and circumstances that he wants me to look into. In general, the redundancies that will occur in the military as a result of the strategic defence and security review and the comprehensive spending review will be compulsory. For civilian staff, we want to consider natural wastage and voluntary redundancies where possible.

[Bob Russell (Colchester) (LD)]

With soldiers from the Colchester garrison in 16 Air Assault Brigade currently deployed in Afghanistan, I remind the Secretary of State what he said to me on 8 November in response to a direct question:

“We need to maintain the Afghanistan rotation. It is therefore in the interests of common sense and fair play that no personnel serving in Afghanistan, or on notice to deploy, will be given compulsory redundancy.”—[Official Report, 8 November 2010; Vol. 518, c. 12.]

Does that pledge still stand?

[Dr Fox]

Yes.

[Mr Denis MacShane (Rotherham) (Lab)]

Will the Secretary of State comment on ministerial responsibility? Everybody else seems to be blamed, but nobody on the Government Front Bench. Will he agree to come back to the House and make a statement about this matter, and the dismissal of the RAF trainees, when all the facts have been established?

[Dr Fox]

The redundancy process in the RAF will proceed as it should. The individuals concerned will be informed, and we will see whether alternatives are available for them. Those who need to leave will do so under the rules for compulsory redundancy, which are set out clearly for the armed forces.

[Mr John Redwood (Wokingham) (Con)]

What is the current rate of natural wastage for civilian and uniformed personnel? In future, will it be possible to achieve the reductions mainly through natural wastage rather than compulsory redundancy?

[Dr Fox]

The cases are different for civilian and military personnel. In the military there is a compulsory redundancy programme, so that we maintain the shape of the armed forces. We must maintain not just those on the front line, but the enablers whom they require. Things are different in the civil service—and while we will be losing 17,000 personnel across the armed forces, we will be losing 25,000 from the civil service in the Ministry of Defence.

[Albert Owen (Ynys Môn) (Lab)]

RAF Valley, in my constituency, is a centre of excellence for fast jet training. Civilian staff and trainee pilots were unsettled, to say the least, to read reports over the weekend about redundancies. As the Secretary of State said, it is not for him to make redundancy announcements in the House. However, as Secretary of State, surely he should indicate what the impact of his announcement of job cuts will be on the RAF, so that bases such as RAF Valley have the stability and clarity that they need for the future.

[Dr Fox]

We set out in the SDSR what we believed the shape and size of the RAF would be, and the need for fast jets in the future. When it comes to redundancies, it is hugely to be regretted that not only did the information appear first in a national newspaper, rather than coming down the chain of command to those involved—which is the correct process—but much of the information was inaccurate. That was a double blow for the personnel. As I said, those personnel will be informed personally of the decisions that affect them, so that their personal circumstances can be taken into account. I have no intention of announcing redundancies through the House of Commons.

[Mr James Arbuthnot (North East Hampshire) (Con)]

Will my right hon. Friend be able to exercise some degree of flexibility in the case of pilots who were close to achieving their qualifications?

[Dr Fox]

That is primarily a matter for the RAF, but I have already asked for Ministers to be fully informed about the progress through any course that is being taken. It would make common sense to ensure that those closest to the end of their course could be allowed to continue, if possible. Not all those in the press stories, or the numbers in the press stories, will have to be made redundant. I hope that there will be some flexibility, and that common sense will be shown.

[Mr Tom Watson (West Bromwich East) (Lab)]

Is this a betrayal of the military covenant?

[Dr Fox]

No, it is a betrayal of the people of this country, where economic incompetence has forced us to reduce the size and budget of our armed forces to a level that we would not have chosen.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

Can my right hon. Friend assure the House that the recently announced redundancies will not affect our ability to continue with our mission in Afghanistan?

[Dr Fox]

The whole of the SDSR was predicated on success in Afghanistan. Nothing that has happened in respect of any announcements made by the Army, the Navy or the Air Force will impact on our operations in Afghanistan. They remain the priority for the Ministry of Defence and the Government.

[Greg Hands (Chelsea and Fulham) (Con)]

Even the previous Government, who were notoriously slack on controlling spending, made the MOD one of three Government Departments that were put into special measures. Does my right hon. Friend agree that all MOD redundancies need to be understood in the context of a Government and a Department where spending was rampant and out of control?

[Dr Fox]

It is no secret that when this Government came to office, not only did we inherit generic economic incompetence, but inside the Ministry of Defence there was a specifically difficult case. I shall set out in the near future measures for achieving better control over the MOD budget, not least in real time.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

Will my right hon. Friend give a commitment that we will make sure that this episode will not be repeated in the case of the 3 Commando Brigade, based in my constituency, which is set to go out to Afghanistan in a few weeks?

[Dr Fox]

As I said in answer to an earlier question, none of those preparing for or on deployment will receive redundancy notices. I shall certainly ensure that all the lessons are learned from this episode to make sure that no one else in the armed forces is put in that position either.

[Tony Baldry (Banbury) (Con)]

Should we not design a new armed forces “parliamentary deficit denier” tie? We would not have to make redundancies if it were not for the fact that when the present Government came into office, Labour had left the Ministry of Defence with the largest unfunded overdraft of any Government Department.

[Dr Fox]

Not only is my hon. Friend correct, but the debt interest repayment that the country will have next year is bigger than the MOD budget, the Foreign Office budget and the overseas aid budget combined. What was shocking today was the fact that there were no regrets and no remorse, just naked self-interest from the Opposition.

[Mr Ben Wallace (Wyre and Preston North) (Con)]

When I was serving in the armed forces under the previous Government, colleagues of mine were given their redundancy notices while serving on the front line in Bosnia. That was not by mistake or leaked e-mail; it was an entirely deliberate process carried out by the Labour Government. Does my right hon. Friend agree that the phoney anger from those on the Labour Benches is designed to cover the fact that they left the MOD in a state of overspend, underfunding and complete chaos?

[Dr Fox]

I think that in the months ahead we will see a number of ingenious smokescreens created by the Opposition to make the House discuss anything other than the appalling economic mess that they left behind—not least as it impacts on our armed forces.

[Christopher Pincher (Tamworth) (Con)]

Does my right hon. Friend agree that the significant, and indeed forced, expenditure on urgent operational requirements by the last Government—money that had to be taken from the reserve, which even the Labour-dominated Defence Committee commented upon last year—has contributed at least in part to the challenges that he now faces?

[Dr Fox]

I did not expect to have to defend the record of the previous Government at any point, but when our armed forces require equipment it is the duty of the Government of the day to ensure that they get it. The UOR mechanism has been a very effective way of achieving that, and the current Government intend to carry on that practice.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I am proud to have RAF Linton-on-Ouse in my constituency. When graduates there have received their wings they proceed to RAF Valley and other RAF stations. There will be huge uncertainty surrounding the continuation of the programmes of both those who have graduated and undergraduates who are currently at RAF Linton. What reassurance can my right hon. Friend give us today about their future?

[Dr Fox]

As I have said, it is greatly to be regretted that we are losing personnel from the armed forces, including 5,000 from the RAF. All of us would wish that that was not the case, but we must deal with the economic reality as we find it. It is important that when announcements are made about redundancies, they are made appropriately through the chain of command, not through national newspapers or political announcements in the House. It is appropriate that we give sensitive treatment to those who are to lose their jobs. I believe that is how the whole House thinks it should be done.

[Kris Hopkins (Keighley) (Con)]

Nobody should lose their job via an e-mail—but particularly not members of the armed forces, who put their lives on the line for this country. If whoever was responsible for sending that e-mail has not done the honourable thing by standing down and resigning, should they not be sacked?

[Dr Fox]

As I said earlier, the Army is already looking into the particular circumstances of the situation. There has been an appalling mistake, and I know that the individual concerned will be absolutely mortified that it occurred. We need to find ways to ensure that it does not happen again, but we have to be careful about hanging individuals out to dry, particularly very experienced individuals, because of demands from the media or anywhere else.

[Mr Peter Bone (Wellingborough) (Con)]

The inaccurate reports of the firing of RAF pilots who have nearly completed their course will cause a great deal of anxiety to members of the RAF. The Secretary of State has rightly not gone into the details, because he wants officers to be informed first, but I ask him seriously to consider coming back to the House in due course so that we can question him further on this matter.

[Dr Fox]

I am sure the House will have a number of occasions, at Defence questions and in future debates, to question me on the implementation of the SDSR and the CSR, and on the reasons why we had to make the reductions that we did, and how we are implementing them. When we have given information to the individuals concerned, then and only then will be the appropriate time to make announcements to the House.

[Mr Speaker]

I am grateful to the Secretary of State and to right hon. and hon. Members for their succinctness, which has meant that everybody who wanted to contribute had the chance to do so.

Auto Windscreens

Tuesday 15th February 2011 Commons Chamber

Application for emergency debate (Standing Order No. 24)

15:58

[Toby Perkins (Chesterfield) (Lab)]

I rise to propose that the House should discuss a specific and important matter that I believe should have urgent consideration—the decision of Auto Windscreens to go into administration yesterday, with the possible loss of 1,100 jobs.

Auto Windscreens employs about 400 people in my constituency, in head office, call centre and manufacturing functions. The loss of those jobs would be catastrophic to an area that is already set to be the worst hit in Derbyshire by the cuts in public sector jobs. Staff were sent home yesterday, and as of today there is no money to pay them for the 14 days’ work that they have done this month, nor for their ongoing employment. However, in an effort to sell the business as a going concern, the administrator, Deloitte, has not yet made staff redundant, so they are effectively in limbo. The company is unable to trade, which will make it more difficult for it to be sold. Time is very much of the essence.

I would like to debate what action the Government can take to support Deloitte to get Auto Windscreens trading again. With every passing day that it is not trading, the task of finding a buyer becomes more difficult and the challenge of turning the business round grows. I would like to debate what action the Government can take to support finding buyers; to help them access the funding required to get the business back on a stable footing; and to support either the moribund regional development agency, which would previously have been expected to co-ordinate the response, or the fledgling Sheffield city region local enterprise partnership, to undertake that co-ordination.

I would also like to debate whether, in the absence of Auto Windscreens, Autoglass, the UK market leader, would have an effective monopoly, and the impact on pricing and, by extension, insurance premiums. I would further like to debate what action the Government can take, in the event of the company failing to be salvaged, to assist the 1,100 employees to find work, and to find out whether discussions have taken place with the trade union to explore the possibility of some sort of employee or management buy-out.

Auto Windscreens is an important employer in my constituency, an important contributor to the UK economy, an important part of the UK automotive industry, an important supplier to the motor insurance industry, and an important component of any private sector-led recovery.

At times like this, it is vital that the employees affected, and people throughout Britain, can see politicians working together swiftly to save those jobs in the national interest. I hope that we can debate in the Chamber what can be done, or that the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk) will agree to meet me, the administrators and any other people who can help get Auto Windscreens trading again and save those 1,100 jobs, which we can all ill afford to lose.

[Mr Speaker]

I have listened carefully to the hon. Gentleman, and I have to give my decision without stating any reasons. I am afraid that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 24, and I cannot therefore submit the application to the House.

Master’s Degrees (Minimum Standards)

Tuesday 15th February 2011 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

16:02

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I beg to move,

That leave be given to bring in a Bill to prohibit universities awarding Master’s degrees unless certain standards of study and assessment are met; and for connected purposes.

It is assumed in our society that hard work, ability and merit are the determining characteristics necessary to obtain academic qualifications, yet there is a glaring anomaly in our system of higher education, which undermines the value of postgraduate credentials: the byzantine practice whereby Oxford and Cambridge universities award a complimentary master of arts degree to anyone who has graduated with a bachelor’s degree from their institutions. I say “complimentary”, but I understand that Oxford colleges often charge a £10 administration fee. In those cases, people’s BA(Hons) are automatically upgraded to MA(Oxon).

While most postgraduate students who hope to obtain an MA must undergo at least a year’s study, have their abilities tested by examination and pay significant tuition fees, often around £4,500, graduates who attend Oxford and Cambridge can automatically convert their bachelor’s degree into an MA, regardless of academic merit.

That is not only unfair to the 200,000 students who get their MA the hard way, but fundamentally undermines the integrity of the MA marque. Worse, apparently 62% of employers when surveyed reported that they thought that the MA(Oxon) or MA(Cantab) were genuinely earned postgraduate qualifications.

Eleven years ago, the Quality Assurance Agency for Higher Education said:

“The Masters title causes much misunderstanding…most employers think it always represents an award for postgraduate study.”

There is no logical or justifiable defence of that historical anachronism, which grew out of ancient circumstances that have long been irrelevant to modern academic practice. To preserve the MA’s academic integrity, it is time to discontinue Oxbridge colleges’ ability to award unearned qualifications that can so easily cause confusion. That is why my short Bill would prohibit granting master’s degrees unless certain minimum academic standards are attained.

Let me be absolutely clear at the outset that I do not blame Oxbridge graduates for taking the opportunity presented to them on a plate—it would be nice if we all received a similar offer. The problem is that that outdated and unfair practice reinforces the suspicions of many of the privileges and advantages bestowed on a small number of very fortunate people, often at the expense of everyone else. For example, in my role before entering Parliament, when sifting job applications and hiring for research positions, I would often see CVs citing that master’s degree brand. Presumably, would-be employers are frequently superficially impressed by what appears to be a mark of high academic distinction.

It is not just me who objects to the practice; The Daily Telegraph reported last year that Cambridge academics are beginning to feel distinctly queasy about the situation. Dr Neil Dodgson, a computer academic at Cambridge, said:

“Many find it offensive that we should award a degree for doing nothing more than being able to breathe for three years…It is only a matter of time before our MA spawns a PR disaster. Perhaps it is time for us to acknowledge that the rest of the world has moved on, and to align ourselves, reluctantly, with a world that believes that a degree should only be awarded for academic achievement.”

Surprisingly, the issue has rarely been aired in Parliament or more widely, and yet the practice is a wrong that the stewards of those great universities could and should put right themselves. I genuinely hope that the new vice-chancellor of Cambridge university will take a more enlightened approach than his predecessor, who famously said that

“universities are not engines for promoting social justice”.

I recently surveyed some of my constituents and received some interesting replies. One woman replied:

“I didn’t realise that the fortunate graduates of Oxbridge could obtain an MA by simply sending in an admin fee! My son worked hard for 2 yrs for his MA”.

Another wrote:

“Thanks for informing me about the £10 MA from Oxford and Cambridge! If this is true, then it’s really too much. My husband (UCL) told me that he didn’t think this was the case. Please confirm. I had no idea. I will tell my 23-year-old who did his masters the long way!”

Another said:

“As someone who is studying for a postgraduate diploma I do feel it is unfair that this might be the case”,

and yet another told me:

“It only reinforces the privileged position that these two universities hold in our society…only academic achievement should enable any qualification at university and not the equivalent of a round of drinks.”

Some will say, “Everybody knows that it’s not really a master’s degree,” but clearly, the survey information and what I have learned from asking around show that most people are oblivious to the small print on the Cambridge website or the statement in the QAA literature. Others will say, “Oxbridge graduates work harder and have higher abilities, and the MA reflects that.” Notwithstanding the fact that that argument is usually made by those who attended Oxford or Cambridge, such an attitude is obviously insulting to the other 100 universities in the UK, which have fine academic records.

Many will say, “This is just the politics of envy, and you are just jealous.” Perhaps people who want access to such unearned privileges are envious, but others who object to the practice just want a fair system based on real rather than fake merit. Others will say, “Well, this whole thing is not to be taken seriously. There are far higher priorities for reform.” It is true that there are far bigger questions, including what is happening to tuition fees, but the Bill is one small step to rectify a simple problem, which it will achieve—crucially—at absolutely no cost. Anyway, if it is such a petty issue, surely nobody will object to ending the practice.

We need the Secretary of State for Business, Innovation and Skills to recognise that it is time that masters’ degrees represented postgraduate study. We need Oxford and Cambridge to consider the situation themselves, and I shall write to them to urge them to do so. Finally, we need legislation to uphold the integrity of what should be the finest British traditions of fair play and achievement-on-merit in our higher education institutions.

16:09

[Mr Mark Field (Cities of London and Westminster) (Con)]

I must confess that the spirited call of the hon. Member for Nottingham East (Chris Leslie) is a reprise of a perennial squabble that I have had with my brother over the past two decades or so. Like the hon. Gentleman, my brother took a master’s degree that involved two years of postgraduate study, while I qualified—if that is the right word—for my MA as a result of gaining a degree from Oxford university. My college, St Edmund Hall, has a history dating back to 1278. At that juncture, the requirement was to surpass 21 terms after matriculation before qualifying for a master’s degree, having taken a bachelor’s degree prior to that. That topping-up arrangement applied happily—dare I say it—for more than six centuries, before Leeds university was even founded let alone started handing out degrees of its own to deserving, and perhaps some slightly less deserving, candidates. Perhaps it is the other universities that should change their role to take account of the history of Oxford and Cambridge, which have established a well-set path of 21 terms post-matriculation by which someone qualifies for a master’s degree.

There is a more serious point about what the hon. Gentleman has said. Our elite universities are now global brands. They should not sit back and take ever more Government interference. Only last week, a proposal was made by the Deputy Prime Minister of the coalition Government to give ever more powers to the access regulator. If he has his way, in future universities will be banned from charging higher levels of tuition fees unless they adhere to fixed Government quotas on admissions. In my view, this is all wrong. The hon. Gentleman and his proposal are, I am afraid, part of that same muddled thinking. Our excellent and elitist universities do not need any more interference in their governance. Otherwise, I fear that we run the risk of some of our best institutions deciding before too long to go private. I am thinking not just of Oxford and Cambridge, but of the London of School of Economics and Imperial college—to name but two—in my constituency. We should be proud of the finest of our traditions in the higher education sphere. It is one of the relatively few areas in which we have a global leadership, and my fear is that ever more Government interference—of the sort articulated by the Bill—will lead to a diminution of that excellence and elitism. If that is the case, we will all suffer.

[Sir Menzies Campbell (North East Fife) (LD)]

rose—

[Mr Speaker]

Order. The right hon. and learned Gentleman would expect me to know, or at least to check to ensure that I know, the procedure. I love nothing more than to hear him talk, but I am afraid that I am allowed to call only two Members to speak in a situation of this kind.

Question put and agreed to.

Ordered,

That Chris Leslie, Nic Dakin, Kerry McCarthy, Helen Jones, Cathy Jamieson, Bob Russell, Mr Mike Hancock, Philip Davies, John Cryer and Mr Dennis Skinner present the Bill.

Chris Leslie accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 18 March, and to be printed (Bill 148).

[Sir Menzies Campbell (North East Fife) (LD)]

On a point of order, Mr Speaker. Your responsibility extends, of course, to giving advice to those who might not be quite as familiar as yourself with the procedures of the House. I should perhaps declare an interest as the chancellor of the university of St Andrews and as the holder of a master of arts degree from Glasgow university. How could I find an opportunity to put it on the record that the first degree in the ancient Scottish universities is an MA?

[Mr Speaker]

As the right hon. and learned Gentleman well knows, he has just done precisely that, and with a skill that might be of interest to new Members who might benefit from it. I appreciate the good grace with which he accepted the selection of speakers on this occasion. I apologise to him for having momentarily forgotten about that high office that he holds, but I am not likely to do so again.

[Dr Julian Lewis (New Forest East) (Con)]

On a point of order, Mr Speaker. In the light of the fascinating short debate we have just had, are you in a position to inform the House whether the practice of making right hon. and hon. Members who happen to be lawyers honorary Queen’s counsels is still in existence?

[Mr Speaker]

I am not sure that I can inform the House on any aspect of that matter. However, as the hon. Gentleman will know—I cannot imagine that he is referring to any particular Member—it is not within my bailiwick. I think that we had better leave it there.

Parliamentary Voting System and Constituencies Bill (Money) (No. 2)

Tuesday 15th February 2011 Commons Chamber

Queen’s recommendation signified.

16:14

[The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)]

I beg to move,

That, for the purposes of any Act resulting from the Parliamentary Voting System and Constituencies Bill, it is expedient to authorise the payment out of the Consolidated Fund of charges payable to the Chief Counting Officer in connection with the referendum on the voting system for parliamentary elections.

The resolution relates to Lords amendments 31 to 34 to paragraph 20 of schedule 1, which were inserted in the Bill in Lords Committee. The resolution gives the chief counting officer, who is the chair of the Electoral Commission, a power to incur expenses for the effective conduct of the referendum in certain, limited circumstances and to make payments in respect of those expenses out of the moneys to be provided from the Consolidated Fund. The original money resolution, which was agreed to on Second Reading in this House, covered only the payment out of the Consolidated Fund of charges payable to regional counting officers and counting officers in connection with the conduct of the referendum.

This additional resolution is needed because it has become apparent to the Government and the Electoral Commission that further savings in the cost of the referendum can be made by allowing the chief counting officer to pay costs directly from the Consolidated Fund. For example, Royal Mail has indicated that it may be able to provide a cheaper service for any sweeps of mail centres—a service to ensure that any postal votes still in mail centres towards the end of polling day are identified, extracted and provided to returning and counting officers before the close of poll that evening—if it can contract for this on a national basis with one individual, rather than having to negotiate and contract with the more than 350 officers conducting the poll locally. The resolution is therefore pragmatic.

[Mr John Redwood (Wokingham) (Con)]

Those of us who are worried about the amount of money to be spent on the proposal might be persuaded a little more if the Minister could give us an idea of by how much the cost will come down as a result of this resolution, and say what other measures he can take to try to secure better value.

[Mr Harper]

I can reassure the House that, because of the way the Bill and the amendments are drafted, the chief counting officer can directly recover expenditure only where it has been incurred in a way that provides a clear financial benefit to the public purse. The test is that the chief counting officer may recover expenditure that she has incurred for the purpose of running the referendum only where that expenditure would have been incurred by local or regional counting officers in any event, but where it was more economical for it to be incurred by the chief counting officer. The resolution is therefore aimed at saving money.

[Mr Redwood]

How much?

[Mr Harper]

The whole point is that it is not possible to predict every eventuality. The resolution says that if by spending money herself centrally, the chief counting officer can get services at a lower cost than all the individual regional counting officers, she will be able to do so, thereby delivering a saving, although it is not possible to quantify this in advance. I have given a specific example of where we know there is an ability to deliver a saving, but I cannot give my right hon. Friend the certainty on the numbers that he seeks. However, having given him the detail that I am able to, I commend this resolution to the House.

16:18

[Chris Bryant (Rhondda) (Lab)]

As the Minister set out, this is a minor money resolution, and we do not have a major problem with it. However, perhaps I can use this opportunity to raise an issue in relation to the combination of polls—the reason we need this resolution—as it affects Scotland. As I am sure the Minister will know, electoral registration officers in Scotland have said that they will not now be able to perform the whole count for the Scottish parliamentary elections overnight. All they will do is the verification—both of the referendum, as the Bill requires, and the parliamentary elections—and then they will stop, leaving the count to take place on the Friday.

I understood from what the Minister said in previous debates that nothing would get in the way of ensuring that the count happened as soon as possible in Scotland and Wales, and in local government. Before the last general election, all parties combined to try to ensure that the overnight count happened. Disappointingly, the Under-Secretary of State for Scotland has refused to suggest any amendments to the Bill. I therefore wonder whether the Minister could assist us by saying something that might help to ensure that the election results are known in Scotland overnight.

[Mr Harper]

It might be helpful if I remind the House that, when the chief electoral officer set out her guidance about the count timing, she also set out a number of principles. One of her principles—which is also one of the Government’s principles that was shared across the House—is to ensure that the results of the elections to the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly, as well as the results of the council elections, are counted and made known first. She was reassured by counting officers in Scotland and elsewhere, and on that basis, she made a determination about the time of the referendum count. I am sure that if she is given different information by those counting officers, she will want to ensure that her principle is upheld—namely, that we should still know the results of those elections before the count takes place for the referendum.

[Chris Bryant]

I am grateful to the Minister, but, unfortunately he has not yet replied to my letter of some weeks ago, so I am unable to know the full purport of what he is saying. The point is that we believe not only in the principle that the elections to elected office should be counted first, but that the counts for the elections to the Scottish Parliament and the Welsh Assembly and for the local elections should happen overnight.

[Mr Harper]

The rules for the referendum are set out in the scope of the Bill, but it would not be within its scope to change the law pertaining to the counting only of the votes in the elections. The important thing that we have set out about the combination is that nothing that happens with the referendum count will change the timing of the election results. I think that there was a shared view on both sides of the House that we want to see those results counted as soon as possible, so that people will know who is running the devolved nations.

[Chris Bryant]

I am sorry, but the Minister’s reply is very disappointing. Either he does not understand the law that he himself has drafted and the statutory instruments that have gone through in relation to the combination of polls in Scotland, Wales, Northern Ireland and England, or he is being—how can I put it—somewhat obtuse. The necessity for most people is that they want to know the election results on the night. However, because of the way in which the Government are combining the polls, and because of the Bill and the statutory instruments that went through at the same time, the people of Scotland will not know their election results on the night. The Minister will have unpicked one of the elements that has been absolutely standard in British history for more than 100 years—namely, that the results are announced immediately. This does not have much to do with the money resolution, Mr Speaker, but I have made my point none the less. I think that it is a great shame that the Minister has behaved in this way.

16:22

[Mrs Eleanor Laing (Epping Forest) (Con)]

I want to put on record that representatives of the Electoral Commission came before the Political and Constitutional Reform Committee again last week to discuss the amendments that are before the House today. One of the questions that the Committee looked at was that of the cost of the referendum. It will cost £100 million to run the referendum, at a time when, I hardly need remind the House, we are looking at cuts—let me say “reductions”—to every other aspect of public expenditure. It would appear that, in addition to that expenditure, the voter education campaign that the Electoral Commission is quite rightly required to undertake will cost something like £7 million. Local authorities will also have to bear additional costs, which we will not know for another six months or so, in running the referendum. That is not a reason not to have the referendum, but it is important that the House and our electorate understand just how much it is costing the taxpayer.

16:24

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I should like to return to the issue raised by my hon. Friend the Member for Rhondda (Chris Bryant), having perhaps given the Minister slightly more time to reflect on the genuinely valid points that my hon. Friend raised. I know that colleagues from other parties were also nodding in agreement when he was raising them.

The returning officers in Scotland are up to the same trick that they were trying to pull before the 2010 general election, when the then Secretary of State, my right hon. Friend the Member for East Renfrewshire (Mr Murphy) gave a clear instruction to the returning officers that they could not delay the start of the count for that general election in Scotland until the following day.

Let me place the Minister under notice that I shall seek two guarantees from him and the Deputy Leader of the House. The first is that he speaks urgently to the Secretary of State for Scotland and the Under-Secretary of State for Scotland—I suspect he will have a number of opportunities to speak to them in the Division Lobbies in the next four hours—to get them to set the record straight on the Scotland Office position on the counting. Will the Minister also guarantee—I will take him at his word, as he is an honourable Gentleman—that either he or the Secretary of State will write to the returning officers in Scotland to remind them that they receive a payment for carrying out these duties?

[Pete Wishart (Perth and North Perthshire) (SNP)]

Does not the hon. Gentleman share my absolute and utter surprise that neither the Secretary of State for Scotland nor the Under-Secretary have yet written to returning officers to get this issue clarified and resolved?

[Thomas Docherty]

I fear that in some ways I am not surprised, because we have learned over the last nine months that the Secretary of State for Scotland is like Macavity the cat. When it comes to any issue—whether it be the coastguard, defence or anything else—he is posted absent. The hon. Gentleman’s point is valid because the Secretary of State should be writing to returning officers to remind them that they receive an additional payment for carrying out their duties in unsociable hours, so there is no reason for the count not to happen. If the returning officers insist on delaying until the following morning, will the Minister guarantee that those payments will be withdrawn from them and their staff? Why should we pay them for a service that they are not carrying out? Will he also confirm that he will write to returning officers to remind them that, during our Wednesday evening debate on the Standing Order at the end of last year and during the course of the Parliamentary Voting System and Constituencies Bill, he gave an explicit guarantee on behalf of Her Majesty’s Government that the count would take place as soon as practically possible—namely, straight after the polls close in Scotland?

16:26

[Mr John Redwood (Wokingham) (Con)]

We are debating a money resolution, the whole purpose of which is for the House to exert some control over the expenditures of public money and to be accountable for them. I find it curious that the Minister was unable to tell us how much money was involved in the wider issue of paying for the referendum, and unable to help the House by telling us by how much he might be able to reduce that rather large bill as a result of this mini motion.

Many of us are reluctant about the entire measure; we do not think that it is either urgent or important, but we believe that controlling public expenditure is vital. When we see discretionary items such as this one, we are even more enthusiastic about exerting very strong control over the expenditure if it proves to be the will of Parliament as a whole that the proposal goes forward. I hope that when the Minister replies, he will have some figures to present to us and will be able to give us a little encouragement about why we should support this particular money resolution. He hinted that it could mean a bit less, but some of us would like it to be a lot less. I hope the Minister will think again.

[Mr Harper]

rose—

[Mr Speaker]

I do not believe the right hon. Gentleman is giving way. I think he has completed his speech. Is that so? I am correct.

16:28

[Mr Charles Walker (Broxbourne) (Con)]

I agree with my hon. Friend the Member for Epping Forest (Mrs Laing) and the hon. Member for Rhondda (Chris Bryant). My Broxbourne constituents are horrified at the cost of this referendum, which some commentators have said could be as high as £250 million. I dare to say that this money would be far better spent on employing doctors, nurses, teachers and soldiers.

16:28

[Mr David Winnick (Walsall North) (Lab)]

I recognise, as do we all, I am sure, that this referendum measure is before us because of the coalition agreement. If the Conservatives had won the election outright and gained a majority, they would certainly not be putting it forward. I also accept that public expenditure should not be the dominant reason why the House should not pursue a particular course. I must say, however, that there is very little evidence of any desire in the country at large to have a referendum on what sort of system should be used for electing Members of Parliament. How many letters have we received? How many e-mails? Do people come to our surgeries and tell us that this is one of the most important, crucial issues of the day? The answer is no. [Hon. Members: “No!”] The noes are coming from the Conservative Benches, but I ask my hon. Friends: am I wrong? Is it not a known fact that there is so little interest in the matter?

I must also say, however—and I know that at some stage this evening we shall debate the Lords amendment concerning the nature of the threshold—that, like others who have spoken, I see little justification for spending what will be a very large amount of money on a referendum on the system for electing Members of Parliament at a time when we are constantly told that we must be careful with our public money, when allowances and benefits are being taken away from people, and when, in my view and, I believe, that of most Members, there is little public wish for such a referendum.

Question put and agreed to.

PARLIAMENTARY VOTING SYSTEM AND CONSTITUENCIES BILL

(PROGRAMME) (No. 5)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Parliamentary Voting System and Constituencies Bill for the purpose of supplementing the Order of 6 September 2010 (Parliamentary Voting System and Constituencies Bill (Programme)):

Consideration of Lords Amendments

1. Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion four hours after their commencement at this day’s sitting.

2. The proceedings shall be taken in the order shown in the first column of the following Table and shall (so far as not previously concluded) be brought to a conclusion at the times shown in the second column.

[Chris Bryant (Rhondda) (Lab)]

On a point of order, Mr Deputy Speaker. I gather that the Division bell did not go off in the Jubilee Room just now, and that some Members were not able to vote because they did not realise that the Division was happening

[Mr Deputy Speaker (Mr Nigel Evans)]

I will ask Attendants to check the Division bells in the Jubilee Room. If they continue not to work, we will ensure that the Attendants call Divisions in the Jubilee Room separately, and I will clearly make allowances for that when I call for the Doors to be locked.

16:31

Division 201

Ayes: 312

---

Conservative: 257
Liberal Democrat: 55

Noes: 240

---

Labour: 216
Democratic Unionist Party: 6
Scottish National Party: 6
Conservative: 5
Independent: 2
Plaid Cymru: 2
Social Democratic & Labour Party: 1
Alliance: 1
Green Party: 1

Parliamentary Voting System and Constituencies Bill

Tuesday 15th February 2011 Commons Chamber

Consideration of Lords amendments

[Mr Deputy Speaker (Mr Nigel Evans)]

I must draw the House’s attention to the fact that financial privilege is involved in Lords amendment 31. If the House agrees to this amendment, I shall ensure that the appropriate entry is made in the Journal.

Clause 1

Referendum on the alternative vote system

16:47

[The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)]

I beg to move, That this House agrees with Lords amendment 2.

[Mr Deputy Speaker]

With this it will be convenient to consider the following:

Lords amendments 3 to 7, 9 to 15, 18 and 21 to 26.

Lords amendment 27, and amendments (a) and (b) thereto.

Lords amendments 28 to 103.

Lords amendment 104, and amendment (a) thereto.

[Mr Harper]

It is no secret that the Bill has received extensive and lengthy debate both in this House and in the other place. It had eight days of debate in this House and the Lords Committee stage took place over the four months from November to February, taking 17 days and more than 110 hours. I think that, with one exception, it was the longest Committee stage of any Bill in my lifetime. I am glad that we finally now have the chance to consider the amendments made in the Lords.

The amendments in this first group encompass a range of changes that were made or accepted by the Government in the other place. I shall set out their effect and the Government’s overall approach briefly to make the best use of time available for debate. The Government have been consistently clear about the fact that we are prepared to make changes to the Bill where we believe they will make genuine improvements and will not undermine the key principles underpinning the Bill. Those principles are clear and we believe they are right. [Interruption.] Will the hon. Member for Rhondda (Chris Bryant) just calm down for a moment and let me proceed? The people should be given the chance to vote on the electoral system that is used to elect Members of Parliament and we should have a system for drawing up constituencies that better ensures that voters have an equal say wherever in the United Kingdom they live.

We have made changes to the Bill in response to points that were made in this House. On the referendum, we accepted changes to the wording of the question, and we also accepted amendments from the Select Committee on Political and Constitutional Reform to clarify the regulation of spending by media outlets during the referendum campaign and to remove the power that has existed since the 1940s for a Minister to modify a boundary commission’s recommendations.

In the House of Lords, we accepted or made a number of amendments on both parts of the Bill. We accepted and made technically effective an amendment in part 1, which relates to the holding of the referendum, that would allow the date of the referendum to be moved if practical reasons made it impossible or impracticable to proceed on 5 May. We brought forward an amendment to part 2 on Report to change the consultation process, on the Boundary Commission’s recommendation, so that it includes public hearings. The hearings are intended to deal with the concern raised about the need for an oral element in the consultation process. We believe that they will provide an opportunity for the public and the parties to express their views, but in a way that will allow more effective engagement than the old, legalistic inquiry system.

[Albert Owen (Ynys Môn) (Lab)]

I do not agree with the Minister that there was ample time to discuss the matter in this House; the reason for the prolonged debate in the other House was the insufficient time here. On the oral hearings, will he tell the House how many such hearings will take place and—there is a Welsh dimension to this—whether they will take place in people’s local communities or just in large towns?

[Mr Harper]

On the hon. Gentleman’s first point, he knows as well as I do, and the view is shared by everyone in the other place, that there was an organised filibustering campaign, which is unprecedented in the way in which the other place conducts its business and of great concern to all those who value its self-regulating nature. That view is not only held by me, but shared across the other House. On his second point, we propose that there will definitely be some public hearings, and there will be up to five in Scotland, Wales and Northern Ireland and each of the English regions. We will allow the boundary commissions to use their discretion to decide where they hold the hearings so that they can reflect the issues that people will raise.

The hon. Gentleman will know that the Bill, as proposed by the Government and as it left this place, contained no provision for an oral process at all. The Government listened carefully to the proposals made in the other place and brought forward those changes, which were accepted without Division. He will also know that his colleagues in the other place then suggested effectively taking us back to the very legalistic process. A full debate was held and the other place decided that that was not an appropriate method and that it was content with the public hearings that we proposed.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

The Minister has made the outrageous claim that there was filibustering. I attended the debates several times in the early hours of the morning to watch the noble Lords debating the issue and I am surprised that he regards some of his Liberal Democrat colleagues in the other place, such as Lord Tyler and others, who tabled amendments which were then accepted in the early hours, as having filibustered. Does he think that it was only Labour peers who filibustered, or does he make that claim just because he was forced to wait for his Bill?

[Mr Harper]

There is a general acceptance in the other place, not only among Conservative peers and those supporting the Government parties, but from many Cross Benchers, that the behaviour, not of the House of Lords but of a small number of former Labour MPs who have gone to the other end of the building, was unacceptable.

[Ian Lucas (Wrexham) (Lab)]

Community councils in my constituency have discussed the removal of the right to make oral representations in public inquiries on parliamentary changes in conjunction with the presentation of information to them from the Boundary Commission on local council boundary changes. It will still be possible to consider local council boundary changes in a local public inquiry, so why is it wrong for a parliamentary constituency to have the right to a public inquiry over the most fundamental changes to boundaries since the 19th century?

[Mr Harper]

The hon. Gentleman raises the issue of people’s ability to have their say in person. Such provision was not in the Bill originally, but we listened carefully to the debate in the other place, and there were a number of very good arguments. Among others, Lady de Souza and Lords Pannick and Wolff were of the view that it was important to allow local people to have a say, so we tabled a Government amendment and an associated new schedule enabling an outlet for local opinion, and that was included in the Bill.

The proposed changes were accepted without a Division in the other place, but I have said—I think, accurately—that there was then an attempt effectively to turn that process of public hearings back into the largely discredited legalistic inquiry process. There was a debate, but the other place, having decided that it did not want to accept the idea, was content with our proposal for public hearings.

[Paul Murphy (Torfaen) (Lab)]

I do not agree that the proposals before us are anything like proper inquiries, but let us assume that the Minister is right and they are concessions. Does he not accept that Wales loses 25% of its Members while the rest of the United Kingdom loses 7%? Does he not think, therefore, that there should be more such assurance in Wales than in other parts of the country?

[Mr Harper]

On the right hon. Gentleman’s first point, which is that public hearings are different from the old discredited system of local inquiries, he is spot on. They are designed to be different, because the academic evidence is very clear: the old system of public inquiries did not lead to an improvement in the boundaries.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

Will the Minister give way?

[Mr Harper]

I am happy to take interventions, but let me at least answer the right hon. Gentleman first. Then, of course, I will take the hon. Gentleman’s point.

On the right hon. Gentleman’s point about Wales, he is quite right that Wales’s share of the House of Commons will fall from 6% to 5%, but we debated the issue in this House, the other place debated the representation of Wales, and both Houses decided that the current over-representation of Wales is not acceptable. All parts of the United Kingdom should be treated equally—

[Chris Bryant (Rhondda) (Lab)]

Apart from the Isle of Wight.

[Mr Harper]

We will get on to the Isle of Wight in due course, but the hon. Gentleman’s colleagues in the other place tabled and supported an amendment to treat the Isle of Wight differently, so it is no good him chuntering from a sedentary position.

[Tristram Hunt]

In evidence to the Political and Constitutional Affairs Committee, we heard last week from Professor Ron Johnston, who listed examples of case after case where public inquiries and the voices of local people had changed the results of Boundary Commission studies. The hon. Member for Epping Forest (Mrs Laing) will back that up. There is no argument that the system is somehow discredited; it is a proper voice by which people can have their say.

[Mr Harper]

The Government accept the argument, and accepted it in the other place, that we should have a process in which local people, particularly, can have their say. That is why we brought forward the proposal for public hearings—

[Stephen Williams (Bristol West) (LD)]

rose—

[Sarah Newton (Truro and Falmouth) (Con)]

rose—

[Joan Walley (Stoke-on-Trent North) (Lab)]

rose—

[Mr Harper]

Let me just answer the hon. Gentleman’s point first. Then, I shall try to take points from Members according to the order in which they rose.

Having read other contributions from Professor Johnston and his colleagues in their British Academy report on the matter, I note that they made it quite clear that local inquiries resulted in little change, and that those arguments raised at local inquiries which had not already been raised in writing did not have any bearing on the result.

We listened carefully to arguments for allowing people to have their say in person, however, and we particularly wanted a process that was more accessible to the public, not just to political parties and their lawyers. Those in the other place—Cross Benchers in particular—were content with our proposals.

[Stephen Williams]

I was also at the Select Committee hearing with Professor Johnston of Bristol university to which the hon. Member for Stoke-on-Trent Central (Tristram Hunt) referred. Professor Johnston actually said that public inquires were usually games for political parties, and that some parties were able to hire expensive barristers. The public were often frustrated by political parties and their barristers, but the hearings that the Bill proposes instead are likely to give the public more say than hitherto over the process.

[Mr Harper]

I am grateful to my hon. Friend, whose argument holds a great deal of water, because that is broadly what the British Academy report said about local inquiries. That report was produced by a team of academics headed up by Professor Ron Johnston, so if that is what he said at the Political and Constitutional Reform Committee, it stacks up very well with what he said in writing.

17:00

[Sarah Newton]

I strongly welcome these amendments, because it is vital that people’s voices are heard, especially those of the people of Cornwall, who mounted a hugely successful campaign about our desire to keep Cornwall whole. I hope that through these opportunities for public meetings, we might yet succeed in achieving that. Does the Minister agree that it would be very desirable to have one such public meeting in Cornwall, given the strength of feeling there?

[Mr Harper]

I thank my hon. Friend for making that point. It is obviously not for the Government to tell the boundary commissions what to do, but one of the reasons for ensuring that there can be several inquiries in various regions is that the commissions will be mindful of the areas where they suspect there will be considerable public interest. It is fairly obvious to everybody that, in the south-west of England, Cornwall will be one of those places where members of the public, in particular, and of course Members of Parliament, will be very keen to make that case.

[Mr David Winnick (Walsall North) (Lab)]

rose—

[Huw Irranca-Davies (Ogmore) (Lab)]

rose—

[Mr Harper]

I think that the hon. Member for Stoke-on-Trent North (Joan Walley) has first dibs.

[Joan Walley]

Given that not all of us have been party to all the debates in the other place, can the Minister tell us how local people will have their say? Whatever the Government are saying about localism, I cannot see how, under the new arrangement that he is bringing to the House, people will understand how they are going to have their say. It might be all right for Cornwall, but it might not be for Stoke-on-Trent.

[Mr Harper]

When the boundary commissions decide to hold their public hearings, they will of course publicise them. We have set out that the commissions will be able at the beginning of those public hearings to lay out the details of the proposals on which they are hearing from local people. I would have thought that the hon. Lady’s constituents in Stoke-on-Trent were as capable of participating as those in Cornwall and in other parts of the United Kingdom.

[Mr Winnick]

rose—

[Huw Irranca-Davies]

rose—

[Mr Harper]

I will be happy to take interventions when I have made a little more progress. I think that the House would expect me to do that in a time-limited debate.

We have also amended the Bill to provide that the boundary commissions must publish all the responses to their initial consultation and allow an additional period during which people will be able to make further representations or counter-representations related to the arguments put forward by others. This is the second area where we thought that some good points had been made in the debate, and we acted in response to an amendment tabled by Lord Lipsey on the Opposition Benches. We think that this amendment, in combination with the public hearing proposals, will deliver a consultation process that represents a real improvement not only on the one that was in the Bill originally, but on that in the Parliamentary Constituencies Act 1986.

We have made other significant amendments to part 2. We have tabled amendments explicitly to empower the boundary commissions to use wards as the building blocks for constituencies—the other place got very exercised about that—and to give the commissions discretion to take account of existing parliamentary boundaries. The amendments respond to concerns about the degree of explicit guidance given to the commissions on what they could take into account. We have accepted an amendment expressly enabling the Boundary Commission for England to take account of the boundaries of the City of London.

In response to an amendment from Lord Williamson, a Cross Bencher, we will require that a review is established after implementation of the new constituencies at the next election to consider the impact of the reduction in the number of seats in this place to 600. There was extensive debate about that in the other place, where we heard all about the fears, largely of those who had been Members of Parliament, that slightly fewer—7.6% fewer—Members of Parliament in this place may place constraints on their ability to do the job. We thought that Lord Williamson’s suggestion of a review in the next Parliament to consider the effect of that reduction to see whether there were some lessons that could be learned was very sensible, and we were happy to accept it.

[Mr Charles Walker (Broxbourne) (Con)]

Does my hon. Friend agree that it seems strange to many Members across the House that we are reducing this House to 600 Members while increasing the size of the unelected House of Lords by 150 peers?

[Mr Harper]

My hon. Friend makes what would be a good point if it were not for the coalition Government’s clear commitment to bring forward a draft Bill in the near future—early this year—to reform the other place. If we were not doing that, he would have a solid case, but given that we are proposing to do that, his case falls away and there is just a timing difference.

[Mr William Cash (Stone) (Con)]

rose—

[Mr Winnick]

rose—

[Mr Harper]

I will give way to my hon. Friend and then to the hon. Gentleman.

[Mr Cash]

Would my hon. Friend be interested to know that some of us are beginning to think, in the light of the forthright position that the House of Lords has taken on the threshold, which we will come to later in the debate, that that House may be more trusted by the electorate than those on the Government Benches?

[Mr Harper]

Mr Deputy Speaker, you would not expect me to be tempted to debate the threshold now, because we will come to it later. I do not agree with my hon. Friend. There is a good case for electing Members to the other place. He knows that the coalition Government have committed to a wholly or mainly elected House. We are in the process of drafting that legislation. From what he says, it is clear that he does not agree with that, but I know, Mr Deputy Speaker, that you do not want me to go into the case for or against House of Lords reform in this debate.

[Mr Winnick]

There will be an interesting debate on thresholds in due course. On the numbers, is the Minister surprised that it is dawning on people outside the House of Commons that far from being a democratic move, it is pretty anti-democratic, because the Government of the day, whoever they are, will simply have more authority? Given that even the most junior Ministers have a Parliamentary Private Secretary, there will be fewer Back Benchers to scrutinise the Government here and in Select Committees. For Governments, the fewer Back Benchers, the better.

[Mr Harper]

The hon. Gentleman obliquely raises the issue of the number of Ministers. He knows that we have been clear at this Dispatch Box and in the other place that we know that there is an issue with that. However, we do not think that this Bill is the right place to deal with it, partly because of the issue of House of Lords reform. We will have to tackle how many Ministers there are not only in this place, but in the other place. As well as the number of Ministers, he touched on the number of PPSs, which currently is not regulated. We have made it clear that the Government will deal with this issue, but that this Bill is not the right place to do so.

[Mr Winnick]

In my lifetime?

[Mr Harper]

This debate also took place in the other place and it was content with our proposals. I do not wish to speculate on the hon. Gentleman’s longevity.

Amendment (b) to Lords amendment 27 would require the arrangements for the review into the reduction of constituencies to be put in place between 1 March and 1 November this year. We do not agree with the Opposition’s thinking in that amendment, because to assess the effect of the reduction in the number of constituencies we must have seen the effects; we should not speculate about them. We think that the Cross-Bench proposal to have the review after the next election is much more sensible.

We have made a number of more minor, technical amendments, including an amendment to ensure that existing legislative powers to change the date of the poll for Northern Ireland Assembly, Scottish Parliament or Welsh Assembly elections are not affected by the provisions on the combination of polls on 5 May. That amendment was made in the other place, but in response to concerns raised in this House by the hon. Member for Foyle (Mark Durkan). We have made amendments to apply the Electoral Commission’s new civil sanctioning powers for new offences relating to loans; to give the chief counting officer the power to be reimbursed from the public purse for expenses that she incurs because it is economically beneficial to the public for her to do so—that is the debate that we had on the money resolution; to ensure that a single definition of registration officer applies throughout part 1; to place an explicit obligation on the chief counting officer for the referendum to take steps to facilitate co-operation between regional counting officers, counting officers and registration officers; and finally, to provide that an elector who registers or who is already registered for a postal vote at one of the polls combined with the referendum, and who is entitled to vote in the referendum, is automatically registered for a postal vote for the referendum.

[Thomas Docherty]

Going back to the point that the Minister made as he rattled through that list, and to the debate that we had a short time ago, will he now confirm, as he did not take the opportunity before, that the Secretary of State will write to returning officers in Scotland to instruct them to begin the count for the Scottish Parliament election as soon as the polls close, and not to delay it?

[Mr Harper]

In response to that debate, which—from memory—was about whether to include in the Bill a power to direct those counting the votes, I said that that would be out of scope and I confirmed that that was the case. If the hon. Gentleman is right in what he says about some returning officers in Scotland, there is nothing in the Bill that has caused them to take that decision. It is a decision that they have taken of their own volition. Some returning officers in Scotland have confirmed that they will count overnight and that there is no problem in doing so. Some returning officers have said that they do not propose to do so, but that is nothing to do with the combination of the polls. It is to do with their judgment about how they want to conduct the count.

As I was saying, similar provision about the combination of polls and postal votes has been made for those registered for other forms of absent vote. I believe that the raft of changes made to the Bill, which the Government have accepted, demonstrate that we have been willing to listen and engage constructively with both Houses of Parliament and to agree to all the proposed changes to our proposals that we believe were merited.

[Chris Bryant]

I am afraid I completely disagree with the Minister’s interpretation of events over the past few months. I wholeheartedly congratulate their lordships on the process they have engaged in, and I make no apologies for the fact that Labour MPs have been holding the Government to account in this House, or for the fact that in the House of Lords there are people who were elected previously and who are able to bring a degree of expertise to the debates when discussing elections.

I note that yesterday Sky News was reporting that the Prime Minister, David Cameron, would take revenge on Labour peers. Bring it on. In legislation on the reform of the national health service, the reform of schools and public services that everybody depends on, Labour peers down the other end will do as robust a job as they have done on the Bill. If there was anything that showed that the Government have not been acting entirely in good faith, it is today’s programme motion, which allows only four hours for 104 amendments to be considered, including the time taken for votes.

I am not sure that my interpretation of what has happened is the same as the Government’s. I say to all hon. Members in all seriousness that I fear that many Members who end up voting for the Bill will regret the day that they did so. The Government have bulldozed their way through every convention so far, ludicrously combining two pieces of legislation that should never have been in one Bill—only because that was a way of keeping the coalition together—pushing forward with no pre-legislative scrutiny of a measure that had no electoral mandate, curtailing debate in this House, for the first time ever threatening the guillotine in the House of Lords, then packing the Lords with pliant new Conservative and Lib Dem Members every day and suspending all the normal rules in the House of Lords.

We will rue the way in which the Bill was pushed through and the legislation itself, because we are not legislating on the basis of long-term democratic health for this country, or on the basis of sound principle, but solely so as to meet the partisan needs of the coalition.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

The hon. Gentleman seems to be suffering from a certain amount of amnesia. When his party was in office in the previous Parliament, there was guillotining all over the place.

[Chris Bryant]

The hon. Gentleman sometimes suffers from amnesia himself. I was talking about guillotines in the Lords. It has been a fundamental principle of the constitutional settlement in this country that the House of Lords is a self-governing House and never has a programme motion.

When there was a Labour Government of just one political party, we never had a majority in the House of Lords. By virtue of how the Government are progressing at the moment, with a large number of new peers being appointed—117 since the general election—they are approaching the point at which they will have an absolutely majority in this House and the other House.

17:15

[Mr Harper]

rose—

[Chris Bryant]

I am not going to give way to the Minister on that point, because I know what he is going to say—that it will not give the Government a majority. However, the coalition’s statement says that they intend to keep on appointing Members of the House of Lords until the percentage share of the vote in the general election is matched there. That will give a majority to the Conservatives and the Liberal Democrats. If the Minister wants to intervene now, I am happy to give way.

[Mr Harper]

I want to make it clear that we have appointed a number of peers, but that a number of them in the resignation honours list of the former Prime Minister were, of course, Labour peers. Even with the new peers who have been appointed, the coalition Government have 40% of peers, well away from a majority.

[Chris Bryant]

The Minister knows perfectly well that the Government are getting very close to the stage at which they will end up having an absolute majority in both Houses. The vast majority of peers who take part in the daily business of the House and vote with the most regularity are those who take a party Whip. Among those, there is already a majority for the governing coalition. The Labour party never had that when in government. My main point is that we have to have some brake on the Government, especially if we go forward and have an elected second Chamber. Otherwise, government becomes autocracy.

Lords amendment 104, so the Minister would have us think, effectively introduces a real opportunity for local people to have their say on proposals from the Boundary Commission. It was a Government amendment tabled in the Lords, but it was introduced in a way that was not quite as the Minister suggests. In fact, Lord Falconer had tabled an amendment and was prepared to waive it because the Government said that they would return on Report with a full process that would embody the ideas behind public inquiries. In fact, Lord Wallace of Tankerness said specifically that

“the Government’s position has been that we are open to considering reasonable improvements to the process, provided that they do not compromise the fundamental principles of the Bill, and that still remains our position.”—[Official Report, House of Lords, 26 January 2011; Vol. 724, c. 1069-1070.]

I do not know what fundamental principles of the Bill might mean that local people cannot have an effective voice, but that is what we have ended up with.

Let us be absolutely clear that what the Government propose does not meet the objections made by the Cross Benchers, Labour peers or many others who believe that local people should be able to have a proportionate say after the Boundary Commission has made proposals. For a start, the inquiries will not be local. There will be five at most across the whole of Wales and five in each region. I look forward to going to one of the five in the south-west, covering an enormous region with wide diversity. Each hearing will probably cover about 10 constituencies. I say to the hon. Member for Truro and Falmouth (Sarah Newton), who spoke earlier about Cornwall, that I do not think there is a chance in hell of local people in Cornwall having their views heard properly in the process. In addition, because of how the Bill is constructed, it will be impossible for the Boundary Commission to do anything about it even if it says that Cornwall should not be split up. The principle of the Bill to which the Minister is so adherent in some parts of the country, but not in all, is that the size of parliamentary constituencies should be equalised—too aggressively, I believe.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

Will the hon. Gentleman define “local people”? Is he talking about unelected local people, local councillors or everybody?

[Chris Bryant]

I mean all those. There is an important distinction, which, as my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt), who is not in his place, said earlier, was discussed in the evidence that was given to the Select Committee last week. Political parties have their views to express—in the past, some have employed a barrister to express it for them, and that is perfectly legitimate. Sometimes, local councils want to take a view because they have a role in electoral registration and so on, but often local people in a small village, such as Much Marcle or Midsomer—if anyone is still alive in Midsomer—who are independent of any political affiliation, want their voice to be heard. They want to say, “No, frankly, we in Acton Burnell don’t”—or do—“want to be in Shrewsbury constituency.” We need a process whereby the people of Acton Burnell, where Parliament was held at Michaelmas in 1283, can express their view, and that will be impossible if there are only five hearings across the whole region. There will not be a hearing for each constituency. It is not each constituency that will be considered right or wrong. That is one of the problems.

[Daniel Kawczynski]

The hon. Gentleman is being cynical. If the people of Acton Burnell, who are in my constituency, wish to remain there, they can feed that information through to me and I will put that view at the public meeting.

[Chris Bryant]

I am impressed by the hon. Gentleman and I am sure that all views expressed by anybody in his constituency should undoubtedly, at all times, be expressed solely through him. However, there is another version of democracy, whereby sometimes people disagree with their local Member of Parliament and might want to adopt a different position.

[Mr Winnick]

The Minister said that public inquiries are discredited—we obviously disagree with that. However, is not it interesting that in previous Parliaments, we heard no such condemnation of public inquiries from the Conservatives, whether in government or in opposition? It is the first time that that has happened.

[Chris Bryant]

Much as I would love to agree with my hon. Friend, I recall previous comments: when people lost the argument at a public inquiry, they tended to hold forth against them; when they won the argument at a public inquiry, they tended to support them. However, in many cases, the Boundary Commission’s original proposals were overturned through public inquiries because of the voices of local people, such as the people of Acton Burnell, of Much Marcle and so on. Sometimes it happened because of the intervention of political parties. None the less, the end result has been constituency boundaries that, in the main, are accepted by the people who are represented.

[Paul Murphy]

My hon. Friend is making a powerful case for boundary inquiries. My constituency was preserved 27 years ago by a long public inquiry. However, I am not sure whether the Minister grasped my earlier point. In Wales, there will be a 25% reduction in the number of seats—I was not arguing about the principle, but making the point that the disruption to the political and constitutional landscape in Wales is hugely greater than in other parts of the country. We should therefore have more public hearings in lieu of the public inquiries.

[Chris Bryant]

My right hon. Friend is absolutely right. In addition, there are some specific concerns. For example, it is possible that, as a result of the boundary changes, we would end up with no single constituency in Wales with a Welsh-speaking majority. That is not of particular concern to my constituents in the Rhondda, but it is of concern to the British Parliament that that voice could be lost.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

One of the reasons for my losing faith in the old system of public inquiries is that, for all the arguments that the Conservative party presented for a fairer distribution of constituencies, we finished up with a manifestly unfair distribution. We need a speedier system, which can use fresher and more up-to-date data to deliver a fairer distribution of constituencies. That should happen.

[Chris Bryant]

It might be that the Conservative party lost because it did not advance good arguments, which goes back to my earlier point.

[Mrs Eleanor Laing]

(Epping Forest) (Con): Will the hon. Gentleman give way?

[Chris Bryant]

If the hon. Lady does not mind, I ought to make a little progress.

17:30

One other significant problem with the Government amendment on hearings and inquiries is that there will be no process of resolution. There will be two days of hearings to consider some 10 constituencies, and a rush of people will come, make their case and leave. At the end, there will be only a verbatim transcript of what was said. There will be no process by which somebody weighs the arguments on different constituencies or the whole area, no summing up, and no report written for the Boundary Commission.

That will give the Government two problems. First, it will almost certainly lead to a much higher number and greater frequency of judicial reviews, which was raised in the House of Lords by two noble peers. Lord Woolf said:

“If there is no provision for an inquiry”—

by which he meant a proper inquiry, not just a hearing—

“I anticipate that there will inevitably be an increase in applications for judicial review…If this amendment is not accepted, the issues that will be sought to be raised on applications for judicial reviews are ones which the courts will find peculiar difficulty in dealing with.”—[Official Report, House of Lords, 26 January 2011; Vol. 724, c. 1067.]

The real danger, therefore, is that we will end up with a slower, more complicated process, because instead of taking their argument to the public inquiry, people will simply take it to court. That will be expensive, so those who can afford it will do better out of the system, and the process will be delayed, which the Government are keen to avoid on principle.

[Mr Harper]

The hon. Gentleman just said something that simply is not true. He said that no one will weigh up the arguments that are put at the public hearing, but that will happen. The boundary commissioners will look at the oral evidence and the written representations, weigh them up and make a judgment. Mr Speaker is of course the ex-officio chair, but the deputy chairman of the commissions is a High Court judge—someone who is legally qualified and perfectly able to chair a process that makes such decisions.

[Chris Bryant]

Lord Pannick made similar points to the ones I just made. He said:

“It is absolutely inevitable that the introduction of such a procedure will exacerbate rather than diminish the sense of grievance that has led people to make representations in the first place.”—[Official Report, House of Lords, 8 February 2011; Vol. 725, c. 143.]

People’s sense of grievance will be exacerbated because they will make their arguments not to an independent person who weighs them up and submits a report to Boundary Commission, but third hand to the Boundary Commission, which, as the Minister says, will then make the decision. That will lead to a greater sense of grievance about the structure of parliamentary constituencies. I say this to Government Members: every single one of you will go through that process, and you will rue the day if you do not change the proposed system.

[Mrs Laing]

I am sure the hon. Gentleman realises that his answer to my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) exactly explains why the old system was dominated by clever lawyers and barristers, and clever political argument, and why it must be changed—it had nothing to do with local people. The hon. Gentleman just admitted as much.

The hon. Gentleman’s point on judicial review is a strong one. Does he agree that judicial review, and therefore delay and uncertainty, will be stopped if the Bill is certain and precise? That is why we cannot allow, for example, Lords amendment 19, which mentions circumstances of “an exceptionally compelling nature”. That is imprecise, but it is our duty to produce precise legislation, and thereby to obviate the necessity for judicial review.

[Chris Bryant]

Large parts of the Bill are not sufficiently precise, and the Opposition have tabled amendments to improve the quality of the legislation. The hon. Lady is a member of the Select Committee on Political and Constitutional Reform, but I am not sure whether she heard Professor Johnston’s evidence last week—[Interruption.] I see that she is brandishing a document, like Excalibur. My reading of his evidence is that he felt that, in certain situations, the Acton Burnells of this world could effect change. We want that to be possible under the new system. We want the people of Cornwall, if they want to, to say categorically, “We do not want to cross the Tamar in the creation of a constituency.” However, there is no provision in the Government’s Bill, either for that voice to be heard effectively and transmitted to the Boundary Commission, or for the commission to act upon it. The commission can do absolutely nothing to act upon it because it is bound by the 5% rule, which is why I hope that the hon. Lady will support the 7.5% rule. If she has a way of improving the provision so that it is more precise, I would be delighted to sit down with her later and draft a new version.

[Graham Stringer (Blackley and Broughton) (Lab)]

Is not the problem with the process that, in principle, after the public hearing, the High Court judge chairing the original boundary commission is effectively the appeal judge to his own decision? I cannot think of any other process in administrative or public law in such an unsatisfactory situation.

[Chris Bryant]

My hon. Friend makes a perfect point. He is absolutely right. Someone cannot be judge, jury and appeal judge of their own decision. The danger is that people will go to court to try to resolve the problem. That is inevitable. All the Cross-Bench lawyers who spoke in the Lords debate made that precise point. That is why we have tabled an amendment to a Lords amendment—I hope that we can divide the House on it, unless the Government are minded to accept it—that would make it clear that public inquiries are intended not just to allow somebody to make a representation, but to effect change if necessary.

[Alec Shelbrooke]

Will the hon. Gentleman give way?

[Chris Bryant]

I will not, if the hon. Gentleman does not mind, because we are on a time-limited debate and I have already given way to him once. He knows that I nearly always give way to everybody.

We have also tabled amendments to Lords amendment 27, which would allow for the creation of a committee after the next general election in June 2015 to consider the effects of the reduction of seats from 650 to 600. It is our fundamental assertion that it would make far more logical sense first to consider the role of MPs, what their job is and therefore how many MPs we need, and then to draw up the boundaries, rather than the other way around. That is why we have tabled amendments to that effect. As we have suggested many times before—Conservative Members have said this as well—there is no electoral mandate for the reduction from 650 to 600. There is no logic behind it and no Minister has ever been able to come up with a reason that figure has been chosen, other than, we suspect, the fact that if we went down to the original Conservative manifesto proposition of 585, we would lose another wodge of Liberal Democrat seats, and consequently—[Interruption.] I merely suggest to hon. Members that they might choose to table amendments to take us down to 585. However, we do not accept the way in which the motion has been advanced.

I want to refer briefly to two other issues. One is the matter to which the Minister referred in his swift run-through of minor amendments made: the issue of postal voters which was raised when we discussed the matter in Committee of the whole House. If someone is registered for a postal vote for an election in Scotland, England, Wales or Northern Ireland, will they automatically get a postal vote for the referendum? As I understand it, that is now to happen—[Interruption.] Actually, I know because I read the Electoral Commission’s report on it. Some people are concerned that others will by dint of that receive two postal votes for the referendum, because some people are registered in two places, including many MPs, who might be registered at their flat in London as well as in their constituency. They might be registered in both of those for postal votes and might then get two referendum ballot papers. That is obviously an issue that needs to be addressed. It was discussed in Committee.

[Mr Harper]

That is no different from the existing system, in which those on two electoral registers might get two ballot papers, but it is very clear—Members of Parliament will be as aware of this as anyone else—that voting twice in the referendum would be a criminal offence, as would voting twice in a general election, and I am sure that no Member of this House would want to do such a thing.

[Chris Bryant]

The Minister is being querulous. I was not suggesting that anybody wanted to do that, but there are some unscrupulous people out there who are not Members of this House who might want to do such a thing. The danger is that we will open ourselves up to an element of fraud.

My final point is about Lords amendment 18, tabled by Lord Tyler, which adds a criterion that the Boundary Commission can look at when considering the new boundaries that it draws up, namely the boundaries of existing constituencies. I am sure that all hon. Members think it a sensible idea for the boundaries of existing constituencies to be borne in mind when drawing up new constituency boundaries. I am delighted that on that, if nothing else, we agree with the Government.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. There are about 11 minutes left, so brief speeches would be welcome.

[Mr Walker]

I will be extremely brief, because I come here naked, without a formal speech to give. All I would say in response to the two Front-Bench speeches that we have heard is that I think that the Lords did an absolutely magnificent job. The Bill has been rushed through this House in haste, and the Lords did exactly what they are meant to do, which is to act as a reforming and revising House. We will ignore some of their recommendations this evening at our peril.

The Prime Minister is not one for taking revenge against those who disagree with him, or perhaps delay his ambitions. I therefore disagreed with the shadow Minister when he quoted Sky News and said that the Prime Minister was gearing up great armies to swoop down on the House of Lords and duff them up a bit. However, I am concerned about the vague promises made by those on my side of the House about setting up a commission to review whether reducing the number of Members of Parliament to 600 is a good idea. This really should have been done by now, as part of the work of a far wider cross-party commission, bringing together all parts of the House to look at the proposals, because we are talking about fundamental constitutional reform. If such reform is to be successful, it will need to carry the support not just of Members of Parliament but of our constituents.

Our constituents will be concerned about what they are seeing, because in essence we propose to reduce the size of the House of Commons by roughly 10%. We do not propose to reduce the number of Ministers, and we are increasing the number of peers by 150. I am sure that some proposal or other will be made to address the question of the House of Lords—there might be a proposal for an elected upper House—but that could be kicked into the long grass and become a third-term aspiration for this coalition Government.

[Mr Harper]

I will be brief in my intervention, given the time limit. As my hon. Friend has said that he thought that the House of Lords did a good job, he should know that the proposal for a review after the next election was made by Lord Williamson, a Cross Bencher. It is a proposal that we agree with, and it had broad appeal in the House of Lords, not just for those who take a party Whip, but for Cross Benchers. I hope that on that basis my hon. Friend will welcome the proposal, which the Government accepted, and which we propose to accept in this House.

[Mr Walker]

I would say to the Minister that we should have shown more foresight in this House, and addressed those issues here before passing them over to the House of Lords.

I conclude by saying that I support any movement and organisation in this House that is difficult, and makes some attempt to resist the will of the Executive.

[Ian Lucas]

Of all the appalling aspects of this piece of legislation, for me the abolition of local public inquiries is quite the worst. No party ever proposed to abolish them before the general election. If the parties now in government had a particular concern about public inquiries, I would have expected them to express it in manifesto commitments on which the electorate could have given their verdict in the general election. However, it is only since the general election that the issue has been raised.

When the idea was raised, I was anxious to obtain the views of local people in my constituency. I highlighted to community councils—the equivalent of parish councils in my constituency—the fact that the right to deliver oral representations to a public inquiry was about to be abolished. My letter to those community councils was considered at the same time as a report from a boundary commission relating to local councils. Representations had been made by councillors of all political parties objecting to boundary commission proposals for local councils. The community councils were most concerned about the local council provisions. They then saw my letter, and became aware that the right to make representations about a parliamentary boundary change was to be taken away from them.

In Wales, public inquiries will continue to be held on matters relating to local councils and Assembly seats, but they will be removed for matters relating to parliamentary seats. The only reason why they are being removed is the electoral deal between the Liberal Democrats and the Conservatives, who want to remove those public inquiries because they need to get the changes through by the next general election. That is why this huge constitutional Bill was not delivered in draft; it is also why many of us on both the Opposition and the Government Benches had our right to make speeches on important issues removed through the use of the guillotine when these matters were considered before Christmas.

[Mark Durkan (Foyle) (SDLP)]

My hon. Friend is rightly highlighting the implications of this provision for Wales. In the context of Northern Ireland, the Bill still ignores the fact that constituencies for the Northern Ireland Assembly are exactly coterminous with parliamentary constituencies. The Boundary Commission’s terms of reference do not allow it to address Assembly considerations, but it will be the implications of the Bill for the Assembly that will prompt people to call for local inquiries. Villages will be cut off from their hinterland, which will raised geo-sectarian issues. Those are the controversies that people will want to put in front of a local inquiry, but the Bill will remove their right to do so.

[Ian Lucas]

Absolutely; my hon. Friend makes a powerful point about Northern Ireland, and I can speak for my constituency in Wales. The Bill will have profound implications for communities across the United Kingdom. In due course, the Boundary Commission will reveal the proposals and people will see what they are. Only at that stage will people will realise the true horror of the Government’s proposals. They represent the antithesis of any form of localism, and they will take away responsibility from local communities.

The dripping sanctimony that we used to hear from Liberal Democrats and Conservatives about localism is in marked contrast to their appalling unreadiness to listen to any arguments about the Bill. They should be deeply ashamed of this legislation. All legislation should be made for the long term, and should carry as much cross-party consensus as possible. Members who support the Bill will have to explain to their constituents why they will no longer have the right to make oral representations on any proposed changes to their local constituency. Those Members will rue the day that they voted for this legislation.

[Mr Jenkin]

I agree with my hon. Friend the Member for Broxbourne (Mr Walker) that this whole matter is being rushed. If there is one thing that should not be rushed, it is the prospect of constitutional change. The pressure of time on our proceedings on the Bill arises solely from the Government’s desire to achieve the date of 5 May for the referendum. That date is cemented into the bit of the coalition agreement that was not published, and it exists purely for political purposes. This is a purely political device, perhaps to try to get a yes vote, or to try to boost the Liberal Democrat turnout at the local elections being held on the same day. Let me be absolutely blunt: there will be barely 11 weeks between the Bill receiving Royal Assent and the referendum, even though the Political Parties, Elections and Referendums Act 2000 stipulates that there should be a period of six months in which to prepare for a referendum.

This referendum is being indecently rushed. Unfortunately, Lords amendment 2, which proposes that the date should be changed, does not do the trick. It does not require the date to be changed. I do not know whether the Government intend to accept that amendment, but it would have no practical effect. The House of Lords has made clear its discomfort with the fact that the referendum was to be held on the same date as the local elections and the Assembly elections. I will not detain the House on that Lords amendment if there is no Division, but I wish to draw attention to the fact that this is a shoddy way to conduct a referendum. It is unconstitutional, it is political—deeply political—and it is not an objective way to address this issue. It will undermine the value of any referendum result, and I shall certainly support a later Lords amendment to address the problem.

17:45

[Mr Harper]

It is worth putting on the record the fact that, as my hon. Friend the Member for Bristol West (Stephen Williams) said, the evidence from academics such as Professor Ron Johnston is clear. They said that in most cases inquiries made little impact, and they clearly saw them largely as an exercise in allowing parties to seek influence over the Electoral Commission’s recommendations. They also said that it would be “a major error” to assume that all inquiries of the past largely involved the public having their say. They were very clear about that, and they welcomed what the Government were doing.

On the question of how many public hearings there will be, we have trebled the time for written representations and we have added a four-week period for counter-representations, which we think will be a more effective process than the legal process that existed—

17:45

One hour having elapsed since the commencement of proceedings on consideration of Lords amendments, the debate was interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House agrees with Lords amendment 2.

Question agreed to.

Lords amendment 2 accordingly agreed to.

The Deputy Speaker then put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Lords amendments 3 to 7, 9 to 15, 18 and 21 to 104 agreed to, with Commons financial privileges waived in respect of Lords amendment 31.

Clause 11

Number and distribution of seats

[Mr Harper]

I beg to move, That this House disagrees with Lords amendment 16.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss Lords amendment 19.

[Mr Harper]

The amendment would give the Boundary Commission the discretion to propose constituencies within an extended 15% range of the UK electoral quota in the event that a commission considered that exceptional local ties or geographical circumstances made it necessary for a viable constituency. That means that the plus or minus 5% rule could be extended to plus or minus 7.5% in the exceptional circumstances set out in the amendment.

The Government believe that the principle of “one vote, one value”, so that there are votes of more equal weight across the country, is paramount. That is the fundamental principle underpinning the Bill. It is not an abstract concept, nor is it, as some of our opponents like to say, about a slavish adherence to arithmetic. It is right for electors across the UK to have an equal say not just in who will be their local representative, but in who will form the Government of the day. For votes to have equal weight in a single member constituency system, the constituencies must contain a broadly equal number of electors.

The existing legislation that determines how the boundaries are to be drawn—the Parliamentary Constituencies Act 1986—also has that principle at its heart. Indeed, in one sense it could be argued that it involves a tighter rule, because it suggests that the Boundary Commission should aim for exact numerical equality, but the rules in that Act are contradictory and compromise the principle of equality. We see the large variations in the sizes of constituencies at the moment, which is why the Government’s proposals set a clear range for the number of electors that a constituency may contain.

I have already said that absolute equality is not practicable. There are a small number of specific exceptions, which recognise the practicalities of genuinely challenging geography: those are the two provisions that we inserted into the Bill at the beginning. I will not dwell on the subject of the Isle of Wight now; we will have an opportunity to do so later. More generally, the Bill allows for constituencies to vary by 5% either side of the quota. On the basis of the register data for 2009, that is about 8,000 electors. Within that range, commissions can take account of local circumstances.

[Andrew George (St Ives) (LD)]

As the Minister knows, we have debated this issue many times before, but I have not heard him explain precisely what is significantly different about the two constituencies identified in the Bill, or why they are so significantly different that they should be identified. It would be useful to have that on the record.

[Mr Harper]

We have defined the difference. Both constituencies constitute groups of islands which, owing to their challenging geography, are not readily combinable with the mainland. I know that some Members, including the hon. Gentleman, wanted more exceptions to be made, but few if any argued that we should not have made the two exceptions that we did make. Although most of the argument in the House of Commons was in favour of further exceptions, we were reluctant to make many, because we believed that the general principle of equality was important.

There was a clear rationale for the Government’s proposal for 5% either side of the United Kingdom electoral quota. It is the closest to equality that we can achieve while allowing wards, which are themselves drawn with local factors in mind, to remain the building blocks of constituencies in England which account for the majority of seats. We believe that that strikes the right balance between the principle of more equally weighted votes at national level, and flexibility to allow account to be taken of specific circumstances at local level.

The amendment was proposed in a constructive spirit by Cross Benchers in the other place who wanted to ensure that exceptions were strictly limited, and it was debated at length. However, the Government disagree with the Lords, for the following reasons. First, we believe that however emphatic the drafting, attempts to limit the exercise of the discretion in exceptional circumstances are unlikely to be as successful as the proposers of the amendment hoped. Each exception would constitute a further precedent, and as the number of exceptions increases, so does the scope for argument. That is clear from the existing legislation. Boundary commissions are supposed to aim for equality, but because of all the other factors that they must take into account, the size of some constituencies varies by up to 50%.

[Andrew George]

I would be interested to know why the Government believe that they know best how to divide the country into constituencies. If the primary purpose is to reduce the number of Members of Parliament to no more than 600—a laudable aim, which I strongly support—would it not be sufficient for the Government to stick to that, and allow the Boundary Commission to do its work?

[Mr Harper]

No, I do not think that it would. The existing process causes a significant variation in the size of constituencies. Even if we set aside differences between the constituent parts of the United Kingdom, where there are different electoral quotas, we see within England significant differences between parliamentary constituencies that effectively mean that the weight of someone’s vote, in terms of the say that they have in the House, is significantly different from the weight of someone else’s vote. The Government do not think that that is right: we believe that constituencies should be of more equal size, so that votes are of more equal weight across the whole United Kingdom.

[John Mann (Bassetlaw) (Lab)]

The Minister conveniently ignores the fact that in some constituencies, such as those containing a large number of students or a large number of second homes, people will have registered twice. Constituencies will therefore not be equal, and individual registration will bring that sharply into focus at some stage in the future.

[Mr Harper]

The hon. Gentleman has raised three issues. First, I can tell him that we propose to continue to use the registered electorate data. Secondly, I can say in answer to his point about our proposal to introduce individual voter registration that—as I have made clear in the House before—the Government are as interested in the completeness of the registers as in their accuracy. The hon. Gentleman, who follows these matters closely, will know that we propose to conduct pilots this year with a range of local authorities to examine public sector databases, and the possibility of using the data to ensure that the electoral register is more complete. Thirdly, the hon. Gentleman will know that ownership of a second property does not, in itself, allow people to register to vote; the electoral registration officer must be satisfied that they genuinely reside in the area concerned.

[John Mann]

This is not just a question of second homes; it is also a question of the presence of students. Some constituencies contain 20,000 students, many of whom are dual-registered. There will not be equality of size; indeed, we will not know whether there is equality of size, because the students’ home constituencies will vary dramatically. We can only guess what the figures would be.

[Mr Harper]

The Bill does not change the process of using the registered electorate data—which are the best that we have—to make the necessary decisions. I am not sure that the hon. Gentleman’s point holds water.

[John Mann]

rose—

[Mr Harper]

I will give way to the hon. Gentleman once more, but then I must make some progress.

[John Mann]

The Minister is kindly giving way again, in the interests of good debate.

My constituency does not contain many students. Whatever limit is set, that will be the number of people eligible and wanting to vote. Other constituencies—Sheffield, Hallam, for instance—contain vast numbers of students. There will be a big difference between the number of voters in Bassetlaw and the number of real voters in Sheffield, Hallam. What has that to do with equality of size of constituencies? The Minister has lost the argument, has he not?

[Mr Harper]

No. I am not entirely certain what argument the hon. Gentleman is trying to make, and I suspect that I carry at least quite a few Members with me. We are not changing the basis on which we use registered electorate data. The hon. Gentleman mentioned a limit to the number of people who had registered to vote, but everyone in his constituency who is eligible to vote is able to register. I would encourage everyone who is eligible to register to vote in his constituency to do so, and to use that vote in an election—as, I am sure, would all Members on both sides of the House.

[Mrs Laing]

The argument advanced by the hon. Member for Bassetlaw (John Mann) does not hold water at all. First, given that there are students and people with second or third homes all over the country, if someone moves from one constituency to another having registered two votes, those votes will cancel each other out. When the movement between constituencies is considered as a single total movement of population, we see that that will apply throughout the country. Secondly, that is exactly why we need a variation of about 5%.

[Mr Harper]

My hon. Friend mentioned the number of votes. It is true that if someone genuinely resides in more than one location, rather than merely owning property in those locations—I know that this has been an issue in some parts of the country including Cornwall, and I urge returning officers who do not believe that someone genuinely resides somewhere to be firm about challenging that claim—even if they receive two ballot papers, they are entitled to vote only once. That is the point that I was trying to make to the hon. Member for Rhondda (Chris Bryant). Currently it is possible to obtain more than one ballot paper, but it is a criminal offence to use more than one in the same election.

[Andrew George]

May I clarify a point? As the Minister said, we have debated the issue before. Does he mean “reside”—in which case people with three or four homes could presumably register in each of the places where they occasionally reside—or does he mean “primarily reside”? Surely it must be decided where people’s primary residence is, rather than where they occasionally reside. People with second homes—and third homes, and fourth homes—have a significant advantage over all other voters, in that they can choose where to deploy their vote most effectively.

17:59

[Mr Harper]

I understand why the hon. Gentleman raises this point: it is an issue in Cornwall, where a number of voters have second properties. The case law clearly talks not about “primarily reside” but about “reside”. However, it is also clear that if a second-property owner pops there on holiday for two weeks a year, that would not count as residing. Many hon. Members genuinely live in more than one location of course, because we spend some of our time in London and some of our time in our constituency. Many Members will therefore be registered to vote in both places, but for parliamentary elections we will exercise that vote only once. I suspect that Members will tend to do as I do, which is exercise it in such a way that we can vote for ourselves, either because it makes a difference electorally or because it is more emotionally satisfying—or both.

I shall return to the point I was making before we went off on a number of interesting detours. However emphatic the drafting, we do not think that attempts to limit the exercise of discretion in exceptional circumstances are likely to be as successful as do those in the House of Lords who proposed the amendment. It may be true that the drafting will discourage a court from finding against a boundary commission that chooses not to exercise that discretion, but the commissions will be under considerable pressure to exercise it, particularly given the inclusion of the concept of “local ties”. Exceptional local ties may actually exist in the UK, but the concept is already the Trojan horse which allows political parties to make arguments that are in their electoral interest—and, frankly, in their electoral interest alone.

The Boundary Commission for England noted in its fifth general report that there was usually more debate at local inquiries about local ties, in their many varied and often subjective guises, than about any other matter. That is one of the main reasons why constituencies are as unequal in size as they are today. It seems to the Government that this amendment would in practice simply increase the amount by which constituencies and the weight of vote vary, and do so by far more than those who argue for it imagine.

My hon. Friend the Member for Epping Forest (Mrs Laing), who is a member of the Political and Constitutional Reform Committee, made this point in the previous debate when she said it was important that we have clarity and as much certainty as possible. The Government’s view is that that will not be the effect of this amendment, which is why I am arguing that we should not agree to it.

[Mark Durkan]

Is it not the case that clause 11 provides for constituencies in Northern Ireland to not conform to being within the plus or minus 5% UK quota? Instead, they will vary greatly, and far more widely than that quota; the Bill makes specific provision for that. Why can Northern Ireland constituencies deviate more widely from the UK quota, and from each other, than other constituencies? These are constituencies that will also be electing six seats each to the Assembly. This completely contradicts both the Minister’s arguments and the principle of proportional representation that is in the Good Friday agreement.

[Mr Harper]

I think we debated this matter at an earlier stage in the House. The reason is very simple: Northern Ireland is a very small part of the United Kingdom and there is an issue in respect of seats being allocated between the constituent parts of the UK. If a Northern Ireland constituency is on the cusp of being or not being allocated as a seat, we could end up with a situation where a boundary commission’s ability to have flexibility was constrained to a far greater degree than the plus or minus 5%. The point of the provision is to make sure that in such cases, in that very small part of the UK where there are relatively few seats, the boundary commissions are able to take proper account of local ties. In no other part of the UK is that effect likely to take place, because the next smallest part of the UK is almost twice the size. We thought this was a sensible measure to make sure the boundary commissions were not constrained to a far greater degree than they would be in other parts of the UK because of the relative smallness of the population of Northern Ireland.

[Mark Durkan]

This stems not from the size of Northern Ireland, but from the problem of fixing—from the fact that the Bill fixes the number of seats at 600 and 600 only, and from the way in which seats are then distributed to the different constituent parts of the UK. That is the issue. It has nothing to do with being able to take account of local boundaries or geography or anything else. It is because of this insistence on 600 and 600 only.

[Mr Harper]

Well, it is certainly true that even if we allocate using the Sainte-Laguë method—which is the one we specify in the Bill, and which is generally agreed by academics who are far more knowledgeable about these things than me to be the fairest way of allocating—it is always the case that there might be a seat that is close to the cusp of allocation. As a result, in this small part of the UK the boundary commissions might find their discretion overly constrained, and far tighter than the plus or minus 5% stated in the Bill. The measures for Northern Ireland were therefore to try to make sure that its boundary commissions were not overly constrained and unable to take account properly, as they can in the rest of the UK, of those important local ties with which the hon. Gentleman will be familiar.

The Government did not think that it would be possible to limit the effect of this amendment to genuinely exceptional matters. In this respect, there is an interesting Court of Appeal judgment. In Al Rawi and others v. Security Service, the judge said:

“Quite apart from the fact that the issue is one of principle, it is a melancholy truth that a procedure or approach which is sanctioned by a court expressly on the basis that it is applicable only in exceptional circumstances nonetheless often becomes common practice.”

That is exactly what we fear here.

We also think the amendment could lead to a general increase in the risk to the timetable for the review. That is important because the boundaries we used at the last general election in England were based on electoral registration data that were a decade out of date. If we do not complete the boundary review before the next general election, we will be fighting it on electoral data that are 15 years out of date, which is clearly unacceptable for those who argue that we should be using up-to-date data. We think that the terms in this Lords amendment, such as “exceptionally compelling”, “viable” and “necessary, are very subjective and would require the boundary commissions to apply new tests that they have not applied before. Because they are subjective, and also because there will be arguments between the four commissions in terms of consistency, we think they will provoke an increased number of applications for judicial review.

That incentive could diminish if, and when, the first judicial reviews are not upheld, but even though successful judicial reviews are unlikely, applications for permission would have to be dealt with, which would impact on the resources of the boundary commissions and, potentially, make it impossible to achieve what is already a challenging timetable of completing the boundary review by October 2013.

We also think that the case for the additional 2.5% either way has simply not been made. Increasing the band of tolerance in one constituency will mean there is less room to account for local circumstances in others. Therefore, the commissions would be asked in effect to trade off the rights of different communities both close to and far from each other. We think the Government’s consistent band is much more sensible. The variation in this rule also has no objective rationale, because it does not solve any real-world problems. All the specific problems that have been advanced—such as the arguments put forward for Cornwall and for Argyll and Bute—are outside that range, so this amendment would not solve any real-world problems, but would bring with it a lot of significant potential problems.

[Mark Reckless (Rochester and Strood) (Con)]

I understand why it is thought that the move to the 5% limit is required—to stop the boundary commissions going off-piste and having very different constituencies—but does the Minister agree that in many areas of the country the 5% will give greater flexibility for local ties than is currently the case, because we will be removing the requirement to try to get even closer to equality? Can the Minister also explain why once a boundary commission has satisfied the 5% requirement, he is not asking it to try to get closer to equality where possible?

[Mr Harper]

This measure gives boundary commissions the range to be able to take account of issues such as local ties, but it also sets the quota. Boundary commissions should aim at the quota, but we want them to have a range so that they can take account of those local ties. I think my hon. Friend is trying to tempt me into suggesting a much tighter limit and a more aggressive move towards equality, but the Government think it is right to take account of some of those local matters, but there should also be a limit so that we end up with more equal constituencies.

[Mark Reckless]

But surely under the new arrangements we will not be requiring the boundary commissions to aim at equality. We will be requiring them only to get within plus or minus 5%, and once they have done that they will be able to give complete consideration to local ties without worrying about getting closer to equality.

[Mr Harper]

The boundary commissions will have to draw up a scheme of constituencies and they will have examine the entire country. In some constituencies there may not be much need to vary from the quota, perhaps because there may not be many ties to take account of. However, there will be such a need in other areas, which is why this proposal to allow a much wider band would be very damaging. If they allow more flexibility in some areas, it will be taken away from others. That is why we want a consistent rule across the United Kingdom.

[Thomas Docherty]

I wish to clarify something that I have been asked about several times. Have the Government given any guidance to the boundary commission as to whether it will work from south to north across the country or from north to south? The direction will have a significant impact on the shaping of the constituencies, so I genuinely ask the question.

[Mr Harper]

I do not know what the hon. Gentleman means by “country”, because of course there are four boundary commissions.

[Thomas Docherty]

In each one.

[Mr Harper]

In Scotland, Wales and Northern Ireland there will be one scheme for the whole area. We have suggested in the Bill that the Boundary Commission for England does this by region. The regional boundaries are not absolute and it is able to propose constituencies that cross those boundaries, but given the size of England it seemed sensible to give the Boundary Commission at least a starting point from which to work. The rules that will apply are in the Bill and it would not be appropriate for the Government to try to influence how it conducts the review. If the Government were to do so, the hon. Gentleman would be one of the first to object.

[Thomas Docherty]

I am grateful for that clarification. Has the Minister had any discussions about whether the Boundary Commission for Scotland is minded to start this from the English-Scottish border and work north? Alternatively, having exempted the highlands and islands—I will not repeat the argument about that—will it work southwards? The direction will significantly affect the shape of these new constituencies.

[Mr Harper]

The hon. Gentleman was asking two questions. On the first, I have not had those discussions with the boundary commissions and I do not think it would be appropriate to do so. On the second, I am not sure that the direction would make the difference that he suggests, but he should put his question to the boundary commissions, rather than the Government.

[Mr Mark Field (Cities of London and Westminster) (Con)]

Could the Minister clarify the precise situation, because this is slightly confusing? Surely if England is to be divided into regions, each of those regions would have to contain a set number of seats, given that a particular day would be pinpointed. The notion that a particular constituency could cross a regional boundary must be nonsense. We have to work on the basis of a particular region having a certain number of seats, for example, 35 or 45. Any decision taken at the 11th hour for a constituency to cross a regional boundary would have a huge knock-on effect on all the other seats within that region.

[Mr Harper]

No, the process for allocating the fixed number of seats in the Bill is by country. So the 600 seats will be allocated between England, Scotland, Wales and Northern Ireland by the fair and impartial process set out in the Bill, which is generally accepted to be the best one for doing these types of divisions. The boundary commissions wanted guidance in the Bill about how to divide up England so that they did not have to do it all in one go. So they will use regions as a starting point, but nothing constrains their ability to cross regional boundaries if they think that that makes sense, taking into account the factors that they are able to consider. The regional boundaries and the allocation of seats to regions are not hard and fast things set out in the Bill.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

rose—

[Christopher Pincher (Tamworth) (Con)]

rose—

[Andrew George]

rose—

[Mr Harper]

I have a dazzling range of talent to choose from, but I have not heard yet from the hon. Member for Na h-Eileanan an Iar (Mr MacNeil).

[Mr MacNeil]

Have the Government done any theoretical mock-ups of how the arrangements might look starting from the south, starting from the north or using any regional basis? Have they worked out how the pieces might fall at the end of the day?

[Mr Harper]

No, we have not. That is not a matter for the Government; it is a job for the boundary commissions and it is not appropriate for the Government to do it.

18:15

[Christopher Pincher]

The Minister has mentioned that the Boundary Commission for England will operate using English regions. Does that mean that it will start by clustering together English counties and then work to refine the boundaries within those counties, or will this be done specifically at regional level?

[Mr Harper]

I can understand why hon. Members are asking me these questions, but these are matters for the boundary commissions. One of the things that we made very clear in the debate when we were being accused of gerrymandering by the Labour party was that in our system the boundary commissions draw the lines, whereas in some other countries those lines are drawn by political parties in legislatures. We have set the guidelines for the boundary commissions and the rules are in the Bill, which we hope will be passed by Parliament and thus enacted. The detail of how the boundary commissions go about that work is a matter for them and they are experienced in doing such work. When they have these public hearings, having published their proposals, they will set out the nature of the scheme under which they are going to listen to people, and they will be very clear about how they have reached their decisions. These are matters for the boundary commissions. I can understand why my hon. Friend is trying to tempt me on this, but it would be wrong for Ministers to try to get involved in directing the boundary commissions on how they carry out their work.

[Mr Mark Field]

Does my hon. Friend not appreciate the concern that when we are discussing whether there should be any variance, be it of 5% or 7.5%, it is important to know how the process operates? If the entire United Kingdom—its 650 seats—were to be considered at once, there would be almost no need for any variance. If things are considered on the basis of smaller clusters, one can see the relevance of having that sort of variance, particularly if there is also a desire to avoid crossing ward boundaries. We do need to have an understanding of the process. If we do not have at least a basic understanding of how it will operate, it will be difficult for us to make any value judgment as to where the variance should lie, which is the subject of amendment 19.

[Mr Harper]

I do not agree with my hon. Friend’s analysis that if we were conducting a single review across the whole United Kingdom, we would not need the plus or minus 5% flexibility at all. We would still need it. At the extreme, we could say that every constituency had to be exactly the same size. We would then end up with a map with lots of straight lines on it, but I do not think anybody would think that that was satisfactory. We therefore set a plus or minus 5% variance, so that the boundary commissions can get seats pretty close to that quota, in order for votes to be of equal weight, but they can also take properly into account the things that hon. Members and those outside this place think they should be able to consider. I do not believe that he was in for the earlier debate, but he will know that the former Member for his constituency had an amendment in the other place proposing that the boundaries of the City of London can be explicitly examined, and I hope that he will welcome that. These are matters for the boundary commissions and we should not be prescriptive about how they carry out their work.

[Andrew George]

Given the nature of some of the questions that the Minister has been asked in the past few minutes, does he agree that perhaps there should be an opportunity to review the wisdom of going ahead on the basis that he is describing? Clearly many hon. Members are not fully aware that this inflexible, sanitised and homogenised approach will result in lines being drawn through constituencies where sitting Members believed that there would be no significant change to the boundaries. That will be happening across the board as a result of the very changes that he proposes.

[Mr Harper]

I recall distinctly that we had this debate in the House in the first place. The boundary commissions set out clearly in evidence to the Political and Constitutional Reform Committee that the reduction to 600 Members and the clearer hierarchy of rules would mean that there would be significant change across the country, except of course for the hon. Member for Na h-Eileanan an Iar and one other Member, whose constituency boundaries will remain the same. Members were very clear about that at the beginning, so I do not think that that is a new piece of information.

Arguments have also been advanced that this extra bit of discretion would mean that parliamentary constituency boundaries would not need to cross county boundaries where the area is a little bit over or under the 10% band of tolerance, but the Government do not consider constituencies that cross local authority boundaries to be a problem in principle—certainly not for electors, who should be the focus of our concern. The 7.5% discretion rule would not solve the problem: it would just move the line somewhere else.

The Government’s proposal of allowing 5% on either side of the UK electoral quota has a clear rationale: it is the closest we can get to having fair and equally weighted votes for electors while still allowing local factors to be taken into account, using wards as the building blocks in most cases. We think that is the right judgment in principle and in practice. Our reasons for disagreeing with the amendments do not detract from the usefulness of this debate, which has been valuable, but we think that the principle of one vote, one value and having more equal-sized constituencies is right. The amendments compromise that principle and would cause practical problems for the review. That is why we oppose them.

[Sadiq Khan (Tooting) (Lab)]

First, I point out that the Government decided that one hour should be set aside to discuss these amendments and that the Minister has taken up almost two thirds of that time. I do not criticise him, because he took many interventions, but it is a bit rich for him to accuse the House of Lords of filibustering. He should bear that in mind when we are considering constitutional Bills of this nature.

The amendments were moved by a Cross Bencher, Lord Pannick of Radlett, in the House of Lords, which is a revising Chamber, when he demolished the points that the Minister has raised this afternoon. The House needs to consider whether we are setting a precedent for how constitutional matters are taken forward—ignoring revisions made in the Lords that were moved by an expert Cross Bencher. I fear that the Minister has fallen into the trap of praying in aid the Lords, particularly Cross Benchers, when they agree with his points, but finding excuses for disagreeing with them when they disagree with him, let alone when they overturn a Commons decision by a considerable majority. For the avoidance of doubt, let me reiterate what my hon. Friend the Member for Rhondda (Chris Bryant) and I said on a number of occasions as the Bill went through the Commons, which was repeated by Opposition spokespeople in the other place: we agree with the principle of creating more equal-sized constituencies, but we have practical concerns about the way that the Bill seeks to pursue that reasonable objective.

Lord Pannick’s amendment would inject some common sense into the rigid mathematical formula in the Bill for redrawing boundaries. I remind the House that the original Bill proposed that there should be flexibility in the size of constituencies of 5% either side of the electoral quota or norm, so that constituencies could vary between 95% and 105% of the electoral quota. The Bill also accepts that there should be exceptions for Northern Ireland, for Orkney and Shetland and for the Western Isles.

[Sheryll Murray (South East Cornwall) (Con)]

Does the right hon. Gentleman share my disappointment and that of my constituents that the Deputy Prime Minister has sought to make special cases for the Western Isles and the Isle of Wight but has ignored Cornwall completely? Does he agree that the 7.5% differential is the best and last chance that the people of Cornwall will have to protect their historic boundary?

[Sadiq Khan]

I agree with every word the hon. Lady has said. She has sat through many debates in the past few months without having the chance to speak in them. It is interesting that we are lectured regularly by the Deputy Prime Minister about principles but that he is willing to throw them in the bin when it suits his party political purpose.

In addition to the exception for the Western Isles and others, the Government are making a further exception for the Isle of Wight, so there will now be two seats with 55,000 voters—so much for one vote, one value. The Government have put aside their concerns about the knock-on consequences and about equality of seats where it suits them, so equality is not the only value or issue being considered. It is obvious that there have to be exceptions on equality for the Bill to be workable in practice.

Lord Pannick’s amendment 19, which was passed by a fair majority in the other House, represents a compromise. To give the amendment the justice it deserves, it is not just the average between the positions of the Government and the Opposition, but a genuine refinement of the measure. To paraphrase, it is fair, reasonable and workable. Having constituencies that can vary in size, in exceptional circumstances, between 92.5% and 107.5% of the norm allows sufficient flexibility to satisfy the concerns of many who think that the Government’s approach way too rigid. When a Bill of this constitutional significance has not had proper pre-legislative scrutiny, it is incumbent on the Government to pause and consider the criticisms made by all-party Select Committees of the Commons and the Lords.

The amendment was moved in the other place by one of the country’s leading lawyers. If we ignore it, that raises questions about the purpose of having Cross-Bench experts in the other place. It was passed by a significant majority, but the Government, rather than seeking to accommodate it, are trying to overturn it in the Commons by taking advantage of their huge majority. The amendment was passed by a significant majority in the Lords after 60 new Government peers had been placed there. That speaks volumes about the merits of the arguments behind it.

Reliance on a rigid mathematical formula could result in problems in parts of the country where there is a risk that unique geographical and historical circumstances will be disturbed and that the local legitimacy of constituencies will be undermined. That is not just our opinion; it is shared in many quarters.

[Alec Shelbrooke]

Will the right hon. Gentleman give way?

[Sadiq Khan]

I want to make some progress.

Democratic Audit, a think-tank attached to the university of Liverpool, has argued that greater flexibility is needed in the system for a number of reasons. It would lead to far fewer county boundaries being crossed, a reduction in the number of wards being split, a lower chance of towns and villages being divided between constituencies and better community cohesion. Let me throw into the mix that such flexibility would also mean that the clarion calls from Cornwall for the preservation of parliamentary representation west of the Tamar would be satisfied—no doubt to the relief of those Members who represent the fiercely proud people of that part of the south-west.

I emphasise that the amendment is not partisan, so it ought to find favour on both sides of the House.

[Andrew George]

Will the right hon. Gentleman give way?

[Sadiq Khan]

I want to finish my contribution so that others can speak.

The wording in Lord Pannick’s amendment is designed to prevent exceptional circumstances from simply becoming the norm—a concern that the Minister has articulated—and the Opposition do not question Lord Pannick’s legal judgment. His amendment is deliberately drafted to allow the boundary commissions very narrow discretion to depart from the electoral norm by up to another 2.5% either way. They could do that only if they believed that two criteria were satisfied. First, further departure would have to be “necessary”—not reasonable or desirable, but necessary. Secondly, the departure would have to be necessary in order to address “special geographical considerations” or local ties of an “exceptionally compelling nature”.

Lord Pannick has already forcefully demolished the arguments that the Minister put forward in his lengthy contribution today. It is worth reminding the House that before Lord Pannick drafted the amendment, he met the Leader of the House of Lords, the Government spokesman on these matters Lord Wallace of Tankerness, the Minister himself, and the Bill team. He then sought to address constructively in his amendment the concerns they had raised with him. I urge Members on both sides of the House to recognise the inherent sense of realism that the amendment brings to the Bill and I hope that they will see fit to support it in the Division Lobby.

18:29

[Andrew George]

I wish to make a few brief remarks on this most inflexible and rigid part of the Bill. The amendments would move things in the right direction by giving the boundary commissions greater latitude and flexibility than they would have had under the original Bill. In my view, that is a result of the intransigence of the Prime Minister, rather than the Deputy Prime Minister, in insisting that we adopt a situation in which there are just 600 MPs. A more flexible approach would have been to say that there should be no more than 600 and to allow the Boundary Commission the latitude and flexibility to interpret that alongside a clear instruction to work towards more equalised constituencies.

The Government have won that argument, and certainly the current range in electorate sizes across constituencies is intolerable and more effort must be made to achieve greater equality across constituencies. However, to do so in the sanitised, homogenised, rigid, inflexible and intransigent way that the Government propose is not the solution, because that will continue to create a wide range of significant anomalies across the country.

Given some of the interventions that we have heard, particularly from Government Members, it will be interesting to note how the work of the Boundary Commission will dawn on those Members as it does its work. They might believe that the whole town they represent, or the whole part of a shire county, for example, which they feel comfortable with, will not be changed, other than a little nibbling away at the boundaries, which they can tolerate. However, the Government’s approach will mean that we will end up with lines being drawn straight through those constituencies, and the associations that have been established over years between Members of Parliament and their towns will be divided as a result.

I do not know how it will all pan out. As we have heard, although there will be guidance for the Boundary Commission to work within what I call the Government zones, but which others have described as regional boundaries, there is no absolute requirement for it to do so.

[Mr Mark Field]

Surely the hon. Gentleman must realise that every major boundary review, including those that took place before the 1983, 1997 and 2010 elections, resulted in more than half of all constituencies changing, often substantially. That is the nature of any boundary review.

[Andrew George]

My hon. Friend is absolutely right, but I think that the inflexibility of the proposals will result in much more significant changes across the country. Having argued that we should have far fewer MPs than even proposed in the Bill, I am not averse to the idea of significant changes being made at one time to the process by which MPs are elected, but I do not think that it should happen every five years, irrespective of what has happened before. That will happen across the country every five years, and as a result of these proposals the changes will be very significant indeed.

All I am asking is that the Government take a less intransigent and more flexible approach—the 7.5% figure is a reasonable extension, frankly. In order to be able to address many of the anomalies, from Argyll and Bute to the Cornish seats and the highlands, the Boundary Commission will need to be given a great deal more latitude than the amendment proposes, as the Minister has rightly said. We had the opportunity to extend the exceptional geographical circumstances of the Western Isles—

[Mr MacNeil]

Na h-Eileanan an Iar.

[Andrew George]

Na h-Eileanan an Iar, and Orkney and Shetland. When one considers the geographic arguments for those constituencies’ exceptional status, one sees that it is reasonable to argue that exceptional geographical status can be justifiably extended to other constituencies.

[Mr MacNeil]

The hon. Gentleman will know that I am a supporter of Cornwall in that argument, and of Isle of Wight and Argyll and Bute. Following an earlier question to the Minister, I have a question for the hon. Gentleman. Given the geographical constraints on his constituency in the south-west, from where the Boundary Commission will obviously have to start moving, how much more territory will have to come into his constituency? He is restricted to the north, south and west and so can expand only eastwards to increase his electorate to roughly 80,000.

[Andrew George]

I am not engaged in special pleading. My constituency is in the bottom left-hand corner and as far away from England as one can get in Cornwall, and of course it includes the Isles of Scilly, which have some special geographical considerations, so it is clear that I do not need to worry. There will no doubt be some oscillation of the constituency’s eastern boundary. I am here not for special pleading, but because I believe that a significant injustice is going on across the whole country and that the intransigence in the way it is being handled is simply unacceptable.

[Mrs Laing]

Will the hon. Gentleman give way?

[Andrew George]

I will not give way, because we have only 11 minutes left and I want to finish to allow other Members to speak. We had the option of extending to other constituencies the exceptional geographical status that is applied to Na h-Eileanan an Iar, Orkney and Shetland and the other places that have been mentioned. All the amendment would do is give the Boundary Commission reasonable latitude and discretion to accept the arguments for exceptional status that will inevitably arise. Otherwise, the Government’s intransigence will leave a legacy that I believe the House will regret.

[Paul Murphy]

I do not understand why the Government and the Minister are being so rigid and fundamentalist on this issue. The Minister has already accepted the principle that there can be 5% leeway in the size of the electorate and that that flexibility is the result of local ties and circumstances. Many of us wanted a flexibility of 10%, but the Government wanted 5%. After weeks of debate in the House of Lords and in this Chamber, he is for some reason sticking to the rigidity of 5%, despite knowing full well that the 7.5% flexibility would not result in the problems that he has suggested. Of course it would not, because the principles are exactly the same.

The Minister represents a constituency that has distinctive circumstances as a result of its locality—the former coal-mining area of Forest of Dean. If it was turned into Gloucestershire parliamentary district No. 3, does he think that that is how his constituents would want to be represented in the House of Commons? Of course they would not. They would want to ensure that they have someone who understands their locality and all the special reasons that make it so important. I have already named two examples from Wales, as we have a number of Welsh-speaking constituencies that, generally speaking, have Welsh-speaking MPs to represent their linguistic interests in the House. With the 25% reduction in MPs for Wales, that is no longer likely to be the case.

[Tristram Hunt]

Does that not point to a lack of understanding about the nature of the Union? Those balances and inequalities are represented in this Chamber, because that is the price of holding together the Union, and the Government’s utilitarian approach does no favours to the United Kingdom.

[Paul Murphy]

My hon. Friend is absolutely right, in the sense that the unity of our kingdom is based on the recognition of the differences within it. Those differences can be reflected linguistically, culturally, socially and in other ways. The rigidity with which the Government have embarked on this course puts that Union in danger.

[Mr Harper]

I set out from the Government’s perspective the reason why we settled on plus or minus 5%—a 10% range that is based on more equal seats but allows the use of wards as building blocks. Can the right hon. Gentleman explain to the House the principled reason why he thinks that 7.5% either side of that quota is the right number?

[Paul Murphy]

That extra flexibility allows for the factor that I have just described in Wales and elsewhere to be taken into account—of course it does. I should argue very strongly for 10%, but the Government have a particular principle behind their legislation, which incidentally is based not in any way on logic, but on expediency.

[Mrs Laing]

The right hon. Gentleman is doing very well, as ever, at putting before the House what appears to be an argument based on principle, but in reality are not he and his Labour party colleagues afraid of the inflexibility of a 5% variation, because it would take away their in-built advantage under the current unfair system?

[Paul Murphy]

In the examples that I have just given, of Welsh-speaking constituencies in Wales, the seats are held mainly by Plaid Cymru and the Liberal Democrat party, so there is no advantage for the Labour party in that. I am not arguing a partisan point; I am arguing that 7.5% would provide for that flexibility throughout the United Kingdom and avoid the worst excesses of the Bill.

[Mr MacNeil]

A couple of moments ago, the right hon. Gentleman said that the Union might become weaker with the passage of the Bill. How much weaker does he think that 88-year-old Union—stretching back to 1922—might be after Royal Assent tomorrow?

[Paul Murphy]

The Union will be weaker as a result, because the Bill will not take into account the various points that I have just described. If we do not allow the small countries within our larger country to be properly represented within the Chambers of the legislature, we will ensure a bad effect on the relations between different parts of that country.

As a former Secretary of State for Northern Ireland, I really do not believe, as my hon. Friend the Member for Foyle (Mark Durkan) said, that the Government have thought for one second about the political impact of the changes before us on the constituency boundaries in Northern Ireland. They do not understand that, when we drew up the Good Friday agreement, much of our argument was about how we could create a sensitive balance between Catholic and Protestant, Unionist and nationalist in Northern Ireland. That balance will be upset by the rigidity on which the Government have embarked, and at this very last moment I urge the Minister and the Government to change their minds.

[Alec Shelbrooke]

My problem with Lords amendment 19 is new paragraph 5A(b) of schedule 2 to the Parliamentary Constituencies Act 1986, which states that

“such necessity arises from special geographical considerations or local ties”.

I want to focus on “local ties”, because that is why I shall vote against the amendment. It is bad law, and, looking at “local ties” and how that might be expanded, we should consider my seat, Elmet and Rothwell.

First, let us focus on Rothwell, which between 1917 and 1955 had its own parliamentary constituency. After that, it was included in others, and at the most recent election it fell outside a safe Labour seat for the first time, making me the first Conservative MP for Rothwell.

Moving on to special interests and local ties of an “exceptionally compelling nature”, however, I note that outside my constituency there is a village called Sherburn in Elmet. Many people in that part of the world, when I tell them that I am the MP for Elmet and Rothwell, say, “Ah, I live in Sherburn in Elmet; you’re my MP,” but of course, I am not, because it is not in my constituency.

[Nigel Adams (Selby and Ainsty) (Con)]

My hon. Friend and constituency neighbour refers to Sherburn in Elmet. I assure him that the people of Sherburn in Elmet consider themselves very much in North Yorkshire and would be appalled at the idea of being seen as part of Leeds.

[Alec Shelbrooke]

Absolutely. That makes my point entirely. When considering special circumstances and local ties, would not Sherburn in Elmet, part of the Celtic kingdom of Elmet, become part of a constituency incorporating Elmet? Would that not come under special interests and considerations? Would not precedent be brought forward in the courts in terms of representing that seat? The amendment is absolute nonsense which leads to grey areas in the Bill.

I want to talk about the 5% barrier. In the Leeds area, Elmet and Rothwell has 78,000 electors, and perhaps this point did not occur to the Opposition when they put their proposal together, but their variations on 76,000, the figure in the Bill, take us perilously close to the 68,000 electors in Leeds North East, a Labour seat; to the 65,000 electors in Leeds East, also held by Labour; and to the 65,000 electors in Leeds Central—Labour. The only exceptions are Morley and Outwood, which has 74,000 electors, although I believe the right hon. Member for Morley and Outwood (Ed Balls) would need only a 1.5% swing to lose the seat; and Pudsey, which has 69,000 electors. The 5% barrier is fine; it allows us not to go down the path of dividing villages or streets. The idea of trying to increase the percentage is just an attempt to preserve the Labour party’s in-built advantage.

[Mrs Laing]

The amendment cannot stand: first, it is unclear, and it would be wrong for this House to make laws that are unclear; and secondly, it is unfair.

18:46

Two hours having elapsed since the commencement of proceedings on consideration of Lords amendments, the debate was interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 16.

18:47

Division 202

Ayes: 317

---

Conservative: 268
Liberal Democrat: 49

Noes: 250

---

Labour: 224
Democratic Unionist Party: 6
Scottish National Party: 6
Liberal Democrat: 4
Conservative: 3
Social Democratic & Labour Party: 2
Independent: 2
Plaid Cymru: 2
Alliance: 1
Green Party: 1

Lords amendment 16 disagreed to.

The Deputy Speaker then put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Motion made, and Question put, That this House disagrees with Lords amendment 19.—(Mr Harper.)

19:01

Division 203

Ayes: 320

---

Conservative: 269
Liberal Democrat: 51

Noes: 249

---

Labour: 224
Democratic Unionist Party: 6
Scottish National Party: 6
Conservative: 3
Liberal Democrat: 3
Social Democratic & Labour Party: 2
Independent: 2
Plaid Cymru: 2
Alliance: 1
Green Party: 1

Lords amendment 19 disagreed to.

19:15

[Mr Harper]

I beg to move, That this House disagrees with Lords amendment 17.

[Madam Deputy Speaker (Dawn Primarolo)]

With this it will be convenient to take Lords amendment 20 and Government amendments (a) to (e) in lieu.

[Mr Harper]

The amendments concern the effect on the Isle of Wight of the Government’s proposals for votes to have more equal weight, which has been a subject of much debate both inside and outside Parliament. I know that myself, having visited the Isle of Wight at the invitation of its Member of Parliament, my hon. Friend the Member for Isle of Wight (Mr Turner), last autumn.

As we said in the earlier debates, the Government believe that the principle of one elector, one vote—or, rather, one vote, one value—is paramount. [Interruption.] I think we all agree with the first proposition. There is consensus on that. It is right that electors across the UK should have an equal say not just in their choice of local representative, but in who form the Government of the day. As I said in the previous debate, for votes to have equal weight in a single-member constituency system, constituencies must contain a broadly equal number of electors.

Although absolute equality would be right in principle if—as was said in a previous debate—we were all desiccated calculating machines, in the real world some flexibility is needed to recognise local circumstances. Exceptions compromise equality, so the Government’s view is that the number of exceptions must be very limited. [Interruption.] Calm down. The Bill presented to the House by the Government provided for only two specific exemptions from the parity rule for two Scottish island constituencies —Na h-Eileanan an Iar and Orkney and Shetland. The rationale for those exceptions was clear. They are remote island groups not readily combinable with the mainland, and legislation in practice already recognises their unique geographical circumstances.

[Thomas Docherty]

I am grateful to the Minister, who is always generous with his—with the House’s time. He mentioned the issue of the highlands. Is he not aware that in Scotland there are many islands? I look to the hon. Member for Argyll and Bute (Mr Reid), where there are a large number of islands attached to the mainland. North Ayrshire and Arran also has an island.

[Mr Harper]

My point was that the exemptions were for remote island groups not readily combinable with the mainland. In the two examples that the hon. Gentleman gives, the islands are already combined with the mainland as a parliamentary constituency. That is a clear distinction. I do not understand the point he makes.

[Albert Owen]

I represent a distinct island community. Previously, when I supported the Isle of Wight and other constituencies being lumped together, the argument was that it did not have enough electorate. Now the Government’s proposal is for two distinct seats on the Isle of Wight, with 50,000 electors each. My constituency, Ynys Môn, the isle of Anglesey, has 50,000-plus, so the rationale has changed. Will the Minister reconsider the uniqueness of islands? The existence of a bridge does not make it any less an island or a community.

[Mr Harper]

The hon. Gentleman should wait to hear my argument. In the previous debate, Opposition Members made great play of the fact that when the House of Lords votes on matters, this House should consider them. The Government were clear about the Bill that we introduced. We were clear in the House of Lords about our argument. We resisted Lord Fowler’s amendment, but Members of all parties in the House of Lords did not agree with the Government. If hon. Members will allow me to make some progress in my argument, I will explain why the Government have tabled the amendments in lieu.

The Scotland Act 1998 provided a specific exemption for Orkney and Shetland. There are other constituencies that include or comprise islands, but these have either already been combined with the mainland or, in the Government’s view, such combination would be possible. Clearly, the Isle of Wight does not face the same geographic circumstances as the island constituencies in Scotland. Newport is only three hours from London, and there are regular ferry crossings. In shaping our proposals, we took account of the fact that the island increasingly looks to the mainland in pursuit of greater partnership—for example, in the creation of the Solent local enterprise partnership, which is supported by the island council and covers the economic area of south Hampshire and the Isle of Wight. [Interruption.] Well, I am arguing that that is why the Government thought it was perfectly possible to combine the Isle of Wight with the mainland. The House of Lords, though, took a different view.

In coming to the view that the island should not be granted a specific exemption, we concluded that the practical problems that would arise for an MP attempting to represent a constituency that is already the length of Wales, as in the case of Na h-Eileanan an Iar, or some 12 to 13 hours from the mainland by ferry, as in the case of Orkney and Shetland, would not arise for a cross-Solent MP. We were not persuaded that an MP could not effectively represent two different communities, as a cross-Solent MP would have to do. Many Members represent constituencies that contain citizens with a range of diverse cultures, languages and interests.

We have, however, listened to the arguments put forcefully in this House by my hon. Friend the Member for Isle of Wight and in the other place, most notably by Lord Fowler, who is with us this evening in spirit, and Lord Oakeshott. We judge that the strength of opinion evidenced by the vote on the amendment in the other place, which had cross-party support, including strong support from the Labour party, is such that the Bill should be amended so as not to require a constituency shared between the Isle of Wight and the mainland.

The amendment passed by the House of Lords was intended to achieve that, but it would leave to the discretion of the Boundary Commission for England the question of whether there should be one seat on the island or two. We believe that that poses some practical problems. For a start, the amendment does not specify the basis on which the Boundary Commission should decide how many seats to allocate the Isle of Wight. Nor does it except the constituency or constituencies on the Isle of Wight from the calculation of the electoral quota. The Isle of Wight’s smaller or larger than average constituencies would therefore have an effect on the average size of other constituencies across England. If an exception is to be made for the Isle of Wight, we believe that it should be treated the same as the other exceptions in the Bill in a consistent and fair way.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Does the Minister accept that the Boundary Commission has considered the boundaries of the Isle of Wight on a number of occasions, and has previously discussed whether there should be two constituencies? It has rejected that option on the grounds that it would be difficult to define where the boundary should be and what the islanders’ wishes were. If the Boundary Commission had discretion over exactly what happened, there might be a repeat of those previous processes unless it were directed to conclude otherwise.

[Mr Harper]

On the hon. Gentleman’s point about the views of local people, when I visited the island myself and spoke to people there, they were very clear that they were not being prescriptive about whether they wanted one seat or two. The clear message that I got was that they did not want one that crossed the Solent. They did not say that they wanted only one seat—they were relaxed about whether they should have one or two. I believe that the nub of Lord Fowler’s point was about the nature of a cross-Solent seat, and our amendments in lieu reflect that.

[Andrew George]

There are, of course, other parts of the country, including Cornwall, where people recognise boundaries in precisely the same way as people on the Isle of Wight recognise their boundary on the Solent. Is the irony not lost on the Minister that when we have 650 seats in the House of Commons the Isle of Wight has one, but when the Government are seeking to reduce the number of seats in this House significantly, they double that representation?

[Mr Harper]

If the hon. Gentleman will let me finish my argument, which does not have very much—[Interruption.] No, I am just saying that I have not got to that bit yet. If he will let me, I will get to it.

The amendments that we have proposed in lieu of Lord Fowler’s amendments would resolve the problems that I have mentioned. The Boundary Commission would be required to create two constituencies wholly on the island. They would obviously be outside the range of 5% either side of the quota—otherwise we would not be having this debate in the first place—but each would be closer to the quota than a single island constituency would be. That would ensure that electors’ votes were closer in weight to those cast elsewhere in the UK, which we believe is important.

Our amendments also make consequential adjustments to the formula used to apportion seats to the constituent parts of the UK and to calculate the UK electoral quota, so as to be consistent with the approach taken to the other exceptions in the Bill. To pick up on a point made by my hon. Friend the Member for Epping Forest (Mrs Laing), who is not in her place, they will therefore provide the Boundary Commission for England with a clearer task than under the amendment made in the other place.

[Tristram Hunt]

What is the difference in actual votes between the 76,000 quota and Isle of Wight constituencies of 110,000 or 55,000 people? Would 3,500 votes mean another whole constituency in the House, when the number is going from 650 to 600?

[Mr Harper]

I am sadly not able to do the maths at the Dispatch Box, but we have examined the matter, and what I have just said is borne out. I will do the maths when I sit down, or maybe inspiration will strike me, but two seats would be closer to the quota than one. That is the basis for our decision, which is very clear [Interruption.] The debate in the House of Lords supporting the amendment of the—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I know that hon. Members feel very strongly about this matter, but persistent heckling really is not what we expect in the Chamber. Interventions, yes, but not heckling.

[Mr Harper]

The amendment that was accepted by their lordships’ House, which we accept in principle, was supported by all parties. The Cross Benchers supported it, along with every Labour peer who voted in the Division, some Liberal Democrats and some bishops. However, we believe that the Boundary Commission needs to be given clarity and certainty so that we do not end up with a confusing and challengeable boundary review.

[Mark Reckless]

We might note the precedent of what the Boundary Commission has done in the past when it has had to choose whether to give, say, two or three seats to a London borough. Its decision has been based on trying to get as arithmetically close to the quota as possible. The amendment clarifies exactly that principle for the Isle of Wight. If the matter had been left to the Boundary Commission, precedent suggests that it would have given the Isle of Wight two seats rather than one.

[Mr Harper]

My hon. Friend is quite right, but it is important for the Boundary Commission to be certain about the matter at the beginning, so that it can then undertake the rest of the boundary process. If the decision were up to the commission and it were to make a certain assumption in its initial proposals, and then come to a different conclusion as a result of the extensive written consultation process and public hearings that we have laid in place, it would have to make a radical change to the proposals. As my hon. Friend the Member for Epping Forest, who is now back in her place, said in a previous debate, certainty and clarity are very important to ensure that the boundary review is carried out properly.

[Jacob Rees-Mogg (North East Somerset) (Con)]

I support the amendments fully, but once the Isle of Wight has been given two seats, the argument for absolute uniformity has fallen, which it did not in the case of Na h-Eileanan an Iar, the Shetland Islands and so on. If the Isle of Wight can have special treatment, why not Cornwall and, as far as I am concerned, why not Somerset? Every county now has a special case to make that ought to be considered. In largely accepting the Lords amendment, the Government have given the game away.

19:30

[Mr Harper]

I think that my hon. Friend helps my argument. As I said, this is part of the parliamentary process. The Government introduced a Bill, which did not include an exception for the Isle of Wight. When Lord Fowler tabled his amendment, the Government strongly resisted it—indeed, we were criticised for doing that—but the House of Lords took a different view. My hon. Friend mentioned Cornwall, but the House of Lords debated Cornwall, voted on it, and decided, by a considerable margin, that the case for Cornwall had not been made. I appreciate that some hon. Members disagree, but that was the view that the House of Lords reached. It did not reach the same view about the Isle of Wight. There was a majority of 74 in the other place for making an exception for the Isle of Wight. That was not the Government’s position, but a strong message from the other place.

Inspiration has now struck me, and I can answer the question that the hon. Member for Stoke-on-Trent Central (Tristram Hunt) asked. Based on 2009 figures, one seat would be 34,366 away from the UK quota and the two seats would be 20,748 away from the quota. That is a significant narrowing of the difference.

[Jacob Rees-Mogg]

Although the Lords are wonderful guardians of our constitution, the debate has seen any number of perfectly sensible amendments rejected, and the Government have not lost a single vote in the House. I therefore do not see the logic of saying, “We must give in to the Lords on this, but on everything else we’ll tell them they’re wrong and send the Bill back.”

[Mr Harper]

I think the difference is the strength of view in the other place on the matter. [Interruption.] That view was also consistent and cross party. The Labour Lords who voted in the Division in the other place all supported Lord Fowler’s amendment. It is therefore extraordinary that Labour Members are making so much noise now. The Government have acknowledged the debate at the other end of the corridor. Given my hon. Friend’s previous comments about their lordships, I would have thought that he saw more strength in the case. On the basis of the arguments that I have set out, I hope that that case will be supported.

[Chris Bryant]

I am sorry, but I think that that was the shabbiest speech I have heard from a Conservative Member. The Parliamentary Secretary appeared to suggest that Labour Members are now arguing against what we supported in the House of Lords. We support what was carried in the House of Lords: we would prefer the amendment that was carried there to be accepted here. It is absolutely shoddy that the Government, to give themselves an extra parliamentary seat, will provide for two seats for the Isle of Wight. It is not so much a gerrymander as a ferrymander.

As the hon. Member for North East Somerset (Jacob Rees-Mogg) effectively said, the Parliamentary Secretary has driven a coach and horses through his own argument. His argument so far has been that there must be equalisation at all costs. It has been, “Don’t recognise local ties, county boundaries or ward boundaries.” He tries to insist on mathematical perfection, but when it comes to this one place, there must be an exception.

We agree that there should be exceptions. We believe that there should be some other exceptions, too. The argument that the Parliamentary Secretary makes could and should apply to Cornwall, Somerset and all the counties—and, indeed, ward boundaries. We should recognise more exceptions.

[Dan Rogerson (North Cornwall) (LD)]

I wish that the hon. Gentleman could have presented that argument precisely and briefly when the Bill was previously in the House, then perhaps we could all have had the chance to debate the subject at an earlier stage. However, does he agree that the debate about Cornwall in another place focused on cultural issues rather than geographical considerations? Sadly, the Government’s approach does not address those factors.

[Chris Bryant]

Absolutely. Some specific geographical issues need to be borne in mind. I am sure that the hon. Gentleman will hate any reference to my constituency, but a former Member of Parliament for the Rhondda, Alec Jones, was once presented with a suggestion that the Cynon valley should be included in the Rhondda constituency, even though for much of the year it is almost impossible to get from one to the other. Alec Jones wisely said, “Bloody hell, somebody’s got hold of a flat map.” Those are precisely the sort of arrangements that we will end up with.

[Stephen Williams]

Will the hon. Gentleman give way?

[Chris Bryant]

I will not, because the hon. Gentleman voted for the programme motion. There is a short time left and we ought to hear from the hon. Member for Isle of Wight (Mr Turner), who should be the only hon. Member for the Isle of Wight.

The argument that has been adduced in favour of the Isle of Wight should surely apply to Anglesey, too. There is no argument against that—except for the fact that it is represented by a Labour Member, and happens to be in Wales.

There is an additional problem with the Government amendments. Because they are trying to force two parliamentary seats on the Isle of Wight—I suspect that that does not reflect the view of the people of the Isle of Wight; they think that it should be separate from Hampshire, but they have not argued for two seats—it will be difficult to draw the boundary. We are more likely to end up with one constituency of 60,000 or 65,000 and one of 30,000 or 35,000 than an exact divide.

[Mark Reckless]

Will the hon. Gentleman give way?

[Chris Bryant]

No, I am sure that the hon. Gentleman, too, voted for the programme motion, so I shall not give way.

Someone of cynical mind could look at the list of parliamentary constituencies for which exceptions are being made and draw conclusions: one, by virtue of 13,000 sq km, to the Liberal Democrats; one, for Orkney and Shetland, to the Liberal Democrats, one, for Na h-Eileanan an Iar, to the nationalists—at the moment, but I hope for not much longer—and two for the Isle of Wight. Some have suggested that that means two Tory seats in the Isle of Wight. It may be one Tory and one Liberal Democrat: perhaps that is the rescue seat for the Deputy Prime Minister come the next general election.

[Mr Andrew Turner (Isle of Wight) (Con)]

I had a speech prepared to deliver today, but I do not think that I shall need it; I am using another.

Let us go over what happened. When I first heard of the proposals, I got together with the County Press, the island’s weekly paper, and Isle of Wight Radio, our local radio station, to see how “we” could fight “them”. It was energising to do that. We all met representatives from the island’s Labour party and Liberal Democrats—and, of course, the Conservatives—as well as the chamber of commerce, and the One Wight campaign was formed.

We appointed a non-political spokesman, Richard Priest, who has done an admirable job of fronting the campaign.

[Mr MacNeil]

I would just like to point out that there was some international support from the SNP.

[Mr Turner]

That is correct, but I would not use the word “international”.

Although opinion was divided on whether the ideal solution was for one or two MPs, we were united at the outset in the view that what was simply unacceptable was the notion of one and a half MPs, with one part of the island placed in an unholy alliance with a part of the mainland.

Eventually we all agreed that even if the island were to remain under-represented, that was a price worth paying. We got support from many places. Among many others, printing was done free of charge by Crossprint; Marc Morgan-Huws of the bus company Southern Vectis donated the use of the One Wight bus, which thousands of people signed, and Paul Bertie of World Leisure printed T-shirts for the campaigners. I would like to thank them all, as well as those whom I do not have time to mention. Everyone involved played a significant part.

My amendment was not debated in this Chamber and there was no vote, but I want to place on record my gratitude to the hon. Members from all parties who pledged their support for it. I like to think that we would have won if the opinion of the House had been tested. None the less, the Bill went to the other place unamended, and the island’s cause was taken up by Lord Fowler, who is a long-term resident of Seaview, on the island. His skilful management in the other place led to a significant victory and a majority of 74 in favour of keeping the Isle of Wight separate. He found support from all parties, as I did, for the island’s cause, in addition to considerable support from Cross Benchers.

I thank all the noble Lords and Ladies who supported the amendment, and I pay tribute to Lord Fowler. His many years of experience in this House and the other place stood him in good stead in fighting the island’s cause. The whole island owes him a debt of gratitude. I hope that Seaview residents, after short congratulations and celebrations, will permit him to return to a once-again peaceful island.

The fact that islanders were prepared to be under-represented added to the strength of our argument, but the Government were scrupulously fair, and once they accepted the case that we should be separate, they offered us, like the Scottish islanders, over-representation, which I welcomed.

[Tristram Hunt]

In a perfect world, would the hon. Gentleman be in favour of a single Member or two Members for the Isle of Wight?

[Mr Turner]

I am in favour of whatever is voted for by the island.

I admit that I felt a twinge of sadness at the thought that I would be the last MP for the Isle of Wight, but the right decision has been made for the island and I support it unequivocally. I thank my hon. Friend the Minister for listening to the arguments and for making the right choice, albeit rather late in the day.

This is a victory for the island and the islanders. Everyone who supported us can be proud of the part that they played. I look forward to joining hon. Members of all parties in the Aye Lobby.

[Albert Owen]

It is a great pleasure to follow a fellow islander in this debate. I supported the Isle of Wight exception all the way through, and like the hon. Member for Isle of Wight (Mr Turner), I have been consistent in the view that there should be exemptions for unique island constituencies such as his and Ynys Môn—the Isle of Anglesey.

I have a lot of respect for the Minister, who has had a difficult job in presenting the Bill to the House. He has been courteous and amicable in taking interventions. He was rigid in his responses, and always said that he would not give an exemption to the Isle of Wight and gave his reasons for that. However, as the hon. Member for North East Somerset (Jacob Rees-Mogg) said, the Minister has now let the cat out of the bag: the exemption is a political fix, pure and simple. To argue for days and days in the House for no exemption for the Isle of Wight, Cornwall and other historic places, and then all of a sudden to make a U-turn for political advantage, is an absolute disgrace.

The people of Anglesey are proud people. It has been a seat since 1535, during which time it has been represented by four different parties, which is perhaps unique in the House. The Liberal Democrats represented Anglesey for many years, as did the Conservatives. I can tell the House that Anglesey will give its verdict in the May elections on its shabby treatment by this coalition Government of Liberals and Conservatives.

Wales has not been treated fairly in the Bill. The 25% reduction in the number of seats is an absolute disgrace. What is more, the Anglesey community is unique. It is coterminous with the county council. It has unique linguistic as well as historic characteristics, but they have not been recognised.

The hon. Member for Isle of Wight was supportive of islands such as mine, and I am still supportive of his, but the Government have gone a step too far by conceding seats that will represent in the region of 50,000 to 55,000 electors. If they want to put that down as a marker, they should reconsider seats such as Anglesey. The island will be a single constituency in National Assembly for Wales, so there will be confusion at the next elections if they take place on the same day. One set of voters will be voting for the island and another set will be voting for the island-plus. That is completely and utterly wrong, and the Minister should reflect on it. He is looking at his notes, and he has been courteous all the way through, but I hope that he can now somehow please Wales, because thus far, Wales has been treated grossly unfairly.

19:44

[Dr Whitehead]

I want briefly to reflect the view from the other side of the Solent. I congratulate the hon. Member for Isle of Wight (Mr Turner), who has fought a magnificent campaign on the principle that the Isle of Wight should be a constituency in its own right. Indeed, the island is a unitary authority. It has close links with the other side of the Solent but it is a distinct community, council and island, with its own practices and traditions, rights and functions.

Before becoming a unitary authority the island was divided into two district authorities. As hon. Members who took any interest in that arrangement will know, the division of an island that is essentially a unitary entity proved extremely difficult. I predict that should two seats be required for the Isle of Wight, a similar difficulty in defining what part of the island goes—

19:50

Three hours having elapsed since the commencement of proceedings on consideration of Lords amendments, the debate was interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 17.

Lords amendment 17 disagreed to.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Motion made, and Question put, That this House disagrees with Lords amendment 20.—(Mr Harper.)

19:47

Division 204

Ayes: 311

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Conservative: 262
Liberal Democrat: 49

Noes: 244

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Labour: 223
Democratic Unionist Party: 5
Scottish National Party: 5
Liberal Democrat: 3
Social Democratic & Labour Party: 2
Independent: 2
Plaid Cymru: 2
Alliance: 1
Green Party: 1

Lords amendment 20 disagreed to.

Amendments (a) to (e) proposed in lieu of Lords amendments 17 and 20.—(Mr Harper.)

Question put, That the amendments be made.

20:00

Division 205

Ayes: 318

---

Conservative: 266
Liberal Democrat: 52

Noes: 233

---

Labour: 220
Democratic Unionist Party: 5
Social Democratic & Labour Party: 2
Independent: 2
Plaid Cymru: 2
Liberal Democrat: 1
Alliance: 1
Green Party: 1

Amendments (a) to (e) made in lieu of Lords amendments 17 and 20.

Clause 1

Referendum on the alternative vote system

[Mr Harper]

I beg to move, That this House disagrees with Lords amendment 1.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to consider amendment (a) and Lords amendment 8.

[Mr Harper]

The first amendment to be moved on Report in the other place by the noble Lord Rooker and agreed to by a majority of just one vote provides that:

“If less than 40% of the electorate vote in the referendum, the result shall not be binding.”

The Government oppose the inclusion of this amendment in the Bill on two key grounds. First, it goes against our view that people should get what they vote for, and, secondly, it introduces the perverse consequences associated with thresholds.

Before going into those arguments, however, I should remind colleagues that we have debated the question of whether to impose a 40% turnout threshold before, when an amendment to this effect was tabled on Report by my hon. Friend the Member for Stone (Mr Cash). I note that he has tabled an amendment today that seeks to reintroduce his proposal from Report, turning Lord Rooker’s proposal into a straightforward turnout threshold by mandating the Minister to repeal the AV provisions in the event that turnout is less than 40%. It is worth recording that, when this House voted on that proposal the first time round, it was resoundingly rejected by 549 votes to 31. On that occasion, the hon. Member for Rhondda (Chris Bryant), speaking for the Opposition, said that he did not think it appropriate to bring in a threshold.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

My next-door neighbour, the hon. Member for Stone (Mr Cash), is often very wise, and I have had the chance to reconsider my position on this matter. Possibly the Minister has, too. I realise that the Deputy Prime Minister—he who has just discovered that there are alarm clocks in Britain, and who feels the pain of the cuts by shopping at Sainsbury’s instead of Ocado—is the most derided politician in the land at the moment, and that people are not exactly going to be galloping to his support, but is not a 40% threshold appropriate for a constitutional change such as this?

[Mr Harper]

I shall treat the first part of the hon. Gentleman’s remarks as political posturing and nonsense that have nothing to do with the Lords amendments. On his second point, I shall explain why I will be urging the House, in a consistent way, to take the same view on these matters that it took in Committee and on Report, whereas the hon. Gentleman, if those on his Front Bench follow suit, would seem to be demonstrating a bit of shameless opportunism.

[Mr Cash]

Does the Minister not think that it might be a little shameless to leave the House of Lords to discuss questions relating to voting in constituencies by our own constituents?

[Mr Harper]

I am sorry; I did not quite understand my hon. Friend’s point. We debated and voted on his proposal on thresholds in this House, and it was defeated by 549 votes to 31—[Interruption.] Well, my hon. Friend should have another go, because I did not really follow the point he was making.

[Mr Cash]

This is an electoral reform proposal in which we are asking the electorate to decide in a referendum what they want to do. Does he not think it a little shameless that the question of whether that decision should be subjected to the 40% test should be decided by the House of Lords rather than by the House of Commons? Perhaps my hon. Friend can answer if I put it that way.

20:15

[Mr Harper]

No, I think that the decision should ultimately be made by the elected House, which is why I will ask hon. Members on both sides of the House to disagree with the Lords amendment. I hope, following the logic of my hon. Friend’s argument, that he will support the Government in the Lobby.

[Mr Stewart Jackson (Peterborough) (Con)]

Does the Minister acknowledge, as we are facing a considerable and potentially irreversible constitutional change, that a precedent has been set by the Scotland Act 1978, which made provision for a turnout threshold? That was among the reasons why the then Labour Government subsequently foundered, following the withdrawal of support by the Scottish National party. So a precedent has already been set for a turnout threshold.

[Mr Harper]

In that case, it was not proposed by the Government, so I do not think that that makes the case. There was a clear vote in Scotland in favour of the proposal, but the turnout threshold was not reached. That did not settle the question; it merely enabled the question to fester for a number of years without being settled. I do not think that my hon. Friend is correct.

[Mr Christopher Chope (Christchurch) (Con)]

My hon. Friend says that he wants this matter to be decided by this House, but would not that be the effect of Lord Rooker’s amendment? If there were a lower than 40% turnout in the referendum, it would be for this House to decide what to do. Is that not a good idea?

[Mr Harper]

No, because it is more important to allow the people to decide. The coalition wants to enable the public to decide. I will explain in a moment why the effect of a threshold would be to deny the public that opportunity.

[Mr MacNeil]

The Minister is absolutely right to say that the 40% turnout threshold for the referendum in Scotland was wrong. As he said, it ensured that the will of the people was not acted upon. In fact, the will of the people was acted upon with bells on 18 years later, because the scare stories in 1979 brought us a Scottish Parliament that was far more powerful than an Assembly. The point tonight is that in a referendum on first past the post versus AV, there is a simple choice either way. If the public are sufficiently supportive of first past the post, it will win in a straight run-off against AV—and vice versa. If neither system can garner sufficient support, then so be it, but the Minister is absolutely right to say that there should be no threshold whatever. There should simply be a straight choice between the two.

[Mr Harper]

The hon. Gentleman is right. One of the most convincing arguments was heard in our previous debates in this House, which is that a turnout threshold effectively makes every abstention a no vote. People abstain from voting in referendums for any number of reasons, but treating all those who abstain as effectively expressing a preference is not the right thing to do. A turnout threshold would give those in favour of a no vote a positive incentive to stay at home. As I said in our earlier debate, we should, as democrats, encourage people to go out there and vote yes or no. The important thing is that people take part, and a turnout threshold would encourage some of them to stay at home.

Such a barrier would also create some very strange mathematical scenarios. For example, if 39% of the electorate turned out, the result would not be binding, even if 75% of those votes were in favour of change. So, even if the public had expressed a clear preference, it would not count. On the other hand, a result in which 41% of the public had turned out, even if it were a narrow 51%:49% result, would count. There is no logic to that proposal; it makes no sense.

[Mr Jack Straw (Blackburn) (Lab)]

This whole argument is against a motion that was not passed in the other place. It is against one that was defeated where there was a threshold that amounted to a veto on the result if the turnout were below that threshold. Does the Minister not accept that this Lords amendment is completely different in character? All it does—although it is a very important “all”—is to ensure that if there is a turnout of less than 40% in total, the matter will come back to this House. To pick up the Minister’s example, if, say, there were a 39% turnout and 75% of that 39% had voted in favour of a change in the voting system, I cannot conceive that this House would fail to endorse it. On the other hand, if there were a 25% turnout and if it were approved by only—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

In fairness, many Members want to contribute to the debate. Can we please come to the end of the question?

[Mr Straw]

In those other circumstances, the House would surely think again. Is that not a very sensible way of proceeding?

[Mr Harper]

No, I do not agree with the right hon. Gentleman. The Government are simply trying to ensure that the public get the choice. If we insert a threshold—even the one put forward by the noble Lord Rooker, which was supported in the other place by a majority of only one—it effectively means that we are saying to the public that even where there was a clear decision, it would not be binding and the matter would come back to this House. If we were to agree with it, there would be no point; if we were to overturn it, it would be outrageous. Thresholds are not part of the traditions and practice in this country. We have discussed the one example of where it was used, and we found that it was not a very good precedent.

[Several hon. Members]

rose—

[Mr Harper]

Let me make a little more progress. I am conscious that other Members want to contribute and I have been generous in giving way.

As drafted, the Bill that left this House offered simplicity and, above all, certainty—the certainty that every vote would count and not be distorted by an artificial barrier. When people go to the polls on 5 May, we should listen to what they have to say, whatever their view. As well as the issues of principle that I have outlined, there are also some technical and practical deficiencies. Before I go on to them, I will take an intervention from my hon. Friend the Member for Harwich and North Essex (Mr Jenkin).

[Mr Jenkin]

I echo the point made by the right hon. Member for Blackburn (Mr Straw) that the amendment only requires the House of Commons to think about a poor turnout and how to respond to the result under such circumstances rather than automatically triggering a small yes vote with a low turnout and a new voting system. Does the Minister not recognise the irony of his position? Here we are looking at a referendum that might introduce a new voting system under which a Member elected to this House will be required to get 50% of the votes cast, yet we cannot even put in a threshold to require a 40% turnout to give credibility to the result of a referendum. What serious constitution around the world does not have some form of threshold and why should we not introduce one in this case?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Let me be quite honest: a number of Members are still seeking to catch my eye, so we need shorter interventions.

[Mr Harper]

I will take your injunction as implicitly indicating that I should give way to fewer of them.

On the effect of AV, it is not, of course, the case under our system of optional preferential voting that it is necessarily 50% of the votes cast that counts; rather it is 50% of the vote remaining in the count. If lots of people choose not to accept a preference, AV does not imply that a Member of Parliament must get more than 50% of the vote. I simply disagree with my hon. Friend. He will know that I am as unenthusiastic about the alternative vote as he is, but I think the right thing to do, which is the Government’s policy, is to have the referendum so that he and I can go out and argue for a no vote, while other colleagues wanting a yes vote will make that case. We can then both seek to get as many people as possible to vote on our behalf. The Government’s view is that if there is a turnout threshold, it will provide an incentive for those who favour a no result to stay at home. I do not think that we should be encouraging that.

[Mr James Gray (North Wiltshire) (Con)]

rose—

[Mr Harper]

Let me make a little more progress.

There are some technical and practical deficiencies, some of which were partially addressed in Lord Rooker’s Third Reading amendment, which the Government did not oppose pending full consideration in the Chamber. The definition of electorate was dealt with, as was how the turnout would be calculated. A problem with the original amendment was not remedied, as it leads to the creation of an internal contradiction in the Bill. It makes no consequential change to clause 8 to clarify that, in a case where the turnout is less than 40%, the referendum result is no longer binding. As it stands, clause 8 provides that the result is binding, irrespective of the turnout.

In addition, neither amendment makes any reference to what kind of process would follow a non-binding result. In the debate, Lord Rooker and his colleagues indicated that, in the event of a yes vote where the turnout was less than 40%, the question of whether the AV provisions should be implemented should return to Parliament. That point has been repeated by Members of all parties, but it is not made clear in the Bill or in the Lords amendment with which we disagree. There are also some issues with the definition of turnout.

[Mrs Laing]

Will the Minister give way?

[Mr Harper]

Given that my hon. Friend is the acting Chairman of the Select Committee, I will give way to her.

[Mrs Laing]

It is in my capacity as acting Chairman of the Select Committee that I wish to make this point. The amendment is—sadly, because I want to see thresholds, but not as the amendment introduces them—deficient. It is not clear. The definition of vote is not clear and the definition of electorate is not clear. The Electoral Commission provided the Select Committee with the evidence—I do not have time to provide it now, but it is on the record—and if a law is not clear, it is bad law.

[Mr Harper]

My hon. Friend is quite right. I was just coming on to the point that there is also the question of whether the definition of turnout in their Lordship’s amendment is correct. Lords amendment 8 specifies that

“the turnout figure is to be calculated on the basis that 100% is defined as the total number of individuals who are entitled to vote in the referendum, as defined in section 2; and… under Part 1 of this Act”.

That means that the turnout figure would not include those who had voted on the day, but whose votes were deemed, for whatever reason, to be void. Those void votes are not counted. As Lord Wallace noted in the other place, the Government’s view is that if eligible electors go to the polling station and vote, they have “turned out”, so they should be included within the turnout figure, even if their vote is subsequently deemed to be invalid. Although this aspect clarifies how to interpret Lords amendment 1, it does not necessarily do so in the right way.

[Mr Gray]

The Minister rests his argument on technicalities, which no doubt the Government could sort out by tabling amendments themselves. Returning to the main point of the debate, does he agree that Lord Rooker’s amendment would allow this House to decide how low the threshold should be if there were a very low turnout in the referendum? In other words, if, for the sake of argument there were a 5% turnout, would the Government believe that to be sufficient? No, I do not believe they would. If it were 35%, I believe they would. What level of turnout does the Minister believe to be a reasonable level to account for “the will of the people”? What would he view as a sensible turnout in the referendum—25% or lower?

[Mr Harper]

My hon. Friend has made a number of points. Let me say first that I did not rely on the technical arguments; I made the principled case at the outset, before adding that serious technical amendments were involved. Although, as my hon. Friend the Member for Epping Forest (Mrs Laing) pointed out, the Government’s original position was simple and clear, the Lords amendments are complicated, and introduce a great deal of uncertainty.

In referring to what the House might do if the amendment were passed, my hon. Friend drew attention to the fact that some Members, understandably, wished to use an amendment passed in the other place by a majority of one as, effectively, a threshold amendment. If the threshold were below a certain point, they would wish to block the decision of the people. As I said earlier, we have taken the view that we should give the decision to the public, that we should campaign in favour of whatever is our side of the argument, and that we should all provide an incentive for the maximum possible turnout rather than some of us providing an incentive for those favouring a particular side of the argument to stay at home.

[Mr Winnick]

Will the Minister give way?

[Mr Harper]

I will take one more intervention from the hon. Gentleman.

20:30

[Mr Winnick]

There may well be a 40% turnout, but the turnout could be higher. Who knows? It will depend greatly on the campaign, and on the people’s interest or lack of it. However, will the Minister answer the question raised by the hon. Member for North Wiltshire (Mr Gray)? At what point below 40%—10%, 15%, or 20%—would the Government conclude that the result did not carry any credibility whatever?

[Mr Harper]

We have already discussed what constitutes the appropriate level of turnout, and the issue arises constantly when elections are held. However, when a general election produces a Government who may make significant changes, we do not say that a Member of Parliament has not been elected because the turnout was low. Indeed, when we debated the issue on another occasion, it was observed that a fair number of Members of Parliament would not be here if that had been the test. That is not the way in which we make judgments in this country.

My hon. Friend the Member for Epping Forest said that, as the Electoral Commission had pointed out, leaving the provisions in the Bill risked rendering the outcome of the referendum unclear both in law and on the ground. We think that the public should make the decision, and that the referendum should be binding and not subject to the turnout threshold. Our colleagues in the other place debated this proposal with their usual consideration and care, but, having done so, voted for it by the slimmest of margins—a majority of one. Having considered both the practical difficulties and the issues of principle, I believe that the arguments for overturning the decision in the other place are compelling. I ask the House to oppose both these amendments and the consequential amendment proposed by my hon. Friend the Member for Stone.

[Chris Bryant]

The Minister’s last few words were something of a giveaway. He suddenly introduced a threshold of his own: a special threshold for votes in the House of Lords, which must secure a bigger majority than one for the Government to take them seriously. That is an interesting innovation.

I will vote yes in the referendum in May, although I hear what is said by the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), and I pay tribute to him. I recognise that the first occasion on which the House of Commons sat on its own was in his constituency, but that was only because it had been summoned to Shrewsbury first to see the hanging, drawing and quartering of the Welsh prince Dafydd ap Gruffudd—and that really was a shame.

I will support the alternative vote, which is why, in Committee, I strongly opposed what I considered to be wrecking amendments in respect of thresholds. However, I believe that this is an exceptional referendum for two reasons. First, unlike the vast majority of referendums that have been held in this country and many others, it will not just advise, but will implement legislation. That means that, if there is a yes vote, we will not have a second opportunity to consider all the elements of how the alternative vote will be implemented.

Secondly, as we have asserted from the outset, we do not believe that this referendum should be combined with elections in Scotland, Wales and Northern Ireland and with local elections, because that will produce very different turnouts in different parts of the United Kingdom. There might well be deep resentment in one part of the United Kingdom because another part, on a very different turnout, had ended up with a different result.

[Stephen Williams]

Will the hon. Gentleman give way?

[Chris Bryant]

I am happy to give way to the hon. Gentleman, although there is very little time and he voted for the programme motion.

[Stephen Williams]

No threshold was involved in the referendum to create the National Assembly for Wales in the summer of 1997. The area represented by the hon. Gentleman, Rhondda Cynon Taf, voted yes in that referendum. Is the hon. Gentleman suggesting that the votes of his own constituents should have been invalidated because the turnout was not above 40%?

[Chris Bryant]

No, I am not saying that at all, but that referendum was not an implementing referendum; nor was it held at the same time as other elections. That is a completely different matter therefore, and I think we behaved entirely properly in introducing our legislation for Wales. Incidentally, in the 3 March referendum I shall also be voting in favour.

[Mr MacNeil]

Is the hon. Gentleman really saying, “These are my principles on referendums, but I don’t like them so I’ve got some other ones”? He says one thing on the one hand, and another thing on the other. There is no consistency at all from those on the Labour Front Bench.

[Chris Bryant]

No, that is not true. [Interruption.] Yes, it is interesting to hear an argument for consistency from a Scottish nationalist. That is almost as interesting as hearing that argument from a Liberal Democrat. [Interruption.] I note that the hon. Member for Bristol West (Stephen Williams) was already laughing before I said that.

The Minister cited me, and claimed that I was going to say all sorts of things. Actually, in Committee in this Chamber I said that

“there is no fixed determined policy that we are completely and utterly in all cases implacably opposed to thresholds. Nor, for that matter, is there a belief that we ardently should have thresholds.”—[Official Report, 2 November 2010; Vol. 517, c. 847.]

My point is that there are times when thresholds might be suitable, and there are times when thresholds will not be suitable. Indeed, the Minister quoted a bit of my speech, but I went on to say that

“I fully understand that there are others who say that because of the way in which the Government are pushing forward with this legislation and because it is an implementing referendum, a threshold would be appropriate.”—[Official Report, 2 November 2010; Vol. 517, c. 849.]

[Mr Alan Reid (Argyll and Bute) (LD)]

I ask the hon. Gentleman to cast his mind back to 1979, when we had a Scottish referendum under the 40% turnout rule. A majority voted yes, the whole issue festered for 18 years, and when the Labour party came back to power and it had another referendum, it rightly learned the lessons of the past and did not have a 40% threshold. Will he please learn the lesson of the past?

[Chris Bryant]

The hon. Gentleman makes a very good point. That was why I was opposed to the versions of thresholds that were brought forward in Committee. There were two different versions. One was that it was necessary to get 25% of the electorate to vote yes, as well as more people voting yes than voting no. The other was a 40% threshold. If neither of those two conditions were reached, the result was to be an automatic no and we were to stick with first past the post.

That is not what this amendment’s threshold would do. This is a very different referendum, and consequently needs a very different style of threshold. All this threshold would do is say that Parliament ought to have a second thought. It would say that if we do not get up to 40%—if, for instance, the turnout in England is 15% or 20 %, whereas in Scotland and Wales it is closer to 43%, 44% or 45%—there ought to be a moment when Parliament thinks again about the implementing process in going forward.

[Jacob Rees-Mogg]

The hon. Gentleman is a distinguished constitutionalist, and I wonder whether he thinks that in the context of referendums being used more frequently, and for deciding on European matters and constitutional issues, it would be a good idea to settle on a threshold for all referendums, so that people knew where they stood.

[Chris Bryant]

As the hon. Gentleman knows, I am very grateful to be called distinguished about anything, but I do not think he would carry the House on that point. I am not a fan of referendums generally at all, because I think the whole point of parliamentary democracy is that Members are elected to take decisions, provide leadership and represent the people in our constituencies. I think that is the best way of advancing policy. However, where there are referendums, I think it is better if they are advisory ones rather than implementing ones. That is the point I would make about the whole referendum issue before us.

I think this is a special referendum and I therefore think it needs a special threshold. That is precisely what Lord Rooker’s amendment provides for, which is why we will be supporting it tonight.

[Stephen Williams]

I will be as brief as possible, as I know that many Members want to speak.

My basic point is that we have many elections in this country where we do not require a threshold in order to give legitimacy to the result. We know that this referendum is very likely to be taking place on the same day as elections to the Scottish Parliament, the Welsh Assembly and local government, and because of the historical pattern of those elections we also know there is likely to be a low turnout in them. In 2009, only two of the 23 wards that elected councillors in the city of Bristol had a turnout of more than 50% and only six had a turnout of more than 40%, and 15 had turnout percentages in the 30s or 20s, yet we do not say that the councillors elected to represent Bristol were not legitimate. We know that turnout usually dips in the year after a general election, and the turnouts in 1998 were even lower. In May 1998, I was last elected as a member of Bristol city council, in Cabot ward, on a turnout of 18%, although I received more than 53% of the vote. Nobody said that I was not fairly elected to represent the electors of that ward.

[Several hon. Members]

rose—

[Stephen Williams]

I am about to stop to allow others to get in. Bristol’s turnout is traditionally higher than that of most of the other great urban areas of this country, yet we do not say that the people elected to run our great cities in England are not fairly elected and cannot make those decisions. We do not have thresholds for those elections, so we should not have a threshold in this circumstance either.

[Mr Straw]

Like my hon. Friend the Member for Rhondda (Chris Bryant), I am a supporter of the alternative vote system, as I have made clear, not least in a tract that few people read, to which I contributed with my right hon. Friend the Member for Neath (Mr Hain) in 1986. I also spelt it out in this House on 9 February 2010 in a very big debate on AV. On the issue of consistency, the hon. Member for Forest of Dean (Mr Harper) may recall that he voted against the whole idea of having a referendum on AV then, so there is always a place in heaven for sinners to repent. On the threshold, I say to him that the excuse of technical defects in an amendment is the last refuge of a Minister who has nothing to say. If the only problems with Lord Rooker’s amendment are technical defects, he should ask the parliamentary counsel to draft amendments and they will go through like a dose of salts.

On the principle, the Minister was arguing against an all-or-nothing threshold, saying that if we did not reach the threshold—this is a very different one from that for the Scottish Assembly in 1979—the whole referendum result would be nugatory. That is not the case here, because this is a skilfully put together threshold. As my hon. Friend the Member for Rhondda says, it does not render nugatory a result on a 39% or 35% turnout; it brings the matter back to this House. However, were the turnout derisory, we would of course need to think again. For those reasons, I strongly urge hon. Members from all parts of the House, regardless of their view on the merits or otherwise of AV, to vote for this Lords amendment.

[Mr Cash]

Last night, Lord Rooker, to whom I pay great tribute, said that his amendment required tweaking, which is what my amendment (a) does. In a nutshell, it says that if the threshold of 40% is not reached, the Minister would have an obligation to introduce legislation to repeal the alternative vote provisions. Why do I say that?

[Mr MacNeil]

rose—

[Mr Cash]

I will not give way.

I say that for a very simple reason, which is that when this House votes to pass legislation for a referendum so that the people can decide, just as it is necessary, according to the principles of the Bill, for there to be a system of preference voting that is said to be fair, so it has to be fair for the electorate as a whole to know that when the decision is taken there is a proper threshold. According to all the constitutional authorities, there is no credibility in a referendum whose turnout is less than 40%—I am talking about turnout, not a yes vote, which is what the Cunningham amendment related to in the 1970s. I tabled my amendment in order to be useful, to help the Government get this right and to help the Lords, who have done a great job, ensure fairness for the electorate by providing that a 40% threshold is the principle on which the provisions should go forward.

[Mark Durkan]

The hon. Member for Rhondda (Chris Bryant) has referred to the wrecking amendments we debated and voted on in Committee. Essentially, what we have tonight are wrecking amendments that are bubble-wrapped. No matter what the sophistry of Opposition Front Benchers or anyone else, we know what the intention is: to put a serious and direct brake on the possibility of the referendum being won.

20:45

There will be barely 11 weeks of campaigning given the time left, and the imposition of a threshold will create a completely unequal situation. In the south of Ireland, people deliberately created all sorts of confusion during referendum campaigns so that they could say, “If you don’t know, vote no.” If we agree to anything that passes for any sort of threshold, people in this country will have an incentive to say, “If you don’t know, don’t vote”, knowing that votes that are not cast will count as votes against. That is completely unfair, and if people are supporting the Bill in the name of equal votes, they should not support a threshold that creates a completely unequal situation.

[Mr MacNeil]

If the threshold were accepted, would that mean that if neither the first-past-the-post nor the AV systems were acceptable to the people, the single transferable vote must be preferred? The threshold argument has to cut both ways.

[Mark Durkan]

The hon. Gentleman makes a very good point. People might have a variety of reasons for not voting, such as that they do not believe the alternative vote is a big enough reform of the voting system. If people do not vote, that does not mean that they are voting for the status quo.

[Mr MacNeil]

I shall take full advantage of the remaining 30 seconds—

20:46

Four hours having elapsed since the commencement of proceedings on consideration of Lords amendments, the debate was interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 1.

20:46

Division 206

Ayes: 317

---

Conservative: 253
Liberal Democrat: 54
Scottish National Party: 5
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Green Party: 1

Noes: 247

---

Labour: 217
Conservative: 20
Democratic Unionist Party: 6
Independent: 2
Alliance: 1

Lords amendment 1 disagreed to.

The Deputy Speaker then put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Lords amendment 8 disagreed to.

Ordered, That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments 16, 19, 1 and 8.

That Chris Bryant, Mr Philip Dunne, Mr Mark Harper, Jonathan Reynolds and Stephen Williams be members of the Committee;

That Mr Mark Harper be the Chair of the Committee;

That three be the quorum of the Committee.

That the Committee do withdraw immediately.—(Stephen Crabb.)

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

[Mr Gerry Sutcliffe (Bradford South) (Lab)]

On a point of order, Mr Deputy Speaker. You will be aware that over the past few weeks we have had to ask questions of the Government in relation to Home Office statements not being made to this House. We have strong indications this evening that tomorrow the Home Office is to make announcements on immigration policy that affect the immigration cap. We believe that the press lobby have been informed; indeed, the Minister responsible has offered an off-camera briefing to the press on the issues involved. How can we take this issue forward when it seems that the Home Office has now become a serial offender?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I am grateful for having been given notice of that point of order. There is no information about a Government statement tonight. Those on the Treasury Bench will have heard what the hon. Gentleman has said. Advice could be taken from the Table Office, and I suggest that he seek it there.

Public Services (Social Enterprise and Social Value) Bill (Money)

Tuesday 15th February 2011 Commons Chamber

Queen’s recommendation signified.

21:01

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

I beg to move,

That, for the purposes of any Act resulting from the Public Services (Social Enterprise and Social Value) Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred in consequence of this Act by a Minister of the Crown, government department or other public authority.

I should like to take this opportunity to thank my hon. Friend the Member for Warwick and Leamington (Chris White) for introducing this important Bill. I am pleased to confirm the Government’s support for the Bill, subject to certain amendments at the Committee stage. On Second Reading, it was the will of the House that the Bill should be discussed in Committee.

The primary measure that the Government are supporting is the requirement for contracting bodies to consider how they might promote or improve economic, social or environmental well-being when commissioning services. This includes a requirement that authorities consider whether to consult the persons who will benefit from the service. The decision on how authorities should take account of this wider value is left to the authority. It is already best practice to take account of wider value when undertaking procurement and to consult in such circumstances, and guidance and tools are already available. For an individual contracting authority, the costs are likely to be small. The measure therefore triggers the need for this new money resolution, which I commend to the House.

21:03

[Roberta Blackman-Woods (City of Durham) (Lab)]

I do not wish to detain the House for much longer on this matter. The Opposition supported the Bill on Second Reading, and we wish to see it go into Committee, where we think it can be strengthened. We very much want local authorities to have strategies in place to promote social enterprises and to consider how they can better meet the needs of their communities and continue to develop public services in a way that it is truly responsive to local needs. We therefore support the resolution.

Question put and agreed to.

Business without Debate

Tuesday 15th February 2011 Commons Chamber

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Senior Courts of England and Wales

That the Civil Procedure (Amendment No. 4) Rules 2010 (S.I., 2010, No. 3038), dated 23 December 2010, a copy of which was laid before this House on 23 December, be approved.—(James Duddridge.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Court of Judicature: Northern Ireland

That the Rules of the Court of Judicature (Northern Ireland) (Amendment No. 3) 2010 (S.R. (N.I.), 2010, No. 430), dated 23 December 2010, a copy of which was laid before this House on 23 December, be approved.—(James Duddridge.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Political Parties, Northern Ireland

That the draft Control of Donations and Regulation of Loans etc. (Extension of the Prescribed Period) (Northern Ireland) Order 2011, which was laid before this House on 17 January, be approved.—(James Duddridge.)

Question agreed to.

Economic Development (North-East)

Tuesday 15th February 2011 Commons Chamber

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

21:04

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

Now is an appropriate time to sound a warning about the changes that are being made to economic development structures in north-east England. The extent to which the coalition Government intend to abandon the Labour Government’s approach to these issues is now clear, as is the outline of their successor strategy, such as it is. It is my contention that the coalition approach is fundamentally wrong on both counts.

The economic development issues facing north-east England are not typical of those facing the United Kingdom as a whole. Of course our region is not sheltered from national and international economic trends. Regional economic development in the north-east is dominated not so much by our unique industrial history as by our transition from it. No region has done more to help itself, and there was a broad consensus in the region on the economic development strategy until the last election.

I had the honour and privilege of being Minister for the North East in the Labour Government. I tried to do the job in a less partisan, party political way, certainly less so than my other ministerial job. My objective was to drive up the prosperity of the region by broadening and diversifying its employment base, with an emphasis on the private sector. That strategy was right for the north-east. It is not for the state to pick private sector winners and losers, but it is for the state to respond at regional level to private sector-led initiatives and to work closely with the private sector in bringing promising projects to fruition.

Our region is essentially two conurbations and a rural hinterland. We make up 4% of the United Kingdom’s population. The single regional structure of the Government Office and, in particular, the development agency worked well for us.

[Mr Kevan Jones (North Durham) (Lab)]

Does my right hon. Friend agree that the unique thing about the north-east is that there has been support going back many years not just from councils and the public sector, but from the private sector, the TUC and other sectors recognising the need for the region to speak with one voice?

[Mr Brown]

My hon. Friend is absolutely right. One of the great things about economic development in our region is that it has proceeded with consensus, with buy-in right across the region sector by sector, including the public, private and voluntary sectors. We have understood the need to stick together, to talk to each other and to speak coherently on the issues. The fact that we did so is one of the great successes of our region.

Through the single approach that we took, we were able to avoid the poverty of ambition and the attendant dangers of parochialism. Working relationships across agencies and between the private and public sector were good, and there was a general feeling in the region that we were getting somewhere.

On Teesside, the issues relating to Corus and the process industry have features in common. The way forward has to be private sector-led. The private sector needs dialogue with national Government through the regional development agency. It is not reasonable to ask local government, even neighbouring local authorities acting in concert, to deal with issues of this scale. The same is true for the economic development potential of the underused industrial sites at the east end of the Tees valley.

In our region, there was general enthusiasm for the carbon reduction strategy, and for applying our traditional industrial and manufacturing skills to the challenges of combating climate change. There is excitement about the development of the electric car at Nissan. The region is also host to other electric vehicle manufacturers. The Clipper offshore wind factory at the Walker technology park is the only such factory in the UK so far. The potential for the development of printable electronics at Thorn, the innovative photovoltaic products of Romag glass, and the strong case made by Rio Tinto at BIyth and the mutually compatible bid from Tees Valley to be part of a carbon capture and storage pilot, all show how deep and widespread the region’s enthusiasm for this approach goes. We are, as the hon. Member for Hexham (Guy Opperman) pointed out recently to the House, host to the United Kingdom’s green pub of the year, the outstanding Battlestead’s hotel at Wark.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

There is great enthusiasm not only for green pubs but, as my right hon. Friend said, for the new technologies in the region. Does he agree that as well as being great in the private sector, that enthusiasm needs to be matched by the public sector so that the supply chains and the skills that the new technologies need are provided?

[Mr Brown]

I strongly agree with all that. In my discussions with individual public sector agencies, as well as with private sector companies, that enthusiasm was matched right across the piece. People understand the importance of it and see the opportunities for the economy of our region. One of my misgivings about the Government’s approach is that the public sector’s ability to respond is financially constrained.

The policy approach that we adopted meant that our region had the fastest growth rates of any English region right up until the banking crisis. The Pricewaterhouse study of One North East found that, over a five-year period, the agency had directly created more than 24,000 jobs, helped to create over 1,000 new businesses, helped a further 1,700 companies improve their business performance, helped more than 6,000 people into employment, and assisted more than 98,000 people to gain new skills. In particular One North East’s work in the area of business competitiveness and development, which covers activities such as overseas investment and enterprise support, realised an overall return of £8 for every £1 spent.

[Grahame M. Morris (Easington) (Lab)]

I pay tribute to the work that my right hon. Friend did on behalf of the region as Minister for the North East, and in particular to the support that he gave us in Easington. What is his view of the cost of redundancy following the winding up of the regional development agencies, which the Minister has indicated will be £464 million over the four years, including salaries, redundancies and transition costs? The alternative, the local economic partnerships, have no budgets. Does my right hon. Friend think they are an effective vehicle to drive economic growth in the region?

[Mr Brown]

I am grateful for my hon. Friend’s intervention and for his kind remarks about my involvement as regional Minister. I was tremendously impressed by the work that is going on in Easington district, the exciting film projects that we visited together, the work of the coal board residual authority in his constituency, and the opportunities that there are, working with Durham county council, to bring to an end long-standing and intractable labour market problems in the eastern part of County Durham. I pay tribute to my hon. Friend and his predecessor, our friend John Cummings, for the enormous amount of work that has been done locally to try to give hope where at times it seemed that there was not much room for it. I felt that we were getting there, and it would be very sad if the ideas and projects that I am so enthusiastic about, and that I know my hon. Friend is so enthusiastic about, end up set back because of events in the region.

My key point is that the economic development agency was the principal agent of change and transition in north-east England. Far from being a burden on the taxpayer, it repaid its cost, in the region, several times over.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

I echo the warm thanks of my hon. Friend the Member for Easington (Grahame M. Morris) to my right hon. Friend for his work as regional Minister. We all saw the benefits of that.

Will my right hon. Friend join me in congratulating Nissan, which he mentioned earlier, on winning the European car of the year award for 2011, one of many awards that it has won for its Leaf electric vehicle? Does he agree with Nissan, especially in the light of the recent rise in unemployment figures, that that achievement and all the jobs it has created in the north-east would not have been possible without the grant for business investment scheme that the Secretary of State for Business, Innovation and Skills has now scrapped along with the very successful RDA, One North East?

[Mr Brown]

My hon. Friend is absolutely right that Nissan was able to take advantage of the support for industry that was in place under the previous Government. What it is doing is not just manufacture a new motor car, because, as its Leaf advertising says, it is much more than that. It is a completely different form of transport. It is a very exciting development and we all wish it well and are proud to have it in our region. I know that she is proud to be the constituency MP for it.

That project would not have happened had it not been for the active intervention of the then Labour Government in making grant support available. It was actually because of the intervention of the then Secretary of State and his willingness to champion development in the north-east of England. We had rivals and competitors in our friends in continental Europe, who were also bidding for the plant. It speaks really well for the work force at Nissan that they are so highly regarded within the Nissan family of companies that they were a contender for the project. The clincher, however, was the support that the Government gave and their willingness to stand by the region.

My fear is that public sector cuts will affect the north-east disproportionately. As well as the closures of the economic development agency and the regional office, there are redundancies in each of the local authorities and other public bodies and vulnerabilities at the Department for Work and Pensions and Her Majesty’s Revenue and Customs complex at Longbenton in east Newcastle. If the Minister can say something reassuring about that site, which is the largest single concentration of public sector employees in the western world outside the Pentagon, it will be welcome.

Jobcentre Plus does a good job for us in the north-east. It has had to cope with major redundancy rounds at Atmel, Northern Rock, Nissan and Corus, and it has handled those difficult situations as well as anybody could. It is asking a lot of the labour market to absorb those redundancies and the ones brought about by public spending cuts. The effect of those cuts is cumulative, the more so because the people whose jobs are going have similar skill sets and career aspirations. The Government’s response is that an expanding private sector will take up those employees, but those who advocate that policy must say what private sector and where.

[James Wharton (Stockton South) (Con)]

I thank the right hon. Gentleman for kindly allowing me to intervene in his debate. Is he aware that since mid-August, newspapers in the region have announced more than 20,800 new private sector jobs and more than £4 billion of private sector investment? I appreciate that, like any region in these difficult times, we face tough challenges, but there is a good news story to tell as well. As the region’s MPs, we all have an obligation to talk up the north-east, not just to concentrate and focus on the challenges that we face.

[Mr Brown]

Nobody has talked up the private sector economy of the north-east more than I have, not just now but when I was the Minister for the region. My strategy was to broaden and deepen the region’s employment base by broadening and deepening private sector employment opportunities. I have never said that we are over-reliant on the public sector, but the correct way forward for our region is the development of private sector employment opportunities. That is why I said at the outset that there was not much disagreement about questions within the region. There was a consensus about what we were trying to do and how best to proceed. The region’s Members of Parliament, regardless of party politics, found it easy to discuss those issues among ourselves and make common cause on specific projects.

[Mr David Anderson (Blaydon) (Lab)]

Is not the reality that we have learned from a long history of being cast adrift, when nobody had any plan for the north-east? In the past 10 years, we learned to work together, ably led by my right hon. Friend. The private sector, the public sector—everybody—pulled together. There was no difference between us, and we experienced a renaissance in the north-east, which none of us ever thought possible. It was tremendous, but it is being set back by the Government who have come to office in the past year.

[Mr Brown]

My hon. Friend is right. The theme of my speech is that we had got the structures and the working relationships right between us. There was a real feeling that we were getting somewhere.

[Ian Swales (Redcar) (LD)]

Is it not a matter of regret to the right hon. Gentleman that Middlesbrough, Hartlepool and Redcar and Cleveland were recently rated as being in the bottom 10 in economic strength out of 324 areas in the country? Does not that give weight to the Government’s policy of creating Teesside local enterprise partnership?

[Mr Brown]

We all understand how difficult things are on Teesside, and I have lent my shoulder to tackling those problems, just as other hon. Members across the region have done. However, it is my strong view that we need a single, regional approach rather than allowing our efforts to become fragmented. In particular, it is a terrible mistake to say to those with the most difficult problems—I will say something about the specifics shortly—“You have to sort your own problems out without the help of the rest of us.” The great strength of our region is that we have all stood together, geographically and across party politics, public sector and private sector, including the public sector agencies that are not directly politically led. We have all stood together with the same focus, in an earnest endeavour to work together to give a coherent single voice to government for the good of the region. That is the correct approach.

[Mr Iain Wright (Hartlepool) (Lab)]

I pay tribute to my right hon. Friend, who, in his time as Minister for the North East was a real friend of Teesside, not just of Tyneside. Following on from the interventions of the hon. Members for Stockton South (James Wharton) and for Redcar (Ian Swales), we have enormous potential in Teesside and Hartlepool, with process industries, the nuclear industry and the potential of renewable energy, but that needs help and support. My constituency has 4,000 unemployed people but only 76 vacancies at the local jobcentre. Does my right hon. Friend agree that there needs to be more marrying up of that enormous potential in the private sector and central Government support, which the current Government are not providing?

[Mr Brown]

I agree, but, above all, we need to strengthen the employment base in the Tees valley, and that means focusing on the potential of the key employers—Corus, if the transition takes place, the chemical sector, the process sector, the potential in the under-utilised land at the east end of the Tees valley, the exciting opportunities in Teesport and the new distribution agreements with Tesco and Walmart. Those are exciting and significant developments, providing a whole new range of activity for the port. I wish them well, but they must be supported by the region speaking with one voice. The new job opportunities are for the whole of the north-east of England. Indeed, they are for the whole north of England, going right down to the midlands, and covering all points north, including Scotland.

[Phil Wilson (Sedgefield) (Lab)]

Is not one of the best ways of securing economic growth in the area, and of helping Teesside and Teesport, to ensure that the Government go ahead with the Hitachi project, which will create 800 direct jobs in my constituency? It will create thousands of jobs, not only in the region but throughout the country, and be a great export market for us. It will also ensure that we have growth and an ability to rebalance the economy in the north-east of England. We have waited months for a decision from the Government. Does my right hon. Friend see a new trend developing in the coalition Government of an inability to make decisions?

[Mr Brown]

It is true that the new Government seem to find difficulty in making decisions and giving clear-cut answers. As Minister for the North East, I met representatives of Hitachi in Downing street and worked closely with my hon. Friend to ensure that the programme was understood right at the heart of the Government. We engaged as fully as we could with the Government office of the region, the development agency and the Department involved, and did everything we could to bring those private sector arrangements to fruition on Hitachi’s preferred site—it was of the company’s choosing, not the Government’s. Getting that programme would be a tremendous win for his constituency, and I urge Ministers to do everything they can to bring this to a conclusion and to bring the Hitachi programme to the north-east. The company has chosen the site, not the politicians, although if my hon. Friend and I were choosing, we would have chosen the same one.

Small and medium-sized enterprises are reliant on their supply chains. When those are public sector supply chains, SMEs will be hit by public expenditure constraints. SMEs are particularly significant to the north-east labour market. The arrangements for the public sector to work with them are being reduced dramatically, and their chances of making successful bids to the regional growth fund are practically non-existent, because the fund will not entertain bids of less than £1 million.

There is now no coherent interface with the private sector in the region. The Government closed its regional office, and the subsequent announcement that the Department for Business, Innovation and Skills will open six new departmental offices for the 10 English planning regions to deal with administration is truly pathetic. No doubt the office covering the north-east will be somewhere in Yorkshire.

[Mr Kevan Jones]

Does my right hon. Friend agree that the way in which the Government are dealing with European structural funds is an absolute scandal? Some £160 million is sitting there, ready for investment in the north-east, but because of the withdrawal from the region of match funding, it looks as though we might lose it?

[Mr Brown]

My hon. Friend is right that we cannot get the match funding, but, worse than that, we cannot start any new projects because of the constraints that the coalition Government have placed on what is left of the development agency. The RDA still has an unallocated sum—I think about £80 million or £90 million—but it is not allowed to spend it on anything new. As time goes on, that is something of a constraint.

My contention is that private sector economic development should be private sector led. It is ironic that I, as a former Labour Minister, advocate the structures that the CBI believes have served the north-east well, and that a Conservative-led Government are arguing that what is left of those functions should be led by local authorities.

Economic development in the north-east now has the wrong departmental lead. The Department for Business, Innovation and Skills should lead, but in fact the Department for Communities and Local Government is leading. The local enterprise partnerships look as if they will be staffed by the wrong people—the correct skill set is professional economic development officers, as employed by One North East, not local government officers. Local enterprise partnership boards have the wrong executive lead. What is needed is representatives of private sector business, not local councillors. The geographical areas covered by LEPs are wrong: there should be one agency for the region, not multiple agencies duplicating effort and overlapping. Multiple agencies could also be too small to be effective.

[James Wharton]

I do not wish to depart too much from the largely consensual nature of this debate, but I disagree with the right hon. Gentleman on LEPs. There was great demand in Teesside for the LEP that we have secured, as is evidenced by the fact that Teesside moved to create the LEP before a regional agreement on the LEP approach was reached. I do not like the term “Tees valley” and prefer to say “Teesside”, and we could argue about the exact boundaries of it, but the Tees valley LEP is a welcome development that will help to grow the economy on Teesside.

[Mr Brown]

I am not going to quarrel with the hon. Gentleman about nomenclature. I understand that the local representatives of communities in Teesside want to do their best for their local communities, and I have no quarrel with that at all. Anytime they need my help or the help of other Members of Parliament for the north-east of England, it will be willingly given. They are our friends, neighbours and colleagues, and we want to help them get through what we understand are some of the most difficult and intractable of problems.

These are not local problems. The whole point of my address is that the big strategic issues that stand to be dealt with are best done so at the regional level, with the region acting as an advocate to national Government, and with national Government taking a direct interest, preferably through a dedicated Minister who has responsibility for standing up for the whole region. I think that that is the best structure. I know that the hon. Member for Stockton South (James Wharton) is advocating the LEP proposition, but even he must see that it is ironic that the approach that I am advocating is the private sector-led regional approach endorsed by the CBI, while the one that he is advocating is led primarily by locally elected Labour councillors. There is a rich irony in that. I hope that he can at least appreciate that point.

[James Wharton]

I will keep it brief. My understanding of LEPs is that their boards will be business-led—they will have a 50:50 ratio of representatives of local authorities and business, with a business chair—so I do not agree with the supposition that they will be local authority-led. LEPs will be business-led, which is one of the reasons I believe that the Tees valley LEP will be such a success.

[Mr Brown]

But the representative business organisations in the north-east are organised on a regional basis. I have no quarrel with local business people and local councillors wanting to do their best for the local communities, but I simply say, on the basis of considerable experience, that it is unfair to ask local representatives to deal on their own with a problem of such scale. They have no money and very little in the way of powers. It is not clear where their advocacy, which is the principal thing they will be doing, will be directed. Who is the responsible Minister? Will it be at Parliamentary Under-Secretary of State level or Minister of State level? Will it go to the Department for Communities and Local Government, the Department for Business, Innovation and Skills or both when this regional office is opened somewhere in Yorkshire—for the paper to rattle around in? There will be a lot of talking, but the ability to do something seems to be receding. That is a very dangerous thing for our region.

Engagement with the private sector in the region by Government is now very weak. This is part of a national problem. Even very large private sector businesses are finding it difficult to know where and how to speak to Government, and I would urge the Minister to take that point back and reflect on it. There must be better ways of dealing with these things than those currently in place. I also think that it is a mistake by the Government to have ended the pre-legislative scrutiny arrangements that we had in place under the previous Labour Government. That was a relatively open process which was widely welcomed, particularly by business, as was the opportunity to express a view before proposals were firmed up as legislation.

The Government have a poor strategy for disposing of One North East’s residual responsibilities. Of course, everyone wants the assets, but there are liabilities and continuing investments that have not yet come to fruition. Default responsibility seems to be ending up in the Department. There is now no integration of economic development with transport strategy, and no forum for discussing port strategy, although, as I mentioned, we have some very exciting developments at Tees port, with a relatively new distribution business, with Tesco and Walmart. There is real potential in the region.

[Mr Alan Campbell (Tynemouth) (Lab)]

My right hon. Friend mentioned the importance of transport. He knows as well as I do that one of the ways to unlock the economic potential of the eastern part of the region is to upgrade the A19 around the Cobalt business park and to allow the development north of the Tyne. Was he surprised to read in The Journal that the Government’s answer to securing the funding is that half of it should come from local businesses? Is he aware of any businesses in our region that have the £74 million—in small change—that the Government would like them to chip in to allow the upgrade to happen?

[Mr Brown]

Not immediately. I am more than happy to ask around on behalf of my hon. Friend and the Government, but I suspect that the response that I will get from local businesses is: they pay their taxes and they are entitled to road improvements from those tax payments in just the same way as other parts of the country expect these things. The local authorities and representatives of regional organisations were particularly strong on the importance of the A19 corridor, and they were aware of the potential for a bottleneck in the dualled tunnel under the Tyne and its effects at the Silverlink roundabout, as well as at the roundabout further north. I was able, in the last Labour Government, to secure an agreement with the Secretary of State for Transport that any underspend in what was then our little regional pot could be carried over and spent on the improvements that my hon. Friend has just advocated—perfectly correctly, because they are important to the flow of traffic. All that—local discretion and end-of-year flexibility—has been taken away. The idea that local business men should put their hands in their pockets and pay for that themselves will be met with outrage, if the Government ever get round to asking them.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

Will the right hon. Gentleman give way?

[Mr Brown]

Of course—if it is about the A1 north of Newcastle.

[Sir Alan Beith]

I am grateful to the right hon. Gentleman for giving way, and I recognise the personal efforts that he made as the regional Minister. However, as well as being the regional Minister, he was a senior Minister in a Government who found by the end of their time in office that they had engaged in a massive overspend and had to make severe reductions in capital spending, as well as cuts on a scale comparable to that on which the coalition is now implementing its cuts, albeit on a slightly different time scale. He cannot really talk as if we are in the same financial situation now as we were five years ago.

[Mr Brown]

I accept that, and I am making two points—perhaps I have not made them very well. I accept that we are in a different economic climate: times have changed and things have moved on. Although I believe that what we put in place—particularly the administrative structures—was cost-effective, efficient and focused, and delivered well for the region, it would be more rational, even for the Conservative-led coalition Government, to do more to preserve the consensus that we used to have in the region. They could do that by appointing a regional Minister to keep the core functions of a perhaps scaled-down One North East; it could then handle its own residual functions, apart from anything else. We could keep a presence from the major Departments in the region, not embark on the LEPs and keep the private sector engagement that is so important to getting the private sector-led job creation that we all seek for the region, rather than the structures now being put in place.

Therefore, as well as defending what we were able to do when we were the Government, I am also—and separately—making a plea for a much more rational use of what few resources are available under the current regime. I do not agree with scaling them back as far as they have been, but even if I did accept that—I did not intend to embark on the broader quarrel that the right hon. Gentleman tempts me to pursue—I would say that whatever resources are available could be spent in a better, more focused way and bring about better outcomes. That is my key point.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I, too, commend my right hon. Friend for securing this debate on such an important issue to all us MPs from the north-east. Does he share my concern that, with the swift and fairly draconian—or should that be Maoist?—manner in which the regional development agency has been dismantled, we run the risk of causing a huge dispersal from the north-east of the talent and expertise that has built up there over the years? He gave the example of European regional development funding and the complexities of how such funding is drawn down. We run the risk of losing €139 million that could be invested in the north-east because we have simply dismantled the procedures for drawing down that structural funding without putting anything in their place.

[Mr Brown]

My hon. Friend is absolutely right, but it is worse than that: we also risk losing the talents and the accumulated wisdom of some 245 employees. They have not yet been made redundant, but it is declared that they will be made redundant. All the evidence is that they are not being picked up by the local economic partnerships, which I think is a terrible mistake, but that is the way that things seem to be going. Their talents will be lost within the region as they seek alternative employment as best they can, competing with other people with similar skill sets, or they will be drawn to other parts of the country where there are jobs in the economy and a stronger labour market. That will be a real loss to our region and a real tragedy, and I regret it very much.

I want to draw my remarks to a conclusion now, because, fortunately, there is still time for other Members to take part in the debate, the previous business having come to a conclusion slightly earlier than usual—

[Mr Ronnie Campbell (Blyth Valley) (Lab)]

rose—

[Mr Brown]

Of course I will first give way to my hon. Friend.

[Mr Campbell]

I am sick of hearing the argument that there is no money. Does my right hon. Friend not agree that, if all the multinational companies, including the banks, paid the tax on their profits instead of avoiding doing so by hiding their money in tax havens such as the Cayman islands, we would not have this problem? We would have bags of money—billions of pounds.

[Mr Brown]

It is true that the liquidity crisis is largely the fault of Tory bankers rather than Labour politicians, but I am making a more modest argument focusing on economic development in our region.

[Mr Alan Campbell]

On the issue of the alleged overspend, does my right hon. Friend recall ever being lobbied, in his time as a very good regional Minister, by the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) for more money to be spent to upgrade the A1?

[Mr Brown]

I do; I recall our regional debate in Middlesbrough town hall, at which the right hon. Gentleman spoke long and persuasively about the importance of upgrading the A1 north of Newcastle. Indeed, I have a press release from the Conservative Government in 1994 announcing that it was going to take place, so perhaps there is just a delay between the announcement of the policy and its undertaking. The right hon. Gentleman would have been slightly more credible in his request had his party not been committed even before the election to cancelling all our motorway infrastructure plans—and, indeed, all our major highway investments. Such a cancellation would present a bit of an obstacle if he wanted to advocate the greater connectivity of the great constituency of Berwick-upon-Tweed with the rest of the northern region and, indeed, the rest of the United Kingdom.

I thought that we had a way forward, which would have been to try to meet the Department for Transport halfway by taking money from the discretionary regional transport fund and trying to upgrade the A1 incrementally, starting with the accident black spots, and by cutting a deal with the Department that if we paid our half, it would pay its half. That would have taken longer, but the sums of money involved would have been relatively small, year on year, and we would have got the work done. We could then have built on that, and met the right hon. Gentleman in his constituency—indeed, we would have been able to drive up there—in a timely way. So I did have a plan for taking that forward. I accept that it was not ideal, but most people thought that it was the best way to set about dealing with the problem. In less constrained times, it might be the way forward.

I want to draw my remarks to a conclusion now, because I know that other hon. Members have a few points to make. It is my view that the direct involvement of a regional Minister worked well for our region. The Prime Minister has said that he wants to appoint area-based Ministers from among his team, and I urge him to get on and do that. The structure that would work best for our region would involve a regional Minister, a single private sector-led development agency, some regional presence by large UK Government Departments, strong private sector engagement and collaborative working across the agencies. This would preserve what we had before the general election. The focus should be on private sector priorities. I urge the Government to look again at the poor use they are making of scarce resources in the north-east, and even at this late stage to consider different structures more appropriate to the particular economic development needs of the north-east of England.

[Several hon. Members]

rose—

[Mr Speaker]

Order. A few Members still wish to speak, and I would ask them to help me to help them to accommodate as many of them as possible in the remaining time.

21:44

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

The right hon. Member for Newcastle upon Tyne East (Mr Brown) has done the House a service by having this debate and by mysteriously working out in advance that we would finish our other business early tonight, leaving more time for other Members to participate in an Adjournment debate. He put forward a number of constructive points. In that spirit, I shall not dwell on the things that I think the previous Government should have done in their time of office, although we need serious recognition that we face a very difficult financial situation in which the money is simply not there to operate on a basis that seemed feasible just a few years ago.

Those who tried hard to get the region to adopt the idea that it should make its own decisions and, indeed, have a democratic mechanism with which to do so found that the voters in the region were not persuaded, so our attempt to have a regional assembly was firmly rejected by them. We have to take proper account of that, along with the rejection of the unitary authorities that the Labour Government went ahead and created. We have to recognise that in straitened financial circumstances the scale of the apparatus in the form of the regional development agencies and the Government office for the north-east is just not suited to the time. We cannot afford to use resources in that way. When we have much more limited resources, we have to focus more, so let me put some quick points to the Minister about what I believe the Government should do.

First, they should ensure that the important development sites that One North East had in its possession remain available for development purposes, using the resources of the local authorities and the economic partnerships. Not all the sites or all the buildings owned by One North East fall into that category—it owned all sorts of properties—but key development sites purchased and assembled for that purpose must remain with organisations that can develop them in partnership with the private sector.

Secondly, as the right hon. Gentleman pointed out and others have said, bidding for European funding remains crucial. We need some facility to do that, so it is vital that an appropriate small team of people is retained within the public sector to lead the bidding process. Whether my hon. Friend the Minister can yet say whether discussions on that have been completed, I do not know, but I think it vital, as I have said, to have a team located within the public sector structure to lead that bidding process and to use some of the people who were employed by One North East and developed the relevant expertise. I look to my hon. Friend to find a way of doing that.

Given the removal of One North East’s tourist responsibilities, we need to encourage new, more locally based tourist organisations to work on behalf of the region. I remember just how controversial it was when One North East took over tourist responsibilities, as many small businesses in my area did not want that to happen. We have suffered from the fact that One North East did everything in-house, so the ban on Government advertising hit our region immediately, whereas other regions had contracted out the work so that advertising continued.

I welcome some of what the Government are doing. I welcome the regional growth fund, for example, but I do not believe that it will be able to stick with a £1 million threshold for all projects—that is, I am sure, just an initial stage. I also welcome the national insurance holiday.

Our region has great potential in its work force and great potential in that it is an area of relatively reasonable housing costs in comparison with other parts of the country. It is a beautiful region in which to live and to which to attract people, whether they be business men or future employees. We have a region with tremendous prospect, but one that desperately needs to shift the balance to a much larger private sector element, with less dependence on the public sector. There is consensus across the House that we need private sector-led growth. I look to Ministers to ensure that they direct the necessary support—in more economical ways than were possible or that, perhaps, were rather wastefully possible in earlier times—to enable that to happen.

21:48

[Mr Kevan Jones (North Durham) (Lab)]

I congratulate my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on securing this debate. I would like to concentrate on one private sector that is vital to the north-east economy, namely the tourism sector. It is worth £4 billion annually to the region and it accounts for some 5% of regional employment with 64,000 jobs.

I would like to congratulate One North East on its work on tourism, which provided a significant regional focus. I am sorry but the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) was wrong, as the delivery of tourism was devolved to local areas of Northumberland, Durham, Teesside and Tyneside, which worked very effectively. It galvanised the north-east’s ability to promote its image not just regionally, but nationally and internationally.

The Passionate People, Passionate Places campaign was pioneered by One North East. I want to record my thanks to Stacy Hall, director of tourism at One North East, and also to someone who is very much a private sector individual—Geoff Hodgson, who chaired the North East Tourism Advisory Board and who has been one of the biggest critics of what the Government are doing to tourism in the region.

Over the past few years there has been growth in the tourism sector, which has become confident and able to promote the north-east to potential visitors not just internally but externally. All that, however, has been cast aside by the simple fact that One North East can no longer spend any money on promotion and marketing. The fantastic support given by the Passionate People, Passionate Places campaign to businesses both large and small, such as the Beamish museum in my constituency and even small bed-and-breakfast establishments in the constituency of the right hon. Member for Berwick-upon-Tweed, has been removed and has not been replaced. That has placed our region at a disadvantage in comparison with other regions which can continue to promote themselves at our expense.

I do not accept the suggestion that the north-east did not promote itself well, and nor do most people in the tourism sector to whom I have spoken. I also see no hope in what has replaced it. There is no money there. The local enterprise partnership will prove to be a mere talking shop with no real money to conduct the regional marketing campaigns that we need. I am not talking merely about competing for tourism with other parts of the United Kingdom; I am talking about international opportunities. For example, when the Emirates airline launched its successful flights from Newcastle to Dubai, One North East was able to work with it and other partners throughout the world to promote the north-east. No single LEP will be able to do that, and the opportunity will not be replaced. Businesses in the north-east and the tourism sector are already suffering as a result of the short-sighted decision to stop One North East promoting the region as a whole.

The ability of local government to become involved in tourism has also been affected. In August last year, the Prime Minister made a speech in which he promoted the tourism industry and spoke of its importance to the economy of the United Kingdom. He said,

“Tourism is a local industry.”

He said that it counted on the support of local people and could not be directed from Whitehall, and I entirely agree with him. As my right hon. Friend the Member for Newcastle upon Tyne East pointed out, the north-east is a good example of a region in which elements have come together to promote it effectively.

Tourism is not a sector that we can dismiss. It provides jobs in not just large but small enterprises. The Prime Minister said that it was a “vital part” of rebalancing the economy of the north-east, but he also said something very ironic. He said that

“Local authorities must be allowed to invest”

in

“their own communities.”

Meanwhile, his Secretary of State for Communities and Local Government was changing the formula funding for local authorities so that it was based on foreign occupancy per night, which lost the north-east some £5.9 million in local authority grant—and guess who gained? London boroughs gained £60 million. Now Durham county council, which is so proud of its great attractions—such as the Beamish museum in my constituency, Durham cathedral and the beautiful countryside in the constituency of my hon. Friend the Member for Bishop Auckland (Helen Goodman), to name but a few—is being asked to accept a 40% cut over the next four years. The idea that local authorities will step in to meet the shortfall is absolute nonsense.

[Roberta Blackman-Woods (City of Durham) (Lab)]

Does my hon. Friend agree that the severity of the cuts in the council’s budget are threatening even important facilities such as our tourist information centre, which, like those in other cities, is critical to increasing tourism?

[Mr Jones]

Well, it is a double whammy for those areas because not only has the money gone that was devolved to them from One North East, and which was spent very effectively in Northumberland, County Durham, Teesside and Tyne and Wear, but local authorities are now also struggling to afford to fund important things like tourist information centres. It is an absolute scandal for the tourism offer for a world heritage site such as Durham not to be well packaged.

It seems that this Government just do not get it. The Minister has never been to the north-east, for example, even though the right hon. Member for Berwick-upon-Tweed and I asked him to visit a few months ago. They just do not get it. By way of example, I cite the idea that regionalism is bad, whether it be the regional office or One North East, and that other sectors will somehow meet the funding challenge, when in fact they will not.

I ask the Minister and the Government to listen not only to politicians, but to the people in the region who know. They are not necessarily elected officials. They might be people like Geoff Hodgson, who has a highly successful business career in the publican sector, and who knows something about what the private sector in the region needs. The Minister should listen to people like him.

[Grahame M. Morris]

Does my hon. Friend share my concern about the coalition Government’s decision to suspend grants for business investment, which I understand brought £112 million into our region and supported 25,000 private sector jobs?

[Mr Jones]

Exactly, and a lot of those grants, which a lot of businesses in the tourism sector need, are actually quite small. The idea that they will benefit from any of the money from the regional growth fund is absolute nonsense. The advantage of One North East devolving money to the regional tourism boards was that they could react locally by giving small amounts of money that those types of businesses needed.

The Minister recently told me and the right hon. Member for Berwick-upon-Tweed that we should leave it all to VisitBritain and VisitEngland. I am sorry, but my response to that is, “Forget it.” I used to serve on the north-east tourism board, and my mystery shopper activity every month when I was down in London was to go to VisitBritain’s tourist information office on the Strand to see what promotional material it had on areas other than London and the south-east. It had absolutely nothing. Its approach is London-centric and south-east-centric, and if anyone thinks the north-east of England gets a fair deal in promotional terms out of VisitBritain, they can forget it.

The Government must rethink their strategy. They must listen to the people in the know, who have done a very good job, and pay tribute to them for their work over a number of years in promoting both the north-east and jobs in what is a vital sector.

21:58

[Roberta Blackman-Woods (City of Durham) (Lab)]

I pay tribute to my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) for securing this debate, which is very important for those of us in the north-east. I also pay tribute to him for the tremendous work he did in the region as regional Minister. It was a great pleasure to work alongside him as the deputy Minister, and I can certainly confirm that he put great effort into securing investment for the north-east and trying to improve our economy even in very straitened circumstances.

All of us know the huge impact deindustrialisation had on the region’s economy in the 1980s, resulting in very high levels of unemployment for many years. However, the situation had begun to change by 2005. During 2005-06, the north-east had one of the fastest growing regional economies in the UK. Its economy doubled in size over that decade, adding almost £13 billion to overall output. In the mid-2000s, the region was also experiencing very high rates of business registrations, bringing it somewhere near the UK average, and unemployment rates compared with the rest of the UK were narrowing. That is a very important statement to make, because it shows what can be achieved in the north-east with everyone pulling together and with investment being made in the right areas. That improvement was also built on upskilling our population and, in particular, ensuring that we invested in our young people.

22:00

Motion lapsed (Standing Order No. 9(3)).

Motion made, and Question proposed, That this House do now adjourn.—(Miss Chloe Smith.)

[Roberta Blackman-Woods]

We saw very early on that there was a need to invest in the future work force and that a great many future jobs in the north-east were likely to come from the development of the green economy. The north-east was the first region in the UK to be designated a low-carbon economic area and that brought with it developments in the universities and the industrial sectors. That confirmed the region’s huge potential to be a leader in the development of green energy, including green cars.

[Mr Iain Wright]

My hon. Friend has a particular passion for education and for upskilling our region so that it fulfils its potential. What impact does she think the abolition of the education maintenance allowance will have, particularly in our region?

[Roberta Blackman-Woods]

I am grateful to my hon. Friend for that intervention, because it demonstrates how this Government simply do not understand the needs of regions such as ours and the needs of young people in regions such as ours. Some 67% of the young people who attend my local further education college rely on EMA and they are telling me that they do not know how they will be able to continue their courses.

The previous Government recognised that money had to be put into developing the green economy. Some good examples of that include: the £20 million invested in a printable electronics technology centre in the constituency of my hon. Friend the Member for Sedgefield (Phil Wilson); the £12 million invested in biotechnology at Wilton on Teesside; and Clipper’s development in Newcastle. I name but a few, and investment also came from the private sector, mostly through Nissan. So our Government were doing their bit and they were also putting money into universities to enable them to undertake further research. Narec, a centre of excellence, and the Durham Energy Institute also do really important work on coal gasification in our region.

[Pat Glass (North West Durham) (Lab)]

My hon. Friend was talking about green jobs and industry. Does she agree that when we lost One North East, we also lost £1 million of funding that was going into the eco-village in Weardale, in my constituency? That would have created many green jobs in an area where jobs are scarce.

[Roberta Blackman-Woods]

My hon. Friend makes an excellent point. We know that County Durham’s economy has suffered through the recession and we see few plans coming from this Government to correct the situation.

It is possible to argue that our region is well placed to become a centre of green energy production and green manufacturing, but for that to happen we need to continue to develop our skills base and there are worrying signs that that is faltering. I wrote to the Business Secretary asking what was going to happen to regional skills strategies, because they have been crucial for the north-east in developing the areas where we needed to reskill the population. The letter I received from the Minister for Further Education, Skills and Lifelong Learning said:

“The Government no longer…expects Regional Skills Partnerships to produce skills strategies”

or even to meet. He said that instead the work should be undertaken by local enterprise partnerships, which represent the correct “geographies”. A number of us would query whether LEPs are the right level for discussing the skills needs of the region and for being able to identify opportunities for upskilling the population. This is extremely worrying, because we need to continue to invest in basic scientific research skills and in how to apply them to manufacturing.

[Ian Swales]

Can the hon. Lady give an example of how a regional skills strategy would deliver something new? She has just expressed what the strategy needs to be, but what else do we need to know?

[Roberta Blackman-Woods]

The hon. Gentleman has to realise that within the umbrella of green energy and manufacturing, many different skills are needed. The regional skills strategy was able to bring together universities, employers and the further education sector. They could then decide between them who was best placed to deliver those skills, but the structure that enabled that to happen has simply been removed. The Government are telling us that there is no need for those strategies, but I dispute that.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

The North East Process Industry Cluster was set up by One North East and was an exact expression of devolution to industrialists and local authorities. In the past two years, NEPIC has engaged with large industries, as well as with small and medium-sized enterprises, to get them to take on board apprentices—something which, at the end of this week, is very important.

[Roberta Blackman-Woods]

My hon. Friend gives an excellent reason why we need to continue with regional skills strategies.

I want to raise a few other issues relating to the skills agenda. The Government have also got rid of the 14-to-19 commission for skills, which is absolutely devastating. That body brought together all the deliverers of vocational education and made sure that apprenticeships were promoted in the region and in the correct areas. Again, there is absolutely nothing to replace that body and it is unclear how we are to ensure that apprenticeships are delivered in the region and that enough placements are available.

Lastly, I want to discuss the abolition of RDAs. We have to recognise that even in straitened times, the RDA could have delivered funding in the key areas that have been identified, particularly green energy and manufacturing. The money that is available—£61 million in 2011-12—has to be spent on existing projects, so there will be no new investment. As my right hon. Friend the Member for Newcastle upon Tyne East has said, all 320 employees are to be made redundant, with all that skills base going to waste. We do not know whether those people are going to get jobs in the region or will be able to pass on their expertise. That is a dreadful loss to the region and we do not think that LEPs will have the money to give employment opportunities to those people. We are all asking the Government to reconsider whether the structures they are putting in place will deliver the economic regeneration we want in the region, whether the structures are at the right level and whether too much of the infrastructure that will bring about the improvement that we all want has been removed.

22:08

[Helen Goodman (Bishop Auckland) (Lab)]

First, I congratulate my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on securing the debate, and on having been such an excellent regional Minister, defending the interests of all our constituents when he had that responsibility. I want to reinforce his central point about regional economic development being operated through consensus in our region, and how valuable that consensus and those partnerships have been.

When the global recession hit our region, manufacturing suffered in particular, and it seemed deeply unfair that our constituents in engineering, for example, were losing jobs because of the foolishness of bankers in London—but thanks to the action that the Labour Government took at both macro and micro level, we saw a number of improvements in 2010. For example, the future jobs fund produced 500 jobs in Durham. There was also the investment and support for Nissan, which other Members have mentioned. That had a knock-on effect throughout the automotive sector supply chain in the region.

There was also the work of the regional development agency, and I press the Minister to take to heart its important role in securing inward investment. That is not a power that local enterprise partnerships have; it has been taken back to Victoria street. I urge him to ask his officials to have a proper presence in the north-east on inward investment, because we are not confident that when sitting in Victoria street they have a clear picture of the nature of the region and its differences.

Thanks to the previous Government’s work, a brand-new Thorn electric light bulb factory has opened in my constituency, which has secured 700 jobs. It works in partnership with Durham university and other private sector partners, and makes a huge difference. Things improved throughout 2010, to the extent that a £45 million retail development site was opened in the constituency, and manufacturing is clearly past the bottom of the recession, now that customers have stopped de-stocking and things seem to be improving. I visited the Berco factory in my constituency, for example, which opened only last Friday.

However, just as things seem to have turned around thanks to all the efforts of the Labour Government, our region is facing deep spending cuts. I want to draw to the Minister’s attention the impact that the cuts will have not only on the public sector, but on the private sector. In my constituency alone, Building Schools for the Future cuts amount to £100 million, which would have been £100 million-worth of business for the local construction industry. The same is true with cuts in the Home Office and Ministry of Justice capital programmes. All that will have a knock-on effect on firms in my constituency, and I could take him to those firms to show him the jobs that are likely to be lost as a result. In addition, cuts in benefits and working tax credits will have an impact on the retail sector. Cuts in tax credits will have an impact on small businesses such as those involved in child care. Those will all have knock-on effects that Ministers must take into account.

[Mrs Mary Glindon (North Tyneside) (Lab)]

Will my hon. Friend give way?

[Helen Goodman]

In a moment.

The pathetic little tweak to national insurance contributions owed far more to politics than it did to economics. Everyone knows that the big barrier to small businesses is securing equity. That is what they need, not a little reduction in their national insurance contributions. It is not surprising that that initiative did not succeed, and I support wholeheartedly the Federation of Small Businesses, which wants it to apply to all new jobs and not just to wholly new businesses.

Ultimately, this is really a question of values. In my constituency, the Decent Homes programme has another 1,000 homes to complete, and for that it needs only £5 million—as much as one banker’s bonus. We know that the Government have failed to tackle the banks and bankers’ bonuses properly, which has an impact in our constituencies. In the week when Barclays announced yet again massive billion-pound profits, it has closed a branch in Shildon in my constituency.

[Tom Blenkinsop]

Does the Government’s flagship policy of reducing corporation tax not actually aid financiers in London far more than it will any self-employed business in the north-east, as the majority of those businesses do not pay corporation tax?

[Helen Goodman]

My hon. Friend is right. Moreover, to cut corporation tax while cutting investment allowances is to bias the tax system against manufacturing, and I thought that everybody agreed that we needed to strengthen our manufacturing base.

One of the most important elements in economic development is for people outside the region to have confidence in us, and I have two examples of organisations that do have confidence in us. The first is GlaxoSmithKline, which wants to build a new plant. One of the shortlisted sites is at Barnard Castle in my constituency, and that would produce 1,000 jobs.

The second example is in tourism development, which my hon. Friend the Member for North Durham (Mr Jones) mentioned. Only this week, the director of the National Gallery said that if we could keep the Zurbarans at Auckland castle, he would be able to lend more paintings, develop a centre of artistic excellence and build our tourism industry. How much better it would be if, in addition to such support, we had the wholehearted support of the Government.

22:15

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

I, too, congratulate the right hon. Member for Newcastle upon Tyne East (Mr Brown) on securing the debate and on his work when he was a Minister. From his comments, he has shown his detailed knowledge of the region where his constituency lies, and in truth Members from all parts of the House will agree that he did an awful lot of work, with some success, for the region. It is right to pay tribute to that, but I think that his skills as a former Chief Whip enabled him to ensure that his debate took place this evening, so that a larger number of Members could join in. The fact that we have had so many Members in the debate has enriched it, and I have found many contributions insightful and interesting.

I make this observation to the right hon. Gentleman, however. Sometimes, in his initial remarks, he appeared rather over-rosy about what happened under the Labour Government—as if everything was just perfect in the north-east as a result of their policies. That is certainly not how I view the economic statistics. Equally, he was rather over-pessimistic about the future. In general, he, like many of his hon. Friends, failed to admit that this country has a huge problem with a massive deficit.

I am afraid that the deficit deniers were out in force tonight, but, when we in the Department for Business, Innovation and Skills had to grapple with the Budget by making our contribution to deficit reduction, we noticed and learned from some of the previous Government’s plans. This has not been mentioned during tonight’s remarks, but they planned to make similar reductions in the Department’s spending—albeit over a slightly longer time scale, I certainly give the right hon. Gentleman that. The reductions would have been significant, however, and whenever we have debates about the Department, we never hear which programmes the Opposition would have cut if they had been returned to government. That whole issue clouds the debate, and the failure to address it undermines the case that the right hon. Gentleman and his hon. Friends make.

[Grahame M. Morris]

Will the Minister explain the issue of choices in connection with a point that the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) made about the coalition Government choosing to fund the upgrading of the A11 in Cambridge, but not the dualling of the A1 north of Newcastle?

[Mr Davey]

All Governments have to make choices, and my right hon. Friend was saying that the Labour Government failed to choose to upgrade the road that serves his constituency, so again I am afraid that they do not have as good a record as some Opposition Members would like us to believe.

[Tom Blenkinsop]

On choices, can the Minister say how many Liberal Democrat local authority group leaders agree with the Government’s current policies?

[Mr Davey]

I believe that they all do, and I will explain why. They know that this coalition Government are improving the public finances, which is vital for the stability of our economy and for investment in the north -east and other regions, and are prepared to take the tough decisions which, if one were to believe what Labour Members have said, their party would have ducked.

I share the desire of the right hon. Member for Newcastle upon Tyne East to ensure that the north-east can share in sustainable, long-term economic growth. He made that case with passion, and the Government agree that we need to make such growth our overriding priority. We want to forge a new model for growth—one that is based on rebalancing the economy, both geographically and in terms of sectors, and which promotes innovation and boosts exports, not merely relying on consumption that is, in many cases, fuelled by public debt. That is why we have set up the growth review, which is a root-and-branch analysis of the barriers that impede business growth, and the structural reforms that we believe are needed to boost economic growth across the country. The initial phase is focusing on immediate priorities for business by improving the competition regime—on which I am leading—increasing exports, reforming the planning system, and cutting red tape and regulation. That will underpin this year’s Budget. A huge amount of work is going on in that context.

When my right hon. Friend the Business Secretary recently made a statement to the House about the trade and investment White Paper, the hon. Member for Bishop Auckland (Helen Goodman) said that she was worried about where inward investment would come from. I refer her to that White Paper, which talks a great deal about the importance of inward investment for all regions of our country. Many excellent firms in the north-east contribute to this country’s manufacturing exports, and I believe that they will strongly welcome the policies and framework that the White Paper sets out.

In the meantime, we are introducing a range of policies intended to support enterprise so that companies can grow and create new jobs. Let me highlight just a few of those. We are cutting the main rate of corporation tax from 28p to 24p by 2014. We are reducing the small companies rate from 21p to 20p—not increasing it as the previous Administration had intended. We are cutting the unnecessary red tape and bureaucracy that hinders, rather than helps, UK firms. We are boosting adult apprenticeships funding by up to £250 million by the end of the spending review period to create up to 75,000 more places a year. We heard nothing about the apprenticeship scheme from Labour Members. It is a huge success. I do not know whether any of them took part in national apprenticeship week, as I did in my constituency. At many of those events, we noticed the enthusiasm of employers and their potential apprentices, with large numbers of people getting really excited about this new opportunity that the Government have provided.

[Roberta Blackman-Woods]

The Minister’s attention was obviously diverted when I spoke about apprenticeships and the need not only to have apprenticeships but to be able to move people on into employment.

[Mr Davey]

I apologise to the hon. Lady if I did not listen when she was talking about apprenticeships, but I did notice her reliance on strategies for skills. What I found rather odd in several policy areas under the previous Government is that they spent a huge amount of money on forming strategies, and then, a year or two later, they were looking at another strategy. In my view, if we have a strategy, we should stick to it and implement it rather than keep changing it, as happened so often under the previous Government.

We are also striving hard to bring about a renaissance in the UK’s industrial base, which has had some serious problems in recent years. Sectors such as advanced manufacturing are critical in creating a more diverse, resilient economy in future. That sector, among several others, is very much part of the growth review that my right hon. Friend the Chancellor will talk about in the Budget.

[Tom Blenkinsop]

The current GDP figures in Britain are incredibly worrying, although admittedly there has been an increase in manufacturing. However, that increase is down to inventory and raw material spending. At many manufacturing sites, short-time working agreements have been taken away, bringing the work force back to their previous contractual hours, which had been reduced.

[Mr Davey]

We are seeing the creation of new manufacturing jobs in the north-east. I hope that the hon. Gentleman welcomes that. I am glad that he has noted that manufacturing and manufacturing exports appear to be picking up. We cannot be complacent about that, which is why we are determined to do the things that I am outlining.

[Phil Wilson]

rose—

[Mr Davey]

I will give way, but I do then want to make some progress.

[Phil Wilson]

I thank the Minister for giving way. Does what he said about manufacturing mean that the Government will give the go-ahead for the Hitachi factory at Newton Aycliffe?

[Mr Davey]

That was a good try, but the hon. Gentleman knows that I am not the Minister responsible for that decision. I congratulate him on his attempt. I would have thought that he would welcome much of what the Government are doing on matters such as apprenticeships, which I believe give businesses in the north-east a lot of the backing that they need.

[Mr Iain Wright]

Will the Minister give way?

[Mr Davey]

No, I am going to make some progress.

The area has a proud industrial heritage, and today its firms are establishing a competitive lead in a number of 21st-century industries, as the right hon. Member for Newcastle upon Tyne East said. The north-east has a strong reputation in areas from health care to life sciences, and from micro-electronics to cutting-edge low-carbon technologies. It accounts for more than 50% of the UK’s petrochemical industry and about 35% of the country’s pharmaceutical output. It benefits from a number of other economic assets: world-class universities, good transport links, and entrepreneurial citizens who are launching new businesses in growing numbers.

This Government recognise that Britain cannot rely on one sector in one part of the country for its national prosperity and the resulting policies that we are implementing to rebalance the economy will free the north-east to unleash its full economic potential at last. This Government also understand that if balanced economic growth is to be achieved across the country, policies cannot be dictated from Whitehall. That is why we are encouraging the formation of local enterprise partnerships across the country, which will work with the grain of functioning local economies.

Local enterprise partnerships will bring together local business and civic leaders to power the economic regeneration of their communities by focusing on creating the right local conditions for private sector jobs and growth. That is real power shifting away from central Government and quangos, and towards local communities and local businesses that understand the barriers to growth in their areas. The partnerships are free to focus on infrastructure investment, transport, skills and a host of other issues. I think it is good news that the north-east has two local enterprise partnerships, one covering the Tyne and Wear area and the other the Tees valley. They are busy identifying the economic priorities for their areas. I pay tribute to all business leaders who have risen to this challenge. We have also set up a £1.4 billion regional growth fund, which is open to public-private partnerships such as LEPs, to kick-start economic expansion, especially in areas where private enterprise has not previously flourished.

The right hon. Gentleman made a number of points, and obviously he was particularly concerned about the abolition of One North East. I pay tribute to much of the work that was achieved by One North East. Anyone who analyses its record can see that it did good things in many areas. However, time moves on and we now have a huge budget deficit. We have to cut our cloth according to what we can afford—a fact that seems to be denied by Opposition Members.

Members not just of this Government, but of this whole coalition have been active in working hard with business to ensure that there are jobs in the future. I pay tribute in particular to my hon. Friend the Member for Redcar (Ian Swales) for his work, with the Secretary of State, on the problems of the Corus plant in Redcar. I hope that in due course we will have good news about the work to ensure that that plant continues and that jobs are not only saved, but extended. Much of that will be down to the work of my hon. Friend.

The Government share the right hon. Gentleman’s desire to see the north-east flourish, along with the rest of the country. That is why we are going all out to create a business environment that gives companies the confidence to invest and grow, and why local communities are being freed from central control to determine their own economic future. That is the key to achieving economic regeneration and sustainable growth, both in the north-east and elsewhere.

Question put and agreed to.

22:29

House adjourned.

Ministerial Corrections

Tuesday 15th February 2011 Ministerial Corrections

Tuesday 15 February 2011

Apprentices

Tuesday 15th February 2011 Ministerial Corrections

[Luciana Berger]

To ask the Secretary of State for Business, Innovation and Skills how many people commenced an apprenticeship in (a) 1997 and (b) May 2010.

[Official Report, 9 September 2010, Vol. 515, c. 671W.]

Letter of correction from Mr John Hayes:

An error has been identified in the answer given to the hon. Member for Liverpool, Wavertree (Luciana Berger) on 9 September 2010. The number given for people on apprenticeships in 1996/97 was incorrectly given as 75,000 when it should have been 65,000.

The full answer given was as follows:

[Mr Hayes]

The number of apprenticeships in 1996/97 was 75,000 last published in the Statistical First Release on the 24 October 2002, however these data were calculated on a different basis and therefore may not be directly comparable with later years.

Table 1 shows the number of apprenticeship starts for England from 2003/04 to 2008/09. 2003/04 is the earliest year for which comparable data are available and 2008/09 is the latest year for which full-year data are available.

[Mr Hayes]

The number of apprenticeships in 1996/97 was 65,000 last published in the Statistical First Release on 24 October 2002, however these data were calculated on a different basis and therefore may not be directly comparable with later years.

Table 1 shows the number of apprenticeship starts for England from 2003/04 to 2008/09. 2003/04 is the earliest year for which comparable data are available and 2008/09 is the latest year for which full-year data are available.

Fire Safety (Protection of Tenants) Bill

Tuesday 15th February 2011 Ministerial Corrections

The following is an extract from a response given by the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) to the hon. Member for Torbay (Mr Sanders) during the Second Reading of the Fire Safety (Protection of Tenants) Bill on 19 November 2010.

[Robert Neill]

The Fire Kills campaign has for some time conducted high-profile campaigns promoting smoke alarms and maintenance messages, which have proved very successful.

The English housing survey 2008, published last month, shows ownership of smoke alarms in all dwellings in England standing at 91%. It is a significant achievement for the Department for Communities and Local Government and the fire and rescue service that nine of every 10 homes have a smoke alarm installed.

[Official Report, 19 November 2010, Vol. 518, c. 1237.]

Letter of correction from Mr Robert Neill:

An error has been identified in an answer given to the hon. Member for Torbay (Mr Sanders) during the Second Reading of the Private Member’s Bill—the Fire Safety (Protection of Tenants) Bill—on 19 November 2010.

The figure of 91% given for the proportion of dwellings with smoke alarms has subsequently been revised to 86%.

The correct answer should have been:

[Robert Neill]

The Fire Kills campaign has for some time conducted high-profile campaigns promoting smoke alarms and maintenance messages, which have proved very successful.

The English housing survey 2008, published last month, shows ownership of smoke alarms in all dwellings in England standing at 86%. It is a significant achievement for the Department for Communities and Local Government and the Fire and Rescue Service that almost nine of every 10 homes have a smoke alarm installed.

Fuel Costs

Tuesday 15th February 2011 Ministerial Corrections

The following is the response given by the Economic Secretary to the Treasury, the hon. Member for Putney (Justine Greening) relating to a question from the hon. Member for Dundee East (Stewart Hosie) during the debate on Fuel Costs on 7 February 2011.

[Stewart Hosie]

The hon. Lady has been very generous indeed. She asks us to welcome the actions that the Government have taken in terms of a deficit consolidation plan. I like and respect her, but I will never welcome a £1.3 billion cut to the Scottish budget this year and a £3.2 billion cut to the Scottish block over the next four years. That is the wrong thing to do in terms of stimulating economic growth and growing our way out of the recession. If we could focus on the fuel duty, that would be particularly helpful, unless of course she wants to devolve the duty to Scotland, in which case I would be absolutely delighted as we could take all the right decisions.

[Justine Greening]

I am sure that the hon. Gentleman will be aware of the Goodison review and that the Scotland Bill is passing through Parliament right now. We are making some changes on tax, and I think he will welcome those measures to strengthen the devolution settlement.

[Official Report, 7 February 2011, Vol. 523, c. 57.]

Letter of correction from Ms Justine Greening:

An error has been identified in the answer given to the hon. Member for Dundee East (Stewart Hosie) during a debate on Fuel Costs on 7 February 2011.

The correct answer should have been:

[Justine Greening]

I am sure that the hon. Gentlemen will be aware of the Calman Commission and that the Scotland Bill is passing through Parliament right now. We are making some changes on tax, and I think he will welcome those measures to strengthen the devolution settlement.

Petition

Tuesday 15th February 2011 Petitions

Tuesday 15 February 2011

Reform of Health Services (Wycombe)

Tuesday 15th February 2011 Petitions

The Petition of residents of Wycombe,

Declares that the petitioners are concerned and unhappy about the continuing loss of control in the hospital services that are in the constituency; and notes that, in recent years, the petitioners have witnessed the closure of Accident and Emergency, the temporary closure of the maternity unit, and the potential loss of urology services at Wycombe Hospital.

The Petitioners therefore request that the House of Commons urges the Secretary of State for Health to take steps to ensure that the constituents of Wycombe are given the freedom to use the latest health reforms to work towards fair funding, make the hospital subject to greater local control, and that clinical staff have freedom from centralised planning and targets.

And the Petitioners remain, etc.—[Presented by Steve Baker, Official Report, 31 January 2011; Vol. 522, c. 705-706.]

[P000881]

Observations from the Secretary of State for Health:

Our reforms are about putting patients and the public at the heart of the NHS—and involving people more in decisions about their local services is fundamental to this.

The Health and Social Care Bill, presented to Parliament on 19 January 2011, sets out our proposals for transforming the quality of services by devolving decision-making to local groups of GP practices, supported by and accountable to an independent NHS Commissioning Board. The amount of time they spend with patients means that GPs understand their communities better than anyone, and are best placed to ensure patients get the care they need.

To further embed public involvement in commissioning, the Bill contains duties for NHS commissioners around the involvement of patients and the public in how services are designed and the promotion of shared decision-making and choice.

We want to make sure that patients and the public have a strong voice both at a local and national level, so we are creating a new consumer champion. Health Watch. Providing national leadership from within the Care Quality Commission (CQC), Health Watch England will have an influential role in feeding local knowledge and concerns about services to CQC. Local Health Watch organisations will build on the work of existing LINks, but with greater responsibility and enhanced funding.

In addition, we want all NHS trusts to be foundation trusts by 1 April 2014, and we are strengthening foundation trusts’ governance to increase transparency and accountability to the governors and membership and the wider public.

The petition calls for greater freedom for clinical staff. Our plans will dramatically increase the freedom that practitioners have, removing unnecessary top-down targets and enabling them to focus on what really matters: improving patient outcomes. We are also liberating providers from unnecessary restrictions that prevent them from innovating and responding to local needs.

We agree that funding for local health services should be fair. The NHS Commissioning Board will be responsible for the allocation of the majority of NHS resources from 2013-14. The Board will make allocations to GP consortia on the basis that all areas secure equal access to NHS services relative to the prospective burden of disease and disability. It will be for the NHS Commissioning Board to decide how to determine the amount to allocate.

The particular issues raised about hospital services in Wycombe are local matters and my Department will therefore bring the petition to the attention of Buckinghamshire Healthcare NHS Trust.

Westminster Hall

Tuesday 15th February 2011 Westminster Hall

Tuesday 15 February 2011

[Mr Andrew Turner in the Chair]

Fuel Prices

Tuesday 15th February 2011 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Dunne.)

09:30

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Good morning, Mr Turner, and I offer a warm welcome to what appears to be a very well attended debate. I am delighted to have secured this debate, and I am particularly pleased about its timing, which is before the Budget on 23 March.

This debate is timely, because it examines the impact of fuel duty, particularly in remote rural communities such as those in North Yorkshire. I will just set the scene by outlining the prices as of yesterday, 14 February 2011. People would be hard pressed to buy unleaded petrol in Thirsk, Malton or Filey for less than £1.30 a litre, and they would be hard pressed to buy a litre of diesel for less than £1.36 a litre.

I want to spend some time outlining the impact of these prices on rural communities, and I also want to set out why I fear that the diesel duty differential is affecting rural communities so harshly. Finally, I want to discuss the options to address this issue.

It is no secret that oil prices have reached a record high—barrel prices have reached $100. The fuel duty and VAT element of petrol prices both impact on drivers and as many people regard those elements as a form of double taxation, their effect on petrol prices is highly inflationary. It is generally thought that 20% of the running costs of a truck are accounted for by the cost of fuel duty at this time.

There is a high dependence on cars in rural areas, where we have limited public transport and where the car is a necessity for many people, particularly the elderly, those on fixed incomes and those with young families. In the words of the AA, in rural areas those on lower incomes are already being priced out of the market.

[Harriett Baldwin (West Worcestershire) (Con)]

I congratulate my hon. Friend on securing this extremely important debate. I represent a rural area myself. Does she agree that there are so few petrol stations in rural areas that the existing rural petrol stations can charge much higher prices than petrol stations in towns?

[Miss McIntosh]

The problem is that the sale of fuel in rural areas tends to be less per vehicle. I have learned that people tend to “tank up” for two or three weeks at a time. That has an impact, as rural petrol stations do not face the competition for customers that exists in urban areas.

A particular concern for North Yorkshire is that we have had extremely adverse weather this winter, particularly in November and December, and in addition we have a particular reliance on 4x4 vehicles. I want to declare an interest, in that I run a partial 4x4 vehicle to ensure that I can access parts of my constituency that I would otherwise be unable to reach. We know that 4x4 vehicles are more fuel-efficient than they were in the past. However, for the reasons that I have given, diesel prices at the petrol pump are higher than they were in the past.

In preparing for this debate, I was surprised by diesel prices in the UK. I had understood that they were the second highest in Europe. In fact, the helpful note provided by the Library for this debate shows that the UK has the highest diesel prices in the EU, despite a pre-tax price that is among the lowest in the EU. The differences in diesel duty rates in EU countries are incredibly stark compared with those for petrol. In some member states, where there are lower diesel duty rates, the diesel discount is nearly 50%. By contrast, the diesel duty rate in the UK is 18p a litre, or 47%, higher than in any other EU country and more than 25p, or 80%, above the simple average for the other 26 member states. It is shocking that the higher cost is passed on to those of us who live in rural areas.

[David Simpson (Upper Bann) (DUP)]

This is a very important subject, which is shown by the number of hon. Members attending this debate. In Northern Ireland, the rise in duty on fuel is obviously a major concern, given that we have a land border. The rise in duty causes major difficulty for all our constituents. However, I am sure that she will have seen reports in the press today that the EU may try to stop the duty and the VAT on fuel from being reduced. I am sure that that is a major concern for her constituents, as it is for mine.

[Miss McIntosh]

When the Minister responds to the debate, he may want to touch on that issue. Also, when I come to put my case for a rural rebate, I will acknowledge that there might be problems with regard to the EU directive in this sector.

[Anne Marie Morris (Newton Abbot) (Con)]

I wonder whether my hon. Friend has examined the impact of rising fuel prices on micro-businesses. In our rural communities, micro-businesses are key, and the Federation of Small Businesses has estimated that rising prices will cost each one of these businesses, which are already sorely pressed, an extra £2,000 every six months.

[Miss McIntosh]

Some 6,000 small businesses in Thirsk, Malton and Filey will be affected, and I congratulate the FSB on its excellent campaign.

The impact on farmers—across north Yorkshire, farming is often the main business, and it certainly is in my constituency—of rising fuel prices has been catastrophic. That issue has pushed up the cost of producing livestock and the cost of taking livestock to market. Moreover, for those who train racehorses across North Yorkshire, many of whom are based in Thirsk and Malton, rising fuel prices have pushed up the cost of feeding the horses and the cost of transporting horses and jockeys to races.

[Jim Shannon (Strangford) (DUP)]

As the hon. Lady has said, rural communities in particular are suffering, and the area that I represent, which is very much a rural community, is one of those that has suffered most. Does she agree that concerns have been expressed during the past few months, particularly since Christmas, that some retailers were taking advantage of the situation in relation to the price increase? And does she also agree that there is perhaps a role for Government in relation to monitoring, controlling and regulating that situation?

[Miss McIntosh]

I am mindful of the point made by the hon. Member for Upper Bann (David Simpson) about the land border between Northern Ireland and southern Ireland. In the European Union, the dream place to live as far as fuel duty is concerned is Luxembourg. I am reminded of the queues that I saw on a road in Luxembourg, which existed because the fuel duty is less in that country. So I am very mindful of what the hon. Member for Upper Bann has said and, as I said earlier, I hope that that is an issue that the Minister will respond to, because rural communities seem to be bearing the brunt.

RAC analysis of the survey “Family Spending 2010” shows that spending on transport for the average household was £58.40 out of a total weekly expenditure of £455. Transport is the biggest single item of expenditure, bigger even than food, rent, mortgage or entertainment. Obviously, ancillary services will suffer if transport costs continue to rise incrementally.

There are four options to discuss today. The first is not very realistic—it is the option to do nothing and maintain the status quo. Personally I do not believe that that is a sustainable or realistic option. Obviously, my preferred option is for the Government to pause on 1 April and not to impose the 1p rise in duty. Of course, that increase will be the eighth duty increase to have been proposed by the previous Labour Government since November 2008. I am mindful of the fact that if it is imposed, it would add at least 4p more to petrol and diesel pump prices, on top of the 1p increase in duty in January and the VAT increase as well.

The perhaps more controversial proposal to introduce a fuel duty stabiliser was first put forward by the present Chancellor when in opposition. As shadow Chancellor, he launched a fairly full consultation in July 2008 on a fair fuel stabiliser, a mechanism to ensure that when fuel prices go up fuel duty falls:

“So as the price of fuel rises, the amount of VAT charged also rises. This means that when the price of fuel goes up, the amount of tax charged on it also rises…The current system also makes the public finances more unstable. This is because, when oil prices rise, the Government receives an unexpected windfall from taxes on North Sea Oil production. And when oil prices fall, the Government suffers an unexpected shortfall in revenues.”

I take some comfort from the fact that the Chancellor, in his June Budget, said:

“We are examining the impact of sharp fluctuations in the price of oil on the public finances to see if pump prices can be stabilised, and we will also look at whether a rebate for remote rural areas could work.”—[Official Report, 22 June 2010; Vol. 512, c. 178.]

[Roger Williams (Brecon and Radnorshire) (LD)]

The hon. Lady has set out the virtues of a fuel tax stabiliser, but does she agree that that still does not address the differential between prices in rural and urban areas, which makes it so difficult for the small businesses that I represent?

[Miss McIntosh]

I entirely take that point, and it is why one proposal that I will come on to is the rural rebate discount. I have no doubt in my mind that the fault for where we are lies very firmly at the door of the outgoing Government, and in particular of their Chancellor. In his 2009 Budget, he announced tax increases on roads, fuel, alcohol and tobacco, and set out fuel duty to increase by 2p per litre in September of that year, and then by 1p per litre above indexation each April for the next four years. The decision to increase duty rates in real terms was projected to raise £3.6 billion over the next three years from 2009-10 to 2011-12.

[Mr David Hanson (Delyn) (Lab)]

Will the hon. Lady tell us whether she voted for the recent VAT rise?

[Miss McIntosh]

I will come on to that in a moment, but it would be nice to hear from the shadow Minister whether he feels any pain or anguish, or any need to apologise for where we are, particularly as many hon. Members from all parts of the House have today said that we are where we are. We need an all-party approach to get out of this, and since we know for a fact, from reading Lord Mandelson’s book, that the Labour party, had it remained in government, would have been committed to increasing VAT, we will not take lectures from Labour Members today.

Motoring organisations and some road hauliers have set out their difficulties with a fuel duty stabiliser, and perhaps the Minister in her response will tell us what stage we are at concerning the assessment reached by the Office for Budget Responsibility about how the stabiliser will work in practice. Were a stabiliser to be introduced, is she convinced that the reduction would be passed on to the motorist? If the reduction remained with the oil companies, there would be no advantage in introducing a stabiliser.

Turning to the rebate for remote rural areas, I realise the difficulties in persuading the European Union of such a necessity, but having practised the art, both as a European Community lawyer—now a European Union lawyer—and during 10 years in the European Parliament, I am more well-versed than most in how to persuade the European Union and our fellow member states, many of whose citizens live in equally remote areas. People in rural areas should be entitled to a discount on the rate of duty.

With fuel duties, the principle would obviously have distribution effects, given the greater reliance in rural areas on both private and public transport. We can have a debate and an argument about how the reduction in duty can best be administered, and I realise that a differential duty would require special dispensation, but the UK, in looking to apply a derogation for a lower rate of duty for petrol sold in one area—Scotland, for example—fails to recognise areas such as Northern Ireland, where there is a land border with an area selling fuel at a lower rate of duty. Also, remote areas that are particularly rural and do not have large centres of population, where people do not have schools closer than 13 or 15 miles and have to travel some distance to do a weekly shop, will be particularly penalised.

[Andrew Bingham (High Peak) (Con)]

My constituency is very rural and contains a huge amount of quarrying. The quarries are remote, and most of the stone is carted out by road, with hauliers paying high fuel prices. Stone is a building block for much of the economy, so does my hon. Friend agree that if there were a rural consideration, the benefits would descend to people in non-rural areas?

[Miss McIntosh]

My hon. Friend has provided an appropriate example of a business that depends heavily on road haulage to get its product to market, and I am sure that it would be a particular beneficiary if the fuel duty stabiliser or a rural rebate were introduced.

Domestic fuel is a subject that appears in my mountains of correspondence. One or two people have expressed concern about the possible operation of a cartel, particularly in the north of England—Yorkshire, the Humber and the north-east—in domestic heating oil prices. I welcome the fact that the Government have grasped that issue and are looking into it through, I understand, Ofgem, but I hope that one of the purposes of this debate is to push at what might be an open door, to press the Government to, at the very least, examine both where we are and how we got into this difficulty. My constituents have expressed their concerns in fairly strong terms. One stated:

“I like many other people in this country am fed up with having to pay over the odds in tax for what is to many people an absolute necessity rather than a luxury”.

Another wrote:

“I am the owner of a small business and am extremely concerned about increases in fuel duty, which have hit the small business sector the hardest.”

[Andrew George (St Ives) (LD)]

I congratulate my hon. Friend on securing this important debate. I have written to the Economic Secretary about the pilots that were announced last October for the proposed rural area rebate. EU Finance Ministers’ approval will be required before we can even get the small pilots going on the Isles of Scilly and in Scotland, which will take some time. Does she agree that it is really important that the scheme is rolled out as quickly as possibly, and that the Government need to go a stage further and indicate which rural areas they intend to cover?

[Miss McIntosh]

I am taken by my hon. Friend’s arguments, but we learned a lot from the smash-and-crash approach of the Labour Government, who announced that they were introducing a 1p increase due to the state of the economy and the fact that the price of oil was $149 a barrel. The Prime Minister’s response to my question showed a responsible attitude. We need a responsible, well-thought-out approach in the Budget. Then we can have pilot schemes in North Yorkshire, Cornwall, Scotland and Northern Ireland.

[Julian Smith (Skipton and Ripon) (Con)]

I support my hon. Friend’s argument. Although the Financial Secretary has said that far-flung areas of Scotland might qualify for rural pilots, North Yorkshire is the most rural county in England and must surely qualify for a pilot if the Government decide to run some.

[Miss McIntosh]

I am delighted that my hon. Friend and neighbour has put the case so eloquently. Rural communities, such as those in North Yorkshire, are suffering, and they deserve special attention.

[Jake Berry (Rossendale and Darwen) (Con)]

On perceived price fixing between local retailers, I wrote to several major supermarkets in my area before the general election. Fuel is 7p a litre more expensive in Rossendale than in the immediately adjoining town of Bury. The supermarkets wrote back to say that there is a small geographical area in which they fix their prices. Is that not a case of major retailers charging people what they can bear rather than what is necessarily fair?

[Miss McIntosh]

Several hon. Friends have made comments that I hope the Government will take up, not least of which is the fact that some small independent retailers who try to offer fuel in rural areas are being priced out of the market because suppliers 20 miles away undercut them substantially. All those issues are worthy of further investigation.

[Andrew George]

Will my hon. Friend give way?

[Miss McIntosh]

I am drawing my remarks to a conclusion.

I believe that we are pushing at an open door, and I take this opportunity to press the Government to change. Doing nothing is not a realistic option. The price of fuel is one of the most pressing issues facing those in rural communities. The small businesses that drive our economy, including the 6,000 small businesses in my constituency alone, are suffering particularly. Fuel forms a large part of individual household income, and it is extremely inflationary in pushing up the price of everyday items. UK hauliers already pay as much as £12,000 a year more than some EU competitors. As I have said, we now have the highest duty on diesel, yet our diesel is the most cheaply produced.

I make a plea to the Minister to stop the 1p increase on 1 April, consider seriously a fuel stabiliser and a remote rural rebate or discount, which would have a favourable impact on many rural constituencies represented in this Chamber, and address the discrimination against rural dwellers endemic in current pump prices. The differential between diesel and petrol is now unacceptable and must be addressed. I urge the Minister to respond in the most favourable terms possible for the good of families, farmers, the elderly, those with young children, small businesses and all of us in rural areas who depend on cars.

09:54

[Mr Alan Reid (Argyll and Bute) (LD)]

It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) on securing this debate. The issue is important for those of us who represent rural communities, as the large turnout of hon. Members from the two coalition parties and Northern Ireland indicates. However, the right hon. Member for Delyn (Mr Hanson) casts a lonely figure on the Labour Benches. I also note that no Scottish National party Members have turned up, which is a scandal considering all the things the SNP is saying in the Scottish press. It shows that the SNP’s priorities are completely wrong.

Representing a sparsely populated rural constituency as I do, I am only too aware of the impact of high fuel prices on people and businesses. I represent many islands of the Inner Hebrides. To give some examples, the price of fuel on larger islands such as Mull and Islay is typically 15p a litre higher than at a city centre supermarket, and on the smaller islands such as Coll and Colonsay, the price is usually about 30p a litre higher. That obviously has a great impact on people’s living standards and on anyone on the islands who is trying to run a business.

I was therefore delighted when the Government announced their intention of pursuing a pilot scheme under which a 5p per litre fuel duty discount would be introduced on many islands, including the Inner Hebrides. I know that the Government need EU permission to go ahead with the scheme, that it takes time to get such projects through the EU and that it is important that the Government get their proposals right, but I urge them to take the proposals through the EU as quickly as humanly possible. I hope that there will be no objections in the EU. Several other countries—Greece, Portugal and France—have similar discount schemes on their islands, so I hope there would be no obstacle to our island pilot scheme. However, as other hon. Members have said, it is not just on the islands that the price of fuel is high. It is the same in many rural parts of the country.

[Andrew George]

I am grateful to my hon. Friend, who is making an excellent case. My constituency, like his, would benefit from the proposed rural rebate, especially the Isles of Scilly, which have just 2,000 people. He is absolutely right that it should be a fait accompli at the EU level, because the principle is already established. The difference in price on the Isles of Scilly is much the same as in his constituency. Does he not agree that we must press Ministers not only to get the proposals through the EU as quickly as possible but to indicate where the pilot will be rolled out beyond the small areas that will benefit in the first phase?

[Mr Reid]

I agree. Some 6,000 of my 60,000-odd constituents will benefit from the pilot scheme, but I hope that it can be rolled out later to other rural parts of the country. However, the most important thing is to establish the principle. My hon. Friend will share my frustration that throughout the last Parliament, we proposed such a scheme every year in the Finance Bill and, although we often heard noises of sympathy from Labour Ministers, no action whatever was taken. It is important to establish the principle, which is why the pilot scheme is so important. Once the principle is established and is shown to work—Labour Ministers always said that it could not, in practice—we can prove it will work. It is important to establish the pilot and prove that it works. Then we can roll it out to other rural parts of the country.

On the coming Budget, the previous Government introduced the fuel duty escalator, which increased fuel duty by 1p over and above the rate of inflation. According to my calculations, that means that the tax on fuel would have increased by 4p in the coming Budget if Labour were still in power. Thankfully, they are not. I think we have established that any argument that fuel duty must increase for environmental reasons no longer stacks up. Market forces have already driven the price of fuel very high, which deters people from using their cars. Any further fuel duty increase would not help the environment; it would simply harm the rural economy.

[Dr William McCrea (South Antrim) (DUP)]

It is easy for the coalition to knock the previous Government, and I have no objection to that at all. However, the coalition Government will be judged by what they do rather than what they say about the past.

I draw to the hon. Gentleman’s attention the fact that many rural dwellers do not use cars as a luxury. They use them because there is no alternative. Many of my constituents have no good local bus service and no train. We should bear in mind that they use their cars not out of luxury but from necessity. The Government say that transport sits at the centre of the rural economy; let them prove that they mean that.

[Mr Reid]

I agree. In my own constituency, particularly on the islands, there are no trains, buses are few and far between, and it would not make sense for the local council to subsidise a bus service for only one person. That would be less beneficial to the environment than people using their cars.

I agree that it is easy to knock the previous Labour Government and that this Government must be judged on their record. It must also be pointed out that we face an enormous budget deficit and that the budget has to be balanced. I recognise that fuel duty brings in a lot of money for the Treasury, but I urge the Chancellor to find another way of raising revenue. Fuel duty discriminates against rural areas in a way that no other tax does, and almost any other tax increase to substitute for the fuel duty escalator would be an improvement. I will doubtless be considered a heretic at the Treasury for saying this, but why not put up the basic rate of income tax? The pillars of the Treasury may collapse at the idea that such heretical thoughts are still around. Every Chancellor for the past 30 years seems to have viewed bringing down the basic rate of income tax as a totemic symbol, but it is a much fairer tax than fuel duty because its impact is equally felt throughout the country, whereas fuel duty impacts far more heavily on rural areas. I therefore urge the Chancellor to abandon the fuel duty escalator policy that he inherited from the previous Government, and raise any other tax in order to balance the budget.

In conclusion, let us get the islands’ fuel duty pilot up and running as soon as possible, and abandon Labour’s fuel duty escalator in the Budget.

10:01

[Ian Paisley (North Antrim) (DUP)]

I, too, congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on securing this important debate. I am delighted that we have the opportunity to talk about the issue and that the Minister is present to listen to the concerns being raised, to which I hope she will be able to respond positively—if not today, then at least in the Budget.

In The Daily Telegraph in January, Boris Johnson wrote the immortal words that

“when it costs more to fill your tank than to fly to Rome, something is seriously wrong.”

I say a profound “Hear, hear!” to that—there certainly is something seriously wrong when it costs less to fly to Rome than to drive to Cullybackey in my constituency. Although that is a humorous point, it is—like all such humorous points—a telling one. The pips are now squeaking throughout this country, and none more loudly than in rural parts. Many hon. Members have already indicated that the car is not a luxury for people who live in rural areas. The hon. Lady made clear the necessity for four-wheel drive vehicles in rural parts of these islands. They are absolutely essential. That has to be driven home to the Government, who live mainly in cities. They have to recognise the needs of the rural community.

I say a huge “Hear, hear!” to the words of the hon. Member for Argyll and Bute (Mr Reid), who spoke about an island pilot scheme. I am glad that I live on an island—it is called Ulster—and I hope that such a pilot scheme will apply there as well. I flew today from the mainland of Ulster to this island to participate in this debate, so I hope that there is recognition for a fuel stabiliser from my island as well as the hon. Gentleman’s island. It is critical. Parts of England, Wales and Scotland have remote rurality, but if ever such remoteness was multiplied—there are a channel and seas between us—we are on the periphery of the periphery. On that basis alone, we deserve some sort of recognition for our rural areas and recognition that help will be given.

I was delighted to see in the agreement that formed the new Government recognition that something was going to be done to address inflated fuel prices. I am sure that, if we cast our minds back to the election, we would all recall that fuel prices were exceedingly high and that our potential and actual voters said on the doorsteps, “You have to do something about fuel prices.” That lost momentum—it is almost as if the car is no longer filled with fuel and has stalled. Now that prices are back up, as the hon. Lady has said, to 136p—15p higher in parts of Scotland, and 10p in parts of Northern Ireland—surely the momentum must be put back into the issue and the Government must grasp the nettle.

[Jim Shannon]

Since the coalition came into power last year, fuel has risen by £2.35 per tank. Does my hon. Friend think that the onus is on the coalition Government to address that issue?

[Ian Paisley]

The hon. Lady has rightly indicated that there are four options. As a member of an Opposition party, I am prepared to leave it to the Government and say that it is up to them to come up with a solution. Let us hope that we can get something with cross-party and cross-House support, and that we can drive it forward so that it makes a difference for the people who send us here. I think that we can all agree on that.

[David Simpson]

While we are having a go at the coalition, I might as well join in. Does my hon. Friend agree that the coalition needs to realise that, where Northern Ireland is concerned, millions upon millions of pounds of revenue are being lost to the British Exchequer every single year the longer this goes on?

[Ian Paisley]

Yes, that is an excellent point, and I want to comment on the issue of smuggling later. I emphasise the points made by other hon. Members that the Budget gives this Government the opportunity—I hope that they will take it and listen to the concerns—to come up with a solution that we can get behind and support.

[Gavin Williamson (South Staffordshire) (Con)]

The hon. Gentleman speaks eloquently about the importance of dealing with the issue. If the Government are able to deal with it, will the Democratic Unionist party and others march through the Government Lobbies in support of the Budget?

[David Simpson]

We are well used to marching.

[Ian Paisley]

At home, if I march, I need to fill in an 11-bar-one form. The hon. Member for South Staffordshire (Gavin Williamson) may not be familiar with that form, but here I have the luxury of parading anywhere I want. If I support the Government’s proposal, I will happily lead the charge through the Lobbies and he will follow in my wake.

On average, petrol at home is about £1.30 or £1.35 per litre, depending on where it is bought. Of that maximum £1.35, 80p is a combination of taxes. People have talked about holding back the 1p increase in April, which will make a difference of about 2p or 3p at the pump, but we need something that will make about 25p difference at the pump if we are going to get not only the rural community, but hauliers and local industry moving again, and people with get up and go to recognise that the economy is starting to breathe and move again. The Government have a serious duty to address that.

My hon. Friend the Member for Upper Bann (David Simpson) has touched on the issue of smuggling. High prices encourage smuggling, and on my island it is incredibly easy to smuggle, because we have a land border with another nation state which has a different fuel price. If ever there was an open invitation or open goal to the smuggler, that is it. The Minister will know that in Northern Ireland alone—these figures are staggering—£200 million is lost each year to Her Majesty’s Revenue and Customs because of smuggling. In the Republic of Ireland, a further €140 million is lost to their Exchequer because of fuel smuggling. On top of that, environmental waste and damage are caused as a result of removing the various tracers and markers from fuels. That causes untold environmental pollution and harm.

If we have a fuel stabiliser, or the fuel price differential is altered and brought in to recognise those differences, the opportunity to smuggle and to cause crime and waste will no longer exist. We are only encouraging crime if we do not address the matter. That is another solid reason why the Government must get behind dealing with the issue of having fair fuel prices. They could, of course, do so through a taxation cut.

[Dr McCrea]

Does my hon. Friend agree that people are looking for clarity about how we arrive at the price of our fuel in the first place? Soaring prices at the petrol pumps are causing anger, particularly bearing in mind that many of the companies concerned recently announced massive increases in profits.

[Ian Paisley]

Clarity is important. Yesterday, I took the opportunity to check how the price differential is made up. Some 58.9p on every litre is duty, and a further 22.3p is VAT. The price of the actual commodity—whether it is diesel or petrol—is currently around 46p. Then, of course, the person who is pumping the fuel has to make a small profit, which is usually a matter of pence—about 5p. There is something seriously wrong when 80p of that is all tax. As I have said, it is getting to the point when people in remote rural communities can no longer get around. The closure of petrol stations in my constituency means that it is 16 miles between some villages and the local petrol station. If someone runs out of fuel, they are stuffed. People have to start thinking ahead, buying fuel and bulk storing it. That is not safe; it is hazardous. We must recognise that we are putting immense pressures on our rural communities. Such a situation must be addressed.

I leave hon. Members with those thoughts. As I have said, like many hon. Members, I am prepared to leave it to the Government to come up with a solution that we can get behind. I am glad that the Minister is here—I can see that she is taking notes—and I hope that she is able to give us some encouragement at the end of the debate. I look forward to the Budget, which will be the opportunity for the Minister to respond.

10:12

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

I congratulate my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) on securing this important debate. I apologise to her, the Minister and yourself, Mr Turner, for possibly having to leave before the Minister has completed her wind-ups.

I shall try to bring together some of the comments made this morning by mentioning two examples from my constituency that illustrate the problem we have. The first issue is something we have not referred to this morning: the cost of domestic fuel for purposes other than simply driving. I thank my constituent Colin Keen for raising that matter. I shall give a quick example. Between Christmas eve and about the middle of January, people who were tied into domestic fuel contracts with a company called Flogas had a 46% increase in their fuel prices. That is an unsustainable and unjustifiable increase, which has a considerable indirect and direct effect on the rural community and the rural business network. It would be helpful for the Minister to address the problem experienced—at least in my part of the world—by a number of householders who are on large estates. They are tied into lengthy fuel contracts that they cannot reasonably or, in some cases, legally get out of. Their domestic fuel prices are apparently being adjusted without any reference being made to them and without them being able to do anything about it at all.

The second example I shall refer to is that of another constituent, Mr Barry Jones. He has studied local supermarkets and has pointed out that we are not necessarily getting a fair crack of the whip from them. He highlighted that Tesco in the rural town of Carmarthen is charging different prices from Tesco in the more urban setting of Llanelli down the road. There is up to 4p a litre difference. Tesco in Carmarthen argues that it is setting its prices in line with local suppliers. That is fundamentally untrue; it is not. It is setting its price at a rather different rate. I cannot help but think that such a situation is slightly ironic when I see a Tesco tanker with a slogan on it that reads: “Why pay more?” The answer is: because we have no choice. Perhaps we can address the grip that the five big supermarkets seem to have over every aspect of our lives, particularly in rural communities.

My hon. Friend the Member for Thirsk and Malton made a further point in her introductory comments about the overall inflationary effect of the issue on rural communities. What we are seeing—and what was being reported on the BBC this morning—is that there has been a much more profound increase in the price of things we need over and above the price of things we want. Fuel hikes have a very different downstream impact on the things we need compared with the things we occasionally want.

That brings me neatly to a further comment about the definition of rurality, which has been touched on in different ways by a number of hon. Members this morning. Several years ago, I tried to get a proper definition of rurality and, perhaps rashly, I asked the pollsters Ipsos MORI for one. It did not have a definition of rural and the people I asked simply said to me, “Well, it’s anything that isn’t urban.” If I may respectfully say so, that is a particularly unhelpful suggestion. Rurality comes in very different forms: isolated, very isolated, fairly isolated and, simply, rural. We need a clearer indication from the Minister and perhaps other interested bodies of what rurality and isolation really mean. I can foresee that some difficult choices and decisions will have to be taken and that they will be based on a line on a map that might mean everything to a bureaucrat, but that will mean absolutely nothing to those of us who live and breathe rurality every day. We might have constituents who fall the wrong side of a line and are prejudiced against—I accept that that might be unintentionally—as a consequence. That definition is important.

We have been told that up to 600 filling stations are closing every year, which means that people have to travel that much further to get their essential fuel. We are told that local authorities in certain parts of the country are cutting back on their rural bus services because of the increase in fuel prices and the downstream effect of that. However, we cannot lose sight of the direct and indirect effects of the issues discussed in this morning’s debate. The matter is affecting directly and indirectly pensioners, care workers, volunteers and hauliers. I can think of two hauliers in my constituency that are based in isolated rural areas so that they can be close to the ports of Pembroke dock and Fishguard. They are in an ideal location, but they can pretty well do nothing about fuel prices. They cannot even go over to Ireland—the Republic—and get a better price. Such price increases are playing havoc with their cash flow.

[Roger Williams]

The hon. Gentleman’s hauliers, like my hauliers, suffer competition from people who come over the channel with a full tank of fuel and carry out transport business. That is a great disadvantage to our hauliers, who have to pay the full amount applicable in this country.

[Simon Hart]

That is a good point. I think I recently read a coalition announcement that a surcharge might be applied to those foreign hauliers. It is worth remembering that hauliers cannot function without three things: vehicles, drivers and fuel. We cannot simply turn around and say that they have to address their overheads in the way we might do so with other businesses. They cannot function without those three vital ingredients.

I shall finish by touching on the big society—I think I have read about that in the news in the past 24 hours—and the social mobility that will come as a result of that. Every hon. Member who has spoken this morning has mentioned the effect of fuel prices, whether domestic or for vehicles, on their daily lives and on how they conduct their businesses. Every one of those observations could have been a direct reference to the big society. We cannot deliver the big society in rural Wales or rural Britain under the current conditions. There are people out there for whom the big society has been a part of their daily life for years, but it is becoming increasingly difficult to be champions of the big society because of fuel duty.

I am not high enough up the political food chain—nor, indeed, are other hon. Members here—to make these decisions, but they need to be made and, as an hon. Member said, they need to be made urgently. Whether it is a rebate, whether it is a stabiliser, whether it is a freeze on duty, or whether it is a combination of those things, the most pressing need for rural Britain if it is to be able to remain in business and deliver the big society is clarity and urgency. I hope that the Minister can address them both this morning.

10:20

[Sheryll Murray (South East Cornwall) (Con)]

I congratulate my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) on securing this debate. It is essential that we discuss this matter, because of its severe effect on constituencies, such as mine in south-east Cornwall. There is no doubt that high fuel prices affect everybody, but in our rural constituencies they have a disproportionate effect.

South East Cornwall has a large number of self-employed people, small businesses and people who have to commute, and we have a very poor public transport infrastructure. The railway timetables are such that often the train cannot be taken and bus companies find it increasingly difficult to provide the service that is needed, so people rely on their cars. My constituents write to me time and time again about the cost of petrol. I stood at the general election on a manifesto that contained the fair fuel stabiliser. I hope that the Chancellor of the Exchequer will include provisions for that in the Budget so that my constituents, including businesses and the self-employed, are at least able to budget for a 12-month period, rather than have their profits decline continuously because of the high rise in fuel prices.

I echo what all hon. Members have said in the debate, but there is one issue that has not been addressed, which is the effect of current fuel prices on our shipping industry. I declare a special interest because my husband is a commercial fisherman. People do not seem to understand that, while our fishermen are able to reclaim the duty they pay, it has a detrimental effect—in fact, a disastrous effect—on their cash flow. There are fishermen in my constituency who go to sea in dreadful weather conditions, but do not secure any return from their catch because it all goes on fuel.

[Jim Shannon]

Part of the point expressed by the hon. Lady relates to fuel, but also to the price of the commodity being less than it was three years ago and to restrictions from Europe on days at sea. Those reasons, along with the fuel increase, are why the fishing industry is in dire straits today.

[Sheryll Murray]

I could not agree more, but I want to stick to the issue of the price of fuel, which is having an effect on our farmers, our hauliers, our fishing industry and on small businesses in my constituency. In South East Cornwall, most businesses are tiny and cannot stand the impact of increasing fuel prices on their cash flow for much longer—it cannot continue.

To sum up, Cornwall has a large number of residents who have no access to the mains gas supply, or other, cheaper alternative supplies of heating. The increase in fuel duty affects the ability of a lot of my constituents to provide heating in their homes.

[Dr McCrea]

Does the hon. Lady acknowledge that there is frustration in the community that, when a barrel of oil on the international market goes up, the price rises immediately, yet whenever there is a decrease, there seems to be a long period of time before the price deflates again? Is that not another issue that needs to be tackled by the Government?

[Sheryll Murray]

The hon. Gentleman sets out a very good case for the introduction of a fair fuel duty stabiliser, which would cushion that effect.

Finally, I would like to mention the rural rebate and make the case for the whole of Cornwall to become a pilot for the rural rebate. We already have convergence funding, so there is already recognition that Cornwall is a special economic area. I ask the Chancellor to ensure that Cornwall is considered as a recipient of a rural rebate.

10.26 am

[Glyn Davies (Montgomeryshire) (Con)]

Thank you, Mr Turner, for calling me to speak in this debate, which is of huge importance. I, too, congratulate my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) on securing this debate. This issue is probably more important and relevant to the problems facing my constituency at present than any other that I can think of, and it dominates a lot of conversations.

I intend to make a fairly short speech because hon. Members have raised most of the points I wanted to raise; I do not want just to repeat them. However, fuel duty is particularly important where I live for two main reasons. One is the absolute cost. As with a lot of rural areas, fuel is essential to us. We cannot just pick up a newspaper in a local shop; we have to drive to the shop. We cannot access any services without having to drive to them. That point is more relevant in a sparsely populated area than anywhere else.

The second issue is competitiveness, about which my constituency neighbour, my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), made—twice, I think—an important point. Competitiveness is important because it affects not just transport hauliers from overseas but those in Britain. The position of small businesses and individuals where we live is incredibly difficult because of competition. The price of fuel is acting as an anti-regional policy that is persuading people to move out, simply because of cost. This is not about individual, large purchasing decisions; it is the accumulation of all the little things that everyone has to buy that makes living so much more expensive.

I do not live on an island, but Montgomeryshire, and Brecon and Radnorshire, are very sparsely populated. Most of the sparsely populated parts of Britain are probably represented here by hon. Members who have made interventions. We want something to be done, but I know perfectly well that that is much easier said than done. There are two issues that must be dealt with: we have to face up to the world market that has caused fuel prices to rise, and which we do not have any great control over; and there is the state of our public finances, which the Treasury has to deal with. We are in huge debt and massive interest payments must be repaid—that cannot be denied. To ask the Chancellor of the Exchequer to reduce taxation anywhere in the Budget is a difficult request, and a balance must be struck. However, we also know from what he has said previously that he is sympathetic on this issue. He has spoken about a fair fuel stabiliser in the past, and that is certainly one way to address it. I can see the question of the use of a fair fuel stabiliser giving rise to great difficulties, and I am certain that the advisers working for the Chancellor are looking at how those difficulties could be ironed out. I can see that there are problems.

The second issue, which interests me more because it is getting a lot of coverage, is one that many Members have spoken about today and which I would favour: giving some form of concession to the parts of the country that are deemed to be sparsely populated or rural, where the impact of the price of fuel is greatest. It is said that we are talking about a figure of only 5p per litre, and that the concession would apply only to the remotest parts of Britain. In that regard, I, like others who are present today, want to make a pitch for where I live. Rural Wales is sparsely populated, and if we are to start this initiative in the remotest parts of Britain—that is what is being discussed—and if the Chancellor has to negotiate with the European Union on how a pilot scheme might be introduced, I hope there will be an early roll-out to constituencies such as mine, where it might make a difference.

[Roger Williams]

My hon. Friend does not need my help—he speaks with great experience and passion on this matter—but some people consider Cumbria the most sparsely populated area in England, although, as he and I know, Powys is four times more sparsely populated. That may add some strength to his bid.

[Glyn Davies]

I am hugely grateful to my honourable neighbour, if that is a proper parliamentary term to use. No, I did not know that it was four times more sparsely populated. As he started to speak, I was intending to go straight to Google to find out the relative levels, but I accept the figure he gives. We know that Powys is sparsely populated. In the past, there would have been Government initiatives to address the problem, but I cannot think of any current great initiative. We need one, and we need to be added to the list of places where fuel price alleviation might be provided.

I wanted to make this contribution, first, because the issue is hugely important to my constituents, and, secondly, to encourage the Chancellor to recognise in his Budget that it is one of the greatest problems facing the remotest parts of rural Britain. The insidious impact is, as I described earlier, an anti-regional policy that makes it far more difficult to bring development to the remotest parts of our country.

[Mr Andrew Turner (in the Chair)]

I call Andrew Bingham. You have until 20 minutes to 11.

10:32

[Andrew Bingham (High Peak) (Con)]

Thank you, Mr Turner. I, too, congratulate my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) on securing this debate. Much of what needs to be said has already been said, but I would like to make some quick points on rurality.

There are certain goods that can come only from rural areas. I have alluded to stone from quarries, and there is also milk from our farms. Such goods have to go into urban centres, so the people who transport them are based in rural areas. Big haulage contractors are based in High Peak because that is where the product is. The impact on small businesses based in rural constituencies has already been mentioned, and, if we are not careful, the price of fuel will drive such businesses away from rural areas into urban areas, thereby accelerating the demise of rural towns.

The Ferodo brake linings factory is in my village of Chapel-en-le-Frith. Shops in and around the village exist on the back of that factory and the people who work in it. If we drive such companies into urban areas, our small towns will suffer.

The Countryside Alliance has produced statistics showing that people who live in rural areas spend a higher percentage of their income on fuel because of the lack of public transport. Since I was elected to this place, I have been impressed by the transport in London. There are buses and the tube—there are various ways of getting about that are not available to people in rural areas. The bus I use to come here runs every six minutes, but buses in rural areas run every half hour or less, which makes getting around more difficult. Consequently, people spend more of their income on private transport. I believe that the average rural resident travels about 8,700 miles on private transport, whereas it is about 5,000 miles for an urban resident. That equates to an extra £200 in tax in a year.

[Ian Paisley]

One bus in my constituency comes once a day, and another bus—a charity bus—comes once a week.

[Andrew Bingham]

I am sure that that is right, and I am sure it is the same in other areas. That brings me to considering the solution. I know that the Chancellor is looking at the issue—he said so in the House—and I understand that he is in a very difficult position because of the financial implications. We have spoken about concessions for rural areas. My concern with that is defining what is rural and what is not. I have various small towns and villages in my constituency, such as Glossop, which shares a boundary with Greater Manchester. It may not be considered rural, but one can go a few miles up the road to a little village called Sparrowpit which is very rural. Like my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart), I worry that a line will be drawn and people will fall on the wrong side of it.

The answer is the fair fuel stabiliser. I know it is a difficult issue, and I have great sympathy with the Chancellor and the Treasury team who have to determine how a stabiliser would be introduced. Perhaps we need to hold off on the duty rise that is due while we try to get it working. Many of us here are standing up for rural areas. I do not think that people in urban areas really understand how big an issue this is to those in rural areas who fill their car up perhaps two or three times a week if they have to drive here, there and everywhere, and how much that impacts on the household budget.

I thank you for giving me an opportunity to speak, Mr Turner, even though I had not notified you earlier.

10:36

[Mr David Hanson (Delyn) (Lab)]

I congratulate the hon. Member for Thirsk and Malton (Miss McIntosh) on securing this debate, which has drawn a great deal of interest. The fact that some 20 Members from all parts of the United Kingdom—Northern Ireland, Wales, Scotland and England—contributed to it shows how important the issue is across the whole of the UK. I confess that for a moment I felt like the 24th Regiment of Foot at Rorke’s Drift—I felt that I was surrounded by thousands of Government Members—but I was pleased that at some point the focus of the debate shifted to the Minister rather than the Opposition.

[Miss McIntosh]

I am delighted to see that the right hon. Gentleman has been joined by a reinforcement on his side. Does he think there is any reason for this issue registering so little in the interests of members of his party that no one else has turned up to participate in the debate?

[Mr Hanson]

I have hon. Friends who represent rural areas. I myself represent a rural constituency. In 2000, the well-known fuel dispute commenced in my constituency because of concerns over fuel prices—we have an interest in the matter.

My first point in response to what the hon. Lady said is that the previous Labour Government did try to address the issue. She will know that striking the right balance between taxation, the environment and affordability of car transport is critical, and that is why Labour, when in government, postponed fuel duty rises when the cost of petrol was high. In October 2008, we postponed the 2p per litre rise to help alleviate the pressures that we recognised were there.

When the fuel dispute took place in my constituency, petrol was around £1.06 to £1.07 per litre. In my constituency, it is now around £1.28 per litre—slightly less than has been mentioned today but a big difference—and, as Members have said, that impacts on businesses, schools, commuters and a range of issues generally. My first thought was, if that is the case, what have the coalition Government, who have had the opportunity to tackle the issue, done since last May? In an intervention, I explained to the hon. Lady that she voted for VAT increases which, according to the House of Commons Library, have added around 2.6p per litre to the price of petrol. Those are important issues. I do not want to focus on the negative, but we cannot get away from the fact that the price of petrol is higher now than it was when Labour left office, and it is higher because of the VAT increases for which she voted.

[Miss McIntosh]

Is the right hon. Gentleman denying that it was his Government’s policy, had they continued in government after the election, to introduce VAT increases which would have had a negative impact?

[Mr Hanson]

There is a range of issues. We would have had to see what we would have done. We had a range of plans to tackle the deficit, but, in my view, VAT is a regressive tax.

[Miss McIntosh]

That is a yes.

[Mr Hanson]

The hon. Lady might want to, but she cannot hide from the fact that her vote—and the votes of all hon. Members who have spoken today from the Government Benches—has added to the increase in the price of fuel since May last year. That is an uncomfortable fact for them, but that is what they have done. Again, I do not want to focus on the negative, because we have had some positive discussions. However, when attacked, I tend to fight back. Unfortunately, that point was made, so I have to reply on the record.

We have had a number of suggestions, all worthy of consideration. I will look at each in turn. The hon. Lady discussed the issue of the fuel duty stabiliser. The issue was raised during the election, and the hon. Members for South East Cornwall (Sheryll Murray) and for High Peak (Andrew Bingham) also touched upon it today. The fuel duty stabiliser involves some problems, so an explanation from the Minister as to where the Government are on their election pledge from last May would be worth while. The Government’s own Office for Budget Responsibility said recently that the idea of a fuel duty stabiliser is unworkable. I share that view, on behalf of the official Opposition.

In principle, the concept is simple: as oil prices go up, fuel duty will go down; and as oil prices drop, fuel duty goes up. The motorist, therefore, pays more or less the same for fuel and the Exchequer gets more or less the same in revenue. However, in reality, the suggestion is far from simple. On 14 September, the Office for Budget Responsibility published an assessment of the effect of oil price fluctuations on public finances, with the aim of informing the debate. The report found that a temporary rise in oil prices would have a negligible effect on UK public finances, while a permanent rise would create a loss. The Government would find introducing a fair fuel duty stabiliser difficult because, as the head of the OBR, Robert Chote, suggested a couple of weeks ago,

“a fair fuel stabiliser would be likely to make the public finances less stable rather than more stable”.

A 1% reduction in petrol duty would cost the Exchequer around £130 million. The fuel duty stabiliser, depending how it was operated, could cost between £3 billion and £5 billion of public expenditure. The stabiliser was a manifesto commitment, which the Conservative Government wish to carry out, but they need to explain how they will do so and how they will compensate for the loss to the public purse of such a sum. My rural constituents, as well as my urban constituents, will have to find that money from somewhere else, whether in public service cuts or extra taxation. The then Liberal Democrat spokesman, now the Secretary of State for Business, Innovation and Skills, said in opposition that he believed a fuel duty stabiliser would be “unbelievably complicated and unpredictable”, which the OBR has confirmed. We need an explanation of where we are. Is the fuel duty stabiliser still a live option? Do the Government intend to keep their manifesto commitments? What would the cost to the public purse be of the potential loss of income from the stabiliser? Since the election, all we have seen is a rise in VAT to 20%, which has increased petrol prices, not decreased them.

The hon. Members for High Peak, for South East Cornwall, for Montgomeryshire (Glyn Davies), for Carmarthen West and South Pembrokeshire (Simon Hart) and for North Antrim (Ian Paisley) suggested that we look at the idea of a rural derogation, which the Liberal Democrats proposed in their manifesto. The idea seems to have been adopted by the coalition. However, the pilot at the moment is simply for the Northern Isles and for the Isles of Scilly. We have also had representations today for the “island of Ulster”, as the hon. Member for North Antrim called it, as well as from Cornwall and mid-Wales—a very rural area, I know, as pointed out by the hon. Members for Brecon and Radnorshire (Roger Williams) and for Montgomeryshire—and from the hon. Members for High Peak, for Thirsk and Malton and for Skipton and Ripon (Julian Smith). Such areas should be included in such an issue.

How would the Government define a rural area, given the issues raised? Half of my constituency is extremely rural and half extremely urban. Throughout the Chamber, we have had discussion about where the border falls. The difficulties are real. First, why have the areas chosen for the pilot been selected? I could make a strong case for parts of Northern Ireland, where I served as a Minister, parts of mid-Wales, which I know very well, or parts of North Yorkshire.

[Andrew Bingham]

The right hon. Gentleman called for the rural derogation, which I am not against. However, that worries me, because I sort of agree with him. My constituency is rural, but includes two fairly sizeable towns, so where the lines are drawn would concern me. We could have that same problem of people shipping petrol across the lines.

[Mr Hanson]

The issues are real. Again, in response, can the Minister tell me why the pilot areas were chosen? What is the assessment of rolling out a rural derogation throughout the United Kingdom? What are the cost assessments for the pilot areas and, indeed, for the other areas bidding today? How do we change the current scheme of taxing oil when it leaves the refinery, rather than at point of sale?

[Roger Williams]

On people travelling to get cheaper fuel, the idea of a derogation is to equalise the price between areas, not that it is cheaper in rural areas than in urban areas.

[Mr Hanson]

As the hon. Gentleman knows, that still involves a cost. We have already seen great bids from a number of parts of the United Kingdom for the derogation to be applied.

Currently, tax on oil is levied on leaving the refinery, rather than at point of sale. The complex issues of a derogation involve not just fairness but also applicability and how to achieve the aims wanted on the ground. The Government must reconsider the real issues.

Finally, one of the big issues in the Chamber that has not been explored was touched on briefly by the hon. Member for Montgomeryshire: the role of the oil companies in the price of petrol. Shell will have made £1.6 million in profit during the hour and 10 minutes of today’s debate. Even after the cost of the Mexican gulf oil spill—£7.7 billion—British Petroleum made £1.8 billion in profit in the third quarter of 2010.

The Government have their responsibility for the price of petrol, but I am also interested to know what steps they are taking internationally about oil company profits—made, quite rightly, in part, from the cost of petrol. Are steps being taken to look at such levels of profit and at whether we can take action among Governments to make a difference? The issue has no easy solutions. We took action as a Government to reduce the price of fuel when it was under pressure. In the Budget, the Government have the opportunity to do the same with the proposed rise. I am interested in what the Minister has to say. The solutions proposed today are not all simple, applicable or desirable. We need to have cross-party consensus, and I appreciate that the Minister has a difficult job. She must now know what we knew in government: none of the issues are easy, without real pain to communities at large. I welcome hearing what she has to say.

10:47

[The Economic Secretary to the Treasury (Justine Greening)]

It is a pleasure to serve under your chairmanship, Mr Turner. I also thank my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) for securing today’s debate. We debated the subject on the Floor of the House recently, but I very much welcome another debate today, because she has clearly raised an important issue.

The cost of fuel is a difficult issue for many families and businesses throughout the country. As I said, the House had an extensive debate last week and, again, we have had helpful contributions from Members throughout the Chamber today. I share the disappointment of my hon. Friend that no Labour MPs other than the shadow Minister participated on an issue that clearly affects all our communities.

In fairness, when we face such difficult times, the impact of fuel duty and fuel prices become even more critical for families and businesses. The Conservative party had recognised that in opposition. We have always acknowledged the impact of oil prices—how they feed through into fuel prices at the pump—to be a real challenge. The Opposition, as we heard again from the shadow Minister, still do not recognise the problem to be in need of solution. We do.

As discussed today, we talked about a fair fuel stabiliser, which I reassure the Chamber we are looking at actively. We take it seriously, and we are looking at how we can develop that policy, among others.

[Miss McIntosh]

I know that the Minister will be pressed to go further, but she will probably not be able to today. One of the coalition Government’s best selling points in the run-up to the election was that we always referred to factors such as rurality and sparsity of population. That was in all areas of life, whether delivering the big society or speaking about the everyday roles of individuals and businesses in rural areas. Will the Minister confirm whether we will go back to that? Do we need a fuel duty regulator? Many of the concerns raised during the debate were about how the reduction in cost would transfer to the motorist if a stabiliser was brought in. I hope the Minister will address the huge and significant differential between the prices of diesel and petrol at the pump.

[Justine Greening]

My hon. Friend raises an interesting point, and this debate has been an excellent opportunity for hon. Members to set out the challenge that fuel prices pose for their communities and businesses. It is difficult—and it would not be right—for me to pre-empt the coming Budget, but my hon. Friend sets out some of the broader issues. This debate is not just about how the oil price feeds through to the price at the pump, but about recognising that rural areas face a particular challenge. I say to my hon. Friend the Member for High Peak (Andrew Bingham) that people in urban areas do understand the impact of fuel prices—they face them too—but we recognise that there are additional challenges for rural areas.

As we have heard, public money is short and the deficit we inherited is unprecedented in modern times. The previous Government had no answers or real ideas—we have heard no ideas today—to tackle the mess that they created. There was something ironic about the note from the outgoing Chief Secretary to the Treasury that said, “There’s no money left.” In many respects, it was even worse than that; we were left with a deficit and debts.

It is worth running through the many rises in fuel duty that we have seen. There was a rise of 2p per litre on 1 December 2008; a rise of 1.8p per litre on 1 April 2009; and a rise of 2p per litre on 1 September 2009. A rise of 1p above RPI was announced in the 2009 Budget. That was phased in from April last year, with a second rise of 1p per litre in October. A range of future increases was announced in the 2009 Budget, one of which has particularly concerned hon. Members in this debate. In spite of all those rises, we picked up an enormous deficit and, according to the outgoing Government, there was no money left. That shows what an absolute mess they handed over which, as has been pointed out, places constraints on what we are able to do. However, we know that we must tackle that mess, and tackle it we will.

We have had to take difficult decisions. Nevertheless, in the midst of that we have taken steps to increase the personal allowance, which will rise by £1,000 from April this year. That will help families on the lowest incomes, and 880,000 taxpayers will be taken out of paying income tax altogether. Parents will be able to take advantage of increases in child tax credits, and pensioners will receive above-indexation increases in the state pension. We have managed to do something that the previous Government did not do in 13 years—re-establish the link between the state pension and earnings. Corporation tax for businesses is being cut from 28% to 24% over the next four years.

[Dr McCrea]

The Minister must acknowledge that those measures apply across the board and to those in urban areas as well as rural areas. Rural areas are being penalised because of the price of petrol, and we need something to deal with that issue.

[Justine Greening]

That is why I am about to talk about the fair fuel stabiliser and the rural fuel rebate pilot. We have tried our best to tackle the deficit, but the way to do that is to encourage growth, help business get back on its feet and take away tax rises and the jobs tax—it would have been catastrophic if employment had cost companies more. We managed to get rid of the worst effects of that, but there is a particular issue with fuel.

In opposition, we talked about a fair fuel stabiliser because we recognised the problem posed by oil prices in feeding through to the price at the pump. When we came into power, one of the first things we did was to ask the Office for Budget Responsibility to look specifically at how the price of oil affects our economy. It said that although there may be some tax receipt growth, higher energy and fuel prices do not help the economy—a point reiterated by many hon. Members. It pointed out that a rise in the oil price has a range of other effects on the economy and does not feed through into extra tax receipts in a straightforward way. People spend less money, goods become more expensive, and certain benefits increase as a result of a rise in oil price. Therefore, it is a difficult issue.

I reassure hon. Members that we are looking at a fair fuel stabiliser and at other measures to tackle the problem of fuel prices. There are a range of options, but we must ensure that whatever we do is fair and affordable. Tax is a matter for my right hon. Friend the Chancellor, and I would not be so presumptuous as to pre-empt him. He will update the House during the Budget, which is only a few weeks away.

The rural fuel duty rebate was mentioned. It is clear that changes to the fuel price have a particular effect on those who live in rural areas and, as we have heard, have a greater reliance on petrol and diesel and face significantly higher prices. That problem is exacerbated by the lack of alternative transport, and realistically for many people the car is the main way of getting around.

My hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) spoke about why the definition of rurality is so important. Interestingly, the EU does not have exact criteria to define rurality, but it will look at the rebate in terms of state aid, and take into account a range of factors such as the cost of transporting fuel, average fuel prices, public transport and access to petrol stations. It is able to look at the issue in a flexible way, which is helpful.

When we came into government, we announced our intention to introduce a rural fuel duty pilot. The pilot will deliver a duty discount of up to 5p per litre on all petrol and diesel, which will save some drivers in rural areas more than £500 a year. We are still looking at the exact scope of the scheme; today’s debate has shown that many hon. Members have particular concerns for their communities and the rurality faced by those communities. It is not as easy as one might hope to define what is rural and where a rural fuel duty might apply, but the pilot aims to get on with that process and work through those challenges. We want the scheme to go ahead in the Inner and Outer Hebrides, the Northern Isles and the Isles of Scilly, but we have not yet finished the exact definition of the scheme. Before it goes ahead, the scheme must get clearance from the European Union. Those discussions are ongoing and are currently at an informal level as that is the best way to proceed to ensure that the pilot scheme is approved. We will update the House further at the time of the Budget.

To conclude, the dramatic increase in world oil prices and the previous Government’s increases in fuel duty have pushed up prices at the pump. We understand the concerns of families and businesses across the country, and we are taking every action possible to help those most in need. At the same time, we must act responsibly and ensure that we tackle our record national debt. That is not easy; it is a difficult balance to strike and we are considering all options in the run-up to this year’s Budget.

Housing (London)

Tuesday 15th February 2011 Westminster Hall

11:00

[Jeremy Corbyn (Islington North) (Lab)]

I am very pleased that we have secured this debate on housing needs in London. There is a feeling of déjà vu about it, although the cast is smaller than usual for debates on housing in London. We have had many such debates and discussions and I suspect there will be many more, because the biggest single issue facing constituents of London MPs is housing problems, which affect just about everyone in every sector. I remain acutely disappointed by the Government’s policies in this respect and the response they have offered so far to the deepening crisis that people in London face.

Homelessness has returned to the streets of London and is increasing fast, as anyone walking around London late at night will quickly observe. I am talking about the numbers of desperate and destitute people sleeping in shop doorways, hanging round outside tube stations and sleeping over central heating exhaust vents. Indeed, the Evening Standard reported that a number of people had been found sleeping in rubbish chutes in west London. That is not a good advertisement for what is a very large, multicultural and diverse city in the 21st century—a city that sees itself as a world-class leader.

Other issues, which I shall go through in my remarks, include the costs of housing for people living in the private rented sector, the enormous shortage of council housing, and what I believe is something of a democratic deficit in the administration and development of housing associations.

Later today, a housing lobby will take place outside the House and probably also in Committee Rooms here. Many people who are council tenants and others will be making the very strong point that the desperate housing shortage in London and the rest of the country must be dealt with, that the market alone cannot solve the problem and, indeed, that the Government strategies, far from solving the problem, are making it considerably worse.

I shall say more about this later, but within the mix of housing in London, the difference with the rest of the country is that the national average for home ownership is about 70% and declining, whereas in London it is declining much faster and, in constituencies such as mine, the proportion of people living in and owning their own home hovers at about the 30% mark and falling. For my constituency and for most of central London, as my hon. Friend the Member for Hammersmith (Mr Slaughter) will testify—similar figures will apply in his constituency—the difference is the very large numbers of people living in private rented accommodation.

Let me first deal with the issues relating to home ownership in London. For the majority of people on anything approaching an average income, the idea of owning one’s own property in London is a pipe dream. They may have a chance of purchasing on a part-rent, part-buy basis—a shared-ownership scheme. However, in central London constituencies such as mine, people would need to have an income well above the national average—indeed, we are talking about an income of £40,000 or more—to get anywhere near meeting the mortgage requirements, if they can get a mortgage and if they can raise the deposit required. For the majority of people in London, unless they have a degree of inherited wealth from their parents or someone else, or access to the very large deposits required by banks and building societies, home ownership is an impossible dream.

Many people have opted to buy into leaseholds or shared ownership with housing associations, and there are deep concerns about the service charges imposed by housing associations and other holders of freeholds who sell on leases in their properties. There is a need for even greater transparency on capital works undertaken to improve those properties. Those of us who represent constituencies where there are a considerable number of leaseholders who have bought in on the right to buy, or bought from people who bought their flat under the right to buy from the local authority, know that there are constant disputes about the costs of capital works and the repayments required. Indeed, they leave some people in a penurious state.

I suspect that many people, when they buy into leasehold properties, are completely unaware of the implications of lease ownership in relation to capital works and vastly and rapidly increasing service charges. I look to the Government to be prepared to be much more transparent and much tougher on regulation in this respect. It is an area of inquiry that the Select Committee on Communities and Local Government ought to be looking into.

The Government’s normal refrain in any debate on anything is that everything that is a problem in our society is the fault of the previous Government. I want to place on the record a couple of points about the previous Government’s record. First, I strongly praise them for the work they did on the decent homes standard, and for the huge and very necessary investment that was made to deal with the repair backlog in council and housing association accommodation. It is a joy to see estates that have been transformed with new kitchens, new bathrooms, new roofs, new windows, new entrance areas and common parts, improvements in the community facilities and improvements in community centres. That creates a sense of pride and well-being in a community that it is hard for anyone to appreciate who has not been through the misery of living on badly run council estates with run-down common areas and high levels of vandalism. I am talking about the sense of pride that comes from the improvements and the reductions in vandalism and antisocial behaviour that result from them. By and large, the decent homes standard work that has been done has been a very good experience. I regret the way in which the so-called choice was put to tenants—that they had to go either to an arm’s length management organisation or for a stock transfer in order to receive central Government money for that. Fortunately, those policies were eventually changed so that all tenants, irrespective of the quality of management or otherwise of their local authority, could receive the central Government money that is so necessary and valuable.

However, as the Minister will know from a recent debate on this subject, a number of local authorities in London did not do very well or did not get any decent homes standard money. They and their tenants desperately need those improvements. I am thinking particularly of Camden and Lewisham, but I suspect they are not the only examples of authorities that need that special attention to achieve improvements in their properties.

The other great step forward that the previous Government made was on homelessness and the rough sleepers initiative, increasing the number of hostel places and encouraging the various charities that run hostels, or local authorities, to provide, as a priority, transfers from those into long-term, permanent, affordable accommodation. That was an important step forward, as was giving priority to people who have come out of prison—long-term offenders who need to be rehabilitated into society. Forcing them into homelessness and poverty is not a way of rehabilitating them and is no good for society as a whole. I am constantly and increasingly shocked by the number of homeless people one meets who are either ex-service people—usually ex-servicemen—or ex-prisoners and convicts. It does not do our society any good to ignore those people and force them into homelessness.

I realise that the Government’s general strategy on housing allocation policies is to leave the issue to local government and to walk away from it entirely, but I ask Ministers and local authorities to think carefully about those policies. We have rightly emphasised the needs of families with children, the vulnerable, those who suffer illnesses, including mental illness, and vulnerable elderly people. Obviously, they are all a priority, but we seem completely to ignore the needs of youngish single people when it comes to providing reasonable, publicly accessible local authority or housing association properties.

It is depressing to have such young people come to see me in my advice bureau, and I am sure other colleagues have had the same experience. The person in front of us will usually be a young man, who will often be in a reasonable job. They will be earning £18,000 or £20,000 a year, but they simply cannot get anywhere to live, because they cannot afford the deposit on a private rented place. In any event, the rent would be very high—possibly £250 or more a week. These people cannot access local authority housing because they are not deemed to be in priority need. One therefore comes across people—I am sure colleagues can bear this out—who hold reasonable jobs but who have no permanent home. They are sofa-surfing or, in some cases, even sleeping in cars, which is tragic. When we look at housing allocation, we need to address the needs of not only families and others, but single people.

[Zac Goldsmith (Richmond Park) (Con)]

I accept that the onus cannot be entirely on local authorities, and that point is well made. However, there is a lot that the local authority can do to place empty homes back on the market. My constituency covers Richmond and Kingston, and there are up to 2,000 empty homes in each of those boroughs. By that, I do not mean homes that have been waiting to be refurbished or homes that cannot be sold, but empty homes by any standard. If, for starters, we multiply the 4,000 homes in those two boroughs by the number of boroughs across London, we have an enormous number of empty homes that could be brought back on to the market and used. Does the hon. Gentleman think that the Government could do more to empower local authorities to get such homes back on the market?

[Jeremy Corbyn]

The hon. Gentleman makes a fair point. Local authorities have powers in this respect, if they care to use them, and some authorities do. Indeed, the local authority in my area is extremely proactive in pursuing empty properties and trying to bring them into rented use or have them taken over by a housing association or somebody else. Typically, these are places such as flats above shops. The hon. Gentleman is absolutely right: there is something criminally wrong about large numbers of good-quality homes being deliberately kept empty across London. Some owners see them as long-term, reserve places that they might live in at some distant point in the future. Some see them as an investment and will wait for property prices to go up. In a society where there is so much homelessness and housing stress, it is simply immoral for places to be kept deliberately empty. I would therefore support effective measures to bring those homes back into use by people who are in desperate housing need.

Where the previous Government did act rather belatedly was on the construction of housing association and council properties. There was an increase in housing association build, most of which came about under section 106 of the Town and Country Planning Act 1990 and planning agreements on particular local sites. However, there was not enough intervention, and the previous Government were not proactive enough. Only rather belatedly did we start building council housing. I am pleased to say that my local authority is now building council housing again. That started during the latter period of the previous Government, when the then Liberal-controlled council brought the programme into being. That programme has continued and is being expanded under the current Labour-run administration in Islington. However, the authority lacks the capital that it requires from the Homes and Communities Agency. When the Minister replies, therefore, I hope he will understand that housing and building costs are high in London, that housing need is desperate and that the only long-term, efficient way out of the housing crisis is to construct council housing at fixed rents and with permanent tenure, which gives people a sense of security, a decent home and an environment in which to grow up.

Before I come to housing benefit, let me say one thing. If we go to any primary school, secondary school, police station or social worker in London and ask what the biggest problem is that we face, we will be told that it is related to housing in one way or another. Young people are growing up in small, overcrowded flats, with two or three siblings sharing a bedroom. That is no way to grow up. Young people in those circumstances cannot bring friends home and they cannot do their homework. There are fights over the television, there are fights over when the lights should be switched on and off—there are fights the whole time simply about space. Anyone who goes into a flat where three teenagers are sharing a room will see the arguments that go on and the stress that is caused to the whole family. What happens as a result? The teenagers do not stay home of an evening; they go out. They do not have a lot of money, so they get into bad company when they go out, and problems result from that. These teenagers underachieve in school. Illness runs rife throughout the whole family. The family breaks up. There is a huge cost to us all in terms of wasted lives, underachieving children, broken families, divorce and everything else. We must recognise that unless we provide all our young people with decent, secure, clean, dry and properly repaired accommodation, it is very unlikely that they will achieve their full potential in school, college or university. We are wasting a whole generation as a result of our failure to address the housing crisis in London.

Local authorities have great difficulty fulfilling their statutory housing obligations to house homeless families or those in desperate need. They do not have enough council or housing association allocations to do that. Incidentally, there is a whole science around allocation, with people looking at the choice of bidding or desperately looking on internet sites and reading newspapers to find out how many points they need to get which flat, how many steps are involved and all the other details, which are so important. However, most of those people, most of the time, will be desperately disappointed because they will fail even to be selected to look at a place, never mind to be shortlisted for possible allocation. For thousands and thousands of people, it is like losing a lottery every week, but the consequences are desperate. We therefore need to address the issue.

Local authorities often place families in private rented accommodation. I do not blame them for that; they have no choice. A whole industry has therefore grown up around the housing shortage, with letting agencies and private landlords charging as much as they can get away with. The housing benefit system will usually pay the rent. Although it varies slightly from borough to borough, the rent for a typical two-bedroom local authority flat in central London is of the order of £100 a week. A two-bedroom flat in poor condition in the private sector costs at least £250 a week, and £300 is quite common. For a house, we are looking at £500 or £600 a week. The difference is paid through housing benefit, so we are all paying the exorbitant profits made by letting agencies and private landlords; they are the people who are living off the housing benefit system.

When the Government say, as the previous Government did, that they have to address the problem of the cost of housing benefit, particularly in London, I absolutely agree, because pouring money into the private sector in this way simply is not a good use of public funds.

[Mr Andy Slaughter (Hammersmith) (Lab)]

A two-bedroom flat in the private sector in my constituency would actually be about £350 a week, so it is even more perplexing that the Government insist that the rent in new social lettings will be 80% of market rent. That means that the rent payable by new tenants will be three to three and a half times what it would be in existing social tenancies. That, of course, will have to be covered by housing benefit in many cases.

[Jeremy Corbyn]

My hon. Friend makes a good point and is extremely experienced in dealing with those issues, both as an MP and as the former leader of Hammersmith and Fulham council, where he did a great deal to try to improve the quality and quantity of the housing stock.

We all do advice surgeries and hear sad and difficult cases. I was talking last week to a lady in my constituency who has discovered that her private sector rent has gone up from £315 a week to £475 a week. I do not blame the local authority, because the housing benefit that she is paid is fixed by the Government through the local housing allowance. My constituent is not in work and receives benefits, and she has been told that she must contribute £145 a week to make up the shortfall between what the local housing allowance will pay and the rent that is expected or demanded from the landlord. She is expected to pay more than the rent that she would pay if she lived in equivalent council accommodation. It is clearly impossible for her to find £145 a week, which is more than her benefits. She would have nothing to eat and nothing for the children, so the only solution is to move away.

What effect will moving away from the area have on my constituent, her family and all the rest of us? She will lose her place and will have to try to find, if she can, a two or three-bedroom flat, probably in the far suburbs of London or outside London. She will lose her family network; her children’s education will be disrupted; she will not have access to the doctors, hospital or community network and support that she is used to; her whole life will be completely uprooted. Wherever she goes, she will have no security of tenure. She will have six months, or perhaps a year if she is lucky, before the landlord decides to allow her to stay or increases the rent because it is possible to get more in the private sector, in which case she will have to up sticks and move on again. Imagine how that feels for the children—the insecurity, changing schools, mum and dad moving the whole time and nowhere permanent to stay or build up a network of friends. It is that sense of insecurity that is so bad for the children of many families living in London.

The Government have decided to address excessive housing benefit costs, and I agree with them. There are two ways of doing it. One is to let the market sort things out, and the other is to bring in some form of regulation, so that there is permanency of tenure and greater security, and so that we spend less money. Unsurprisingly the Government have decided to go for the market option, so they have set local housing allowance limits. I have some figures from James Murray, who is the executive member for housing in Islington and does an extremely good job in difficult circumstances. Bizarrely, Islington falls into four broad rental market areas—inner-east London, central London, outer-north London and inner-north London. The figures for a two-bedroom flat vary. In inner-east London, the figure is £300 a week; in central London, it is £500 a week; in outer-north London, it is £230 a week; and in inner-north London, it is £329 a week.

James Murray also makes the point that in the past 10 years

“demand for private rented accommodation in the borough has gone up by about 20%”.

My observation is that it continues to rise very quickly.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I apologise that, for several reasons, I cannot be here for the whole debate. The hon. Gentleman knows that I always want to be involved in these issues.

When I asked the Secretary of State to consider re-examining the broad market rental area boundaries, I received a positive and encouraging response in the House. I hope that the hon. Gentleman will join me and London Conservative Members in trying to win that argument, so that when people are considered for alternative accommodation in the private sector—if they have to go there—it should be within the local authority boundaries where they start, unless they choose otherwise. Their links—their schools and usually their families—are in those places, and it seems that that would be a sensible and good social policy. I hope that we all agree that that would be progress, if we can bring it about.

[Jeremy Corbyn]

Absolutely, because the less distance people must move, the better. That change would ameliorate the policies, and I, and I am sure other colleagues, would be more than happy to support it. We want to minimise disruption.

I do not want to say too much more, because other hon. Members want to speak. I want to conclude with some points about overcrowding in Islington, which is a small borough in comparison with many others. There are 3,096 families living in overcrowded homes, and of those 355 are in severe overcrowding, which means that they lack two or more bedrooms relative to their need. Clearly, there is a need to build council properties. The council is a major provider of housing in Islington, and in its budget, which is due to be debated this Thursday, 17 February, it has managed to present a significant increase in money to go into council house building:

“Despite the difficult times, we have been able to raise the investment in new build housing from £1.6 million”—

planned under the previous council administration—

“to a new total of £10.1 million for 2011/12. This will go towards work on-site this year for 86 new council homes, with plans in progress to continue and increase this programme.”

I applaud what Islington is trying to do, which is to meet housing needs. Where is central Government’s contribution to meeting those needs? The Government tell local authorities that the only way in which they can build new council properties is by raising council rents to 80% of market rents. That means that for many people it will be impossible, in work, to pay a council rent. We are presented with a vista where people will not be able to accept a council nomination, because they will not be able to afford the rent, which will be too expensive. They will have to go somewhere else and try to find somewhere small and overcrowded, where they can at least afford to stay. That is a monstrous way to fund new building—to say that those in great housing need must pay for people in even greater housing need to be provided with somewhere to live. Why can we not have what we have always had, namely central Government allocation of money through the Public Works Loan Board or any other appropriate arrangement, so that we build our way out of the crisis? I hope that the Minister at least understands that point.

I want to add some brief thoughts. We have experienced the sadness of homelessness and witnessed the health problems and disasters that come from it. London is a strong, thriving and vibrant city in many ways, but if it is left to the free market to deal with the issues that it faces, it will begin to take on some of the worst aspects of cities in the United States: the poor will be driven out, because of the housing benefit system, and the private rented market will take over entirely, bringing all the insecurities that go with that. Young people who move to London, who are in work and who manage to get into the private sector pay a vast proportion of their income on housing costs—probably the highest level across Europe. I have talked to people, some of whom work in this building and are on reasonable salaries for their age, who pay 50% to 60% of their take-home pay in private rent for a shared flat or house, which is a huge burden. There is no possibility that they will ever save enough money to buy a place. We must recognise that without public intervention and investment, the housing crisis in London will get worse and worse.

I have four brief points to make to the Government. First, they should look at the way the benefit changes are operating, and in particular at their perverse effects on families living in inner London. Secondly, they should bring about some degree of security and regulation in the private sector, to avoid the continual merry-go-round of people having to leave private rented flats after six months or a year, and to create some long-term security and certainty. Thirdly, they should build council housing, providing local authorities with the wherewithal to do so. The virtuous circle of taking building workers out of unemployment and putting them into work to provide housing for those who need it is a major and a beneficial form of income regeneration. Finally, the Government should speak to the banks about the difficulty that so many people have in getting mortgages because of the large deposits that are required.

If the Government and local authorities were to consider such intervention, we would all benefit. The benefits would be better health, fewer family break-ups, better educational achievement and a happier and more cohesive society. I hope that the Government understand that many building companies fear that they will go under because of cuts in house building. In its latest residential crane survey, Drivers Jonas Deloitte said that of the 28,150 homes under construction at 169 sites in London, 44% are allocated for affordable housing. Under current policies, that number will go down, and those companies and those jobs will be in trouble. Meet the social needs and solve the economic problems—the two things go together.

11:31

[Mr Andy Slaughter (Hammersmith) (Lab)]

It is difficult, at a time when attacks are being made on the national health service and on state education at every level—from Sure Start to tuition fees—and when we are having to deal with the big society cuts to the voluntary and advice sectors, for housing to be given sufficient attention for us to see exactly what is happening as a result of Government policy; but what is happening in housing is as disastrous in its own way as it is in those other areas. I am therefore grateful to my hon. Friend the Member for Islington North (Jeremy Corbyn) for securing this morning’s debate, as it gives us an opportunity to talk at greater length than usual in Westminster Hall about the Government’s housing policy and its effect on London.

I shall not repeat what my hon. Friend said; he has many more years’ experience as a constituency MP and in dealing with housing problems in London than I do, but I adopt entirely the arguments he put forward, in particular regarding the pernicious effects he spoke of—the bad, insecure, inadequate and overcrowded housing that all London MPs must see every week in their surgeries. Those effects go far beyond housing conditions; they cover health, education and quality of life. It is a national scandal that they have been allowed to develop over far too many years.

I shall deal briefly with four aspects of housing. The first is the private rented sector; the second is the effect of housing benefit changes; the third is the Government’s policy on social rented housing; and the last is planning policy. One of the early decisions taken by the coalition Government was to abandon the previous Government’s proposals that resulted from the Rugg review—a national register of landlords, regulation of letting and management agents, and compulsory written tenancy agreements. When the Government made that announcement, the Association of Residential Letting Agents said that it was extremely disappointed. It said:

“This move risks seriously hampering the improvement of standards in the private rented sector, the sector's reputation, and the fundamental role it plays in the wider housing market as well as failing to protect the consumer who has nowhere to go when there is service failure or fraud”.

That is the view of the industry. My view, as a constituency MP, is that we are seeing a return to Rachmanism in parts of London, with appalling conditions of social rented housing. Perhaps the difference this time is that local authorities are colluding with bad private landlords, with things such as direct letting schemes and, now, the ability to discharge their obligation to the private sector permanently rather than temporarily.

I hear what was said by the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). He is no longer in his place; he tends to pop in and out of these debates. I hope that Members on both sides will try to mitigate the effects of the housing benefit changes that his Government are introducing. It would be better if the Government were to withdraw and review those changes than to give a sop to those who, in their thousands, will be forced to move out of their homes from April onwards. I do not know how we are going to find adequate replacement housing for those hundreds of families in areas with property prices at the levels of Islington and Hammersmith—unless it is in more overcrowded, less salubrious streets and flats. There are few of those, however, because gentrification in inner London has meant that there really are no places where cheap property is available to rent.

It is social engineering. It is gerrymandering. It will force out poorer families who have made their homes in wealthier areas, perhaps over generations; gentrification has crept up on them, and they are now being told that they are not welcome in those areas but must move further out. I hear what the right hon. Gentleman had to say, but they are crocodile tears and warm words from the Liberal Democrats.

[Tom Brake (Carshalton and Wallington) (LD)]

On the subject of crocodile tears, does the hon. Gentleman acknowledge that it was his party’s policy to consider the level of housing benefit? I presume that that review was intended not to increase housing benefit but to decrease it.

[Mr Slaughter]

I have heard the hon. Gentleman many times try to cling to the Labour party as a way of excluding his lamentable failure in supporting a Government who are systemically attacking poorer constituents.

[Tom Brake]

Is it true?

[Mr Slaughter]

The hon. Gentleman must have some poorer constituents, even in Carshalton and Wallington, but perhaps not as many as I do. It would be better if he kept quiet in these debates rather than making such inane points.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

Will the hon. Gentleman answer my hon. Friend’s question?

[Mr Slaughter]

I see the coalition in action.

[Tom Brake]

He’s not going to answer.

[Mr Andrew Turner (in the Chair)]

Order.

[Mr Slaughter]

I can tell the hon. Gentleman that, of course, budgets and housing benefit would have been reviewed, but he is wrong to think that a Labour Government would have been party to the mass eviction of hundreds of families from areas in which their children attend school and they have low-paid jobs. We are talking not about indolent people but those doing low-paid essential jobs in inner London. Before the hon. Gentleman gets on his high horse, he should think about the consequences of his Government’s policy.

Far more fundamental in the long term will be the review of social housing policy. I almost admire the speed at which the Government have moved to ring the death knell of social housing. There has been consensus on that policy certainly since the second world war, and in the charitable sector since the beginning of the last century. That, however, is not good enough for this Tory-led Government.

There are four principal changes. The first is the introduction that I alluded to earlier of near-market rents for new lettings. In London, they will effectively be unaffordable, even to those on average incomes. Rent for two and three-bedroom flats in Hammersmith will rise by three or three and a half times. The second is the two-year tenancy. The speed of their introduction is amazing. I printed a leaflet to warn tenants that the Government might be introducing five-year tenancies, but before I was able to deliver it they had introduced two-year tenancies. The third element is the almost complete collapse of capital funding for the social sector.

As I mentioned earlier, there is the end of the requirement to provide permanent housing in the long term, with the private sector being used to discharge housing need obligations. If, God forbid, the Government were elected for another term, within 10 years there would not be a recognisable social rented sector left in this country. The proud tradition of providing affordable good-quality homes for people on low and average incomes will be gone, and a fundamental part of the welfare state and the post-war settlement will be gone with it.

Finally, let me turn to planning policy, which is a slightly trickier area to consider. I accept what Government Members say about the previous Government’s record in this regard. Over the past 40 years, our record on building sufficient numbers of high-quality affordable homes in this country has not been good. It is almost as if we lost the will to build such homes in the 1970s. In my constituency, we have good examples of the estates and properties that were built in the 20th century: the “homes for heroes” in the 1920s, the “garden” estates in the 1930s and the good quality brick-built council estates of the 1940s and 1950s. We even have some 1960s properties, which, although they have gained a bad reputation, are generally solidly built to Parker Morris standards. They are popular with people who live in them, even if they have not been maintained properly over the years.

The consensus on the will to build good quality council and housing association properties in sufficient quantities has gone. Individual local authorities—including, I hope, my own when it was under Labour control—did their bit and had to be resourceful in doing so. For example, there were the infill developments. We saw building on existing estates, public land being given to people who were prepared to build affordable housing, and building on top of supermarkets. We managed to build about 3,000 good, affordable units over a period of years, but it was a struggle. I do not pretend that it is easy to build social rented houses in areas of high land prices. Nevertheless, as my hon. Friend the Member for Islington North said, for many people—even those on average and above average income—social rented housing is the only type of affordable housing. The definitions of affordability in London have been stretched to ridiculous lengths. The Mayor and some councils say that an income of £70,000 to £80,000 qualifies under the affordable definition, because the types of discounts available on properties for sale or for rent in new developments demand such an income. I am sorry, but I do not accept that people who earn £80,000 a year are in housing need—even in London—which is the perverse definition of my own council.

The problem of planning development is slightly more complicated. At the moment—and the debate is opportune for this reason—London councils are going through their process of approving local development frameworks, which replace the unitary development plans. In preparing for this debate, I looked at my own borough’s LDF, which may or may not be typical, and it appears to give good news. It seems to say that it will build 13,000 houses over the next 20 years, with a maximum of 20,000 allowable. However, when I examined those figures I found that what is actually planned goes well beyond them.

Perhaps the biggest new development under planning consultation in London is the Earl’s Court and West Kensington Opportunity Area, which the LDF says could provide about 2,000 new homes, at least in Hammersmith, over the next 20 years. The developer says it will provide 8,000 homes over the next five to 10 years. The Hammersmith town centre development, which is somewhat misnamed because it includes areas way outside the town centre, including the historic riverside—the hon. Member for Richmond Park (Zac Goldsmith) may be interested in this because he has written about it—is not one development but a string of developments along the riverside. The traditional low-rise buildings of this historic area are being converted into hideous tower blocks of luxury one and two-bedroom apartments. We have seen such developments springing up along many parts of the river on the south side of the Thames. The apartments are built principally for people coming from abroad or for those who wish to have a London pied-à-terre in addition to accommodation elsewhere. We are talking about buildings that are not just at the top of the market, but above it. The LDF for Hammersmith says that over 20 years, up to 1,000 new homes will be built in this area. Some 1,300 homes are currently being built or are under planning consideration for this area, so that target appears to have been exceeded already.

What we are seeing in planning terms, certainly in central London and in my part of London, is a development grab. Those parts of land that might be available for affordable and sustainable development in the future are being cannibalised for luxury high-rise blocks. Some of the blocks on the riverside are up to 15 storeys, and some in the west Kensington area are up to 30 storeys or more. That is a massive increase in residential units, but they are exactly the wrong type of residential units for the local population and will not meet housing need in London. That is a scandal and a misuse of planning powers. Of my local authority, the developer of the Hammersmith riverside says:

“Now the council says it is ‘open for business’, and I think they are—that’s why the development community has embraced the new administration”.

You bet they have. Helical Bar, the developer of the Hammersmith riverside development, has a dispensation to have no affordable housing in it whatever; in fact, there will be a net loss of affordable housing because trust properties for visually impaired people will be demolished to make way for the skyscrapers.

Mr Slade, the founder of Helical Bar, gave £20,000 to the Mayor in the run-up to his election campaign. He made this very prescient comment:

“You do run the thin line of someone saying: I am doing this to have access and influence, but that was what politics was always about. It is a little unfair, but there must be 20 per cent truth in it.”

Helical Bar wants to build high-rise flats in outer London. It now has that consent on the way despite the opposition not just of the hon. Member for Richmond Park, but of almost all my constituents, who do not want to see the destruction of their living environment and of the things they hold dear. They want to see not luxury high-rise flats, but affordable homes for themselves and their children.

[Zac Goldsmith]

I absolutely share the hon. Gentleman’s concerns about the nature of this development. As he knows, I have spoken on the record about it and submitted a number of objections. However, is it not true that the decision comes from the local authority and is not one over which the Mayor has any influence at all?

[Mr Slaughter]

The developments I am talking about are of sufficient size and scale to require the Mayor’s approval, or the Greater London authority’s dispensation regarding factors such as their height and their not containing affordable housing. In addition to the town hall development to which the hon. Gentleman refers, there are other developments along the river. St George has just decided it wants to build 750 similar properties with no affordable housing in them just south of Hammersmith Broadway, and has its eye on redeveloping a council estate, which the council may wish to demolish, for luxury housing. We are not talking about not enough being done to promote affordable housing in London, or about neglect or negligence. We are talking about a concerted policy to socially engineer areas by demolition, and the removal of social housing units in London and their replacement with luxury, small high-rise developments. The ability to build in London for London’s population will not exist again for another generation. That is the real damage being done by this Tory-led Government and their creatures in town halls around London. I am afraid that that is the depressing message.

I entirely endorse what my hon. Friend the Member for Islington North said. I fear that the news, when one looks at the situation on the ground, is actually worse than inaction: it is the deliberate destruction of the consensus on housing policy that has sustained this country for many decades.

11:50

[Tom Brake (Carshalton and Wallington) (LD)]

Thank you for calling me to speak in this debate, Mr Turner. I apologise for missing the opening remarks of the hon. Member for Islington North (Jeremy Corbyn).

[Jeremy Corbyn]

You have heard them before.

[Tom Brake]

Indeed, my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) said that I had perhaps heard some of the hon. Gentleman’s comments before. I was in a meeting with the Peabody Trust and some of its residents to discuss housing, which is why I was late for the debate. I know that the hon. Gentleman has been a passionate and consistent defender of housing under successive Governments, whatever their political colour. Therefore, he is right to say that I have heard him make those comments before in the 13 years since my election to this House. Nevertheless, the fact that I have heard them many times before does not mean that they do not have great merit, and I suspect that I would not differ much from his analysis of the problem in London, albeit that we might have some differences of opinion about possible solutions.

I take a different view about the comments made by the hon. Member for Hammersmith (Mr Slaughter), whose proposals seem to exist in a vacuum. His proposals neither take into account the financial environment in which we are operating nor acknowledge that his own Government planned to examine the level of housing benefit being paid to people in London and other parts of the country. I asked him a question about that issue, but he carefully evaded answering it. He failed to acknowledge that issue, when it would have been the decent thing for him to have done.

That brings me to decent homes. The Minister will know that Sutton Housing Partnership, the arm’s length management organisation in my area, has submitted a new bid for decent homes funding. It is a scaled-back bid compared with the bid that was originally proposed. The partnership had secured a limited amount of funding in the first year of the programme from the previous Government, and I hope that, under the new bidding arrangements, it will succeed in securing substantial funding during the lifetime of the programme that it needs to implement to ensure that social housing in the London borough of Sutton benefits from that funding, as it should do. In many respects, social housing in Sutton has not benefited from the substantial programmes that local authorities in other areas have implemented to repair windows, bathrooms, kitchens and the like.

Many parts of my constituency would have benefited from those repair programmes. For example, the St Helier estate was built in the 1930s. It stretches into Mitcham and Morden and into Sutton and Cheam. It requires investment: it would be unfair to say that many of the properties on the estate have not been touched since the 1930s, but many improvements need to be made. I hope that the Minister will be able to say a little about the progress of the programme to improve that estate.

My second point is about the meeting that I have just had with the Peabody Trust and some of its residents on the St Helier estate. What those residents are trying to achieve is very much in keeping with what the Government are trying to do in relation to the big society. In other words, those residents want to take responsibility for the management of their estate. However, the difficulty arises because that estate has a mixture of tenants, shared ownership, residents and leaseholders. Therefore the structure of tenure is very complex, and I acknowledge that.

[Mr Philip Hollobone in the Chair]

I am pleased that we have someone from the Department for Communities and Local Government attached to that programme, who is working with the residents of the estate, because Sutton is one of the vanguard boroughs when it comes to the big society. That person will try to find ways to work through those problems with the support of the Peabody Trust, which is also keen to address them. The residents feel that they will be able greatly to reduce the costs associated with the maintenance of that development—the Beddington Zero Energy Development or BedZED, which many hon. Members will be familiar with—if they are able to achieve some type of voluntary arrangement to manage those properties. As I understand it, a voluntary arrangement is required to work within the complicated tenure structure that exists on the estate.

Another issue that I hope the Minister will respond to is that, as I understand it, housing associations in the UK abide by European regulations when they advertise for contracts in a way that housing associations in other European countries do not. That means that housing associations in the UK face an additional financial burden as a result of following the appropriate EU process for advertising, which housing associations in other EU countries do not have to follow. If it were possible to remove that burden from housing associations in the UK, it would clearly reduce the costs involved from the point of view of tenants, the Government, shared owners and leaseholders. I hope that the Minister is examining that issue.

I know that the Minister cannot take any action on the final issue that I want to discuss, but he might want to comment on it. It is the issue of planning applications, and specifically the speed with which they are processed. From both a job creation point of view and the point of view of providing housing, particularly if that involves converting or extending properties, the quicker that planning applications are processed, the sooner the builders can get on with the work. I have had representations about that issue myself. I had one on Saturday from a local builder, who is waiting for the completion of four planning applications. He said that, apart from holding him and his staff back from doing their jobs, it is having an impact on the people who will occupy those properties or conversions, once they are completed. Those are the specific issues that I want the Minister to respond to.

I conclude by saying that although I did not hear—regrettably—the comments of the hon. Member for Islington North when he opened the debate, I am sure that he made some salient and pertinent points about the importance of trying to address the substantial housing deficit in London and about the potential consequences of the changes to housing benefit, of which I know that hon. Members from all parts of the House are aware. I hope that the Minister can reassure us on those points this morning.

11:57

[Chris Williamson (Derby North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone, as it was to serve under Mr Turner’s chairmanship before he left Westminster Hall.

I start by congratulating my hon. Friend the Member for Islington North (Jeremy Corbyn) on securing this debate and on making an extremely powerful and cogent speech. He made a number of pertinent points. In the first part of his speech, he referred to the record of the previous Labour Government, including the decent homes investment, which made a big difference to many households in the capital, and the rough sleepers initiative, which did so much to address the problem of homelessness in London. He also mentioned the new build programme. Towards the end of the previous Labour Government, that programme had also started to make an impact on the housing crisis in London. It is regrettable that the policies that are now being pursued by the Conservative-led Government are going in the opposite direction to those Labour policies.

Pertinently, my hon. Friend identified the fact that homelessness is now increasing again in the capital. The scourge of homelessness is an issue that should unite parties across the House, so that we can take the necessary measures to reduce the growing number of people who are forced to live on the streets, which is a stain on our national character. If homelessness in London has increased at the end of this Government’s tenure in office, that will be a very poor statement about their record on tackling this issue.

As my hon. Friend mentioned, it is also clear that the number of people who are forced to sleep on a friend’s sofa—I think that it is known colloquially as “sofa surfing”—is growing. That is because it is simply impossible for those people to access accommodation, as there is such an inadequate supply of housing in the city and the housing that is available in the private sector is beyond their means.

There is also a big problem with the housing benefit system. The system is wasteful, and I agree with my hon. Friend that there is a great need for much more regulation. He called for four areas to be addressed, one of which is changes to the housing benefit system. I agree with that, because there is perversity, but I do not agree with the changes that the Government are pursuing. Regulation needs to be introduced. We need to build more council houses, and I concur with my hon. Friend’s comments about the banks being forced to provide mortgages for people who would like to, and have the income multiples to enable them to, access private sector owner-occupied accommodation.

My hon. Friend the Member for Hammersmith (Mr Slaughter) spoke eloquently about the gentrification of many neighbourhoods in the capital leading to an inadequate number of affordable houses. That contributes to the overall problem in London, and the Government’s policies are effectively leading to a clearance, with people on low incomes being forced out of many boroughs. That is completely wrong, and the Government need to think again. My hon. Friend also identified the fact that much of the housing being built is inappropriate, and I have seen figures that suggest that about 80% of it is only one or two-bedroom units. Clearly, there is a need for much more emphasis on family housing, for the very reasons that my hon. Friend the Member for Islington North gave. A whole host of problems are related to people being forced to live cheek by jowl in accommodation that is too small for a growing family.

There is a need, particularly in the capital where house prices are much higher, for the Government to deal with the problem of people accessing mortgages, and pressure needs to be brought to bear, possibly with regulation to ensure that banks do not insist on people finding massive deposits. That problem is in desperate need of attention, because it contributes to building up the current housing crisis in London.

The proposed changes to social housing tenancies simply will also make matters worse, with the expectation for people to move on if their earnings exceed a certain level, forcing them into an even more precarious and difficult situation. In addition, the housing investment cuts have hit London hard, and they exacerbate the problem to which my hon. Friends have referred.

The amount of housing currently been built in London is inadequate and much of it is inappropriate for family needs, but another problem is that about 50% of it is located in just three boroughs, and there needs to be some attempt to ensure that there is building right across the city.

[Mr Slaughter]

Another part of the Riverside development that I have mentioned is being developed by a housing association, which is building £1 million two and three-bedroom luxury flats with river views, so that it can take the profit and build in east London. That is good for the people of east London, but there is already a lot of affordable housing there, and it does not help people in desperate need in west London.

[Chris Williamson]

My hon. Friend makes a powerful point. It is not really the business of housing associations to build luxury multi-million pound accommodation. Their whole raison d’être should be to provide affordable housing, which is why they came into being in the first place. They have lost sight of their original purpose when they start engaging in market-led developments, such as the one that my hon. Friend has mentioned.

I referred earlier to the difficulties that people have in raising deposits, and I have seen figures that suggest that it takes more than 14 years on average for someone to save for a deposit, assuming that they can keep pace with house price inflation. It is completely wrong that people are forced to rely on relatives to get a foot on the housing ladder, because it disfranchises tens of thousands of people in London whose families do not have the wherewithal to provide them with the deposits needed to purchase the houses that they aspire to own.

The hon. Member for Carshalton and Wallington (Tom Brake) said, I think, that the economic background was one of the reasons why the Government had made some of their decisions on housing and cutbacks. I assume that he was referring to the finance that has been made available for housing and the cuts being made in housing benefit. I disagree with him, because it is really important that the Government seek to invest in the housing market and in providing houses, because that is a way of addressing the very problems that the hon. Gentleman mentioned. Using the construction industry is an excellent way of assisting a private sector-led economic recovery. Most of what is procured for the construction industry is sourced from the UK, which provides a huge number of jobs in areas where housing construction and other building is taking place. It is mistaken to suggest that the economic circumstances that the country faces in some way justify the cutbacks in housing.

The hon. Gentleman also referred to delays in planning, and I agree that more needs to be done in that regard. I am concerned, however, that proposals in the Localism Bill might add delays, or will certainly make it more difficult in many circumstances to provide the houses that people desperately require.

It seems to me that the biggest reason for this housing crisis in the capital is an obsession that can be traced back to the early 1980s and the introduction of the right to buy, with its emphasis on a personal subsidy rather than a subsidy on bricks and mortar. That was almost inevitably going to end in tears, which is where we are today. As my hon. Friend the Member for Islington North pointed out, many landlords—I accept that it is not all of them—have sought to exploit the housing benefit system and to maximise rents. That has led to rents in the private rented sector going up and up to a point at which the Government—the same Government who introduced the obsession with personal subsidies in the first place—are now reining in those subsidies and forcing the poorest people and those on middle incomes in the city to bear the burden for their policy mistake, which can be traced back 30 years.

[Jeremy Corbyn]

Is my hon. Friend also aware that those who live in private rented accommodation not only pay high rents and often a large deposit, but often pay much higher heating costs, because the energy efficiency of the housing is so low? In addition, repairs are often so poor and incompetent that tenants end up paying for repairs themselves out of sheer desperation, in order to live somewhere reasonable. We need a much tougher regulatory regime for private rented accommodation.

[Chris Williamson]

I could not agree more, because my hon. Friend is absolutely right. Again, research has demonstrated that the private rented sector is far and away the worst in terms of providing adequately insulated accommodation. That adds to the burden of people living in such accommodation, obviously, but it also has significant environmental implications for our cross-party commitment to reduce carbon emissions and address climate change. The private rented sector clearly has a big part to play. My hon. Friend has made a forceful point and has provided another reason why more must be done to regulate the private rented sector.

In conclusion, I return to the importance of investing in housing and of a bricks and mortar subsidy rather than a personal subsidy. We should be seeking to turn the juggernaut around and emphasising building new houses and providing subsidy for affordable housing in London in order to supply the homes that people desperately require. That would provide a huge economic stimulus and create many jobs for local people as well as, most importantly, homes.

Good quality homes would also have huge implications for educational outcomes for the many people living in overcrowded circumstances who would be able to move into more appropriate accommodation. Again, my hon. Friend the Member for Islington North made that point. We could also address the health of people in inadequate housing by investing more in providing more and better affordable housing. Crime and antisocial behaviour would be reduced, because people would be living in better circumstances rather than being forced out on to the streets in the evening, where young people get into mischief. It would certainly make a big difference to the quality of personal and family life, which would have a massive, beneficial knock-on effect on the wider community.

[Tom Brake]

Is the hon. Gentleman about to be more specific about what financial commitment his party would make and how many additional properties they would build? Also, would he exclude the sort of option that is occurring in my constituency, for instance, where a housing association’s regeneration of Durand close depends on the sale of private properties as part of the development? Admittedly, those properties are in the same place, not in a different location. Is he excluding the proposed option to give housing associations additional funding to build more properties?

[Chris Williamson]

There is a desperate need for public investment in social housing. On the previous Labour Government’s record, although we certainly could and should have done more in terms of new build during the first part of our Administration, our record on bringing existing housing stock up to a decent standard shows that it was a worthwhile policy initiative and that, in large measure, we achieved it. I know that some areas in London—maybe the hon. Gentleman’s constituency is among them—still have not benefited from the decent homes initiative, but 90% of affordable, social and council housing throughout the country and in the capital has benefited.

We must get away from examples such as the one that the hon. Gentleman mentioned, in which housing associations develop market properties, sell them at a profit and use the money elsewhere. In my view, we ought to exclude that, because it is not the way forward. That is not where housing associations ought to be. The main thrust of what I am saying is that expenditure on housing benefit in this country is massive. We must find a way to shift from personal subsidy in the form of housing benefit to a subsidy of bricks and mortar, so we can build more affordable housing for the sake of all the economic and social benefits that would flow from that. That is what the Government should be considering. I will be interested to hear the Minister’s comments.

12:15

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

It is a pleasure to see you in the Chair, Mr Hollobone, as it was to see Mr Turner earlier. I congratulate the hon. Member for Islington North (Jeremy Corbyn) on securing another debate about housing in London. We do not always agree on the solutions, but I pay tribute to the assiduousness and seriousness with which he regularly addresses the issue. Like other hon. Members, he has raised important points with which I will endeavour to deal. This has been a wide-ranging debate, and I will do my best to pick up the detailed points made.

I accept that housing matters to everybody. It is important politically and socially. Having a home that meets one’s needs is fundamental to achieving one’s aspirations for oneself, one’s family and one’s community. I hope that that is common ground for all parties in the House, and I want to make it clear that the Government regard it as a key objective to help people to achieve those aspirations. I will deal with general issues as well as points about London specifically.

We as a Government are committed to increasing the number of houses available both to rent and to buy. That includes affordable housing, but we must be imaginative in choosing models to use. We need to consider greater flexibility in social housing to ensure best use of stock and help people stand on their own two feet. We must also consider how to protect the vulnerable and disadvantaged and address homelessness, which the hon. Gentleman fairly and properly mentioned. We want to support people to stay in their own homes.

[Jeremy Corbyn]

The Minister will be aware that homeless charities in London—particularly Shelter, but also the Mary Ward Centre and others—have serious financial problems at present. Their grant funding has been cut, although they are trying to retrieve it from London local authorities. The cut in housing advice provided to homeless people by those organisations is devastating and can lead to only greater homelessness. Is the Minister prepared to look into the matter, receive a delegation and consider whether extra help can be given to ensure that those vital agencies remain open?

[Robert Neill]

I am sure that my right hon. Friend the Minister for Housing and Local Government will happily get in touch with the hon. Gentleman. It is worth putting it on record that we are working with the National Homelessness Advice Service to ensure that front-line advice workers have the support that they need. We have established a cross-Government ministerial working group to examine the underlying causes of homelessness and we continue to invest in the Places of Change hostel improvement programme. We are attempting to address the problem, but I appreciate the seriousness with which the hon. Gentleman raises the issue, and I will ensure that the appropriate Minister is in touch with him. I will return to the broader issues of homelessness in due course.

We make no apology for saying that home ownership is at the core of people’s housing aspirations, and it should be at the core of our policy. It is a good thing. It gives people responsibility for their own needs, financial security and confidence. I think that it is good that housing wealth now accounts for nearly half of all household wealth, up from about 25% in 1980. Some hon. Members have criticised the right to buy and related issues in this debate, but I do not apologise for the right to buy. In the 1980s, I was a parliamentary candidate twice in Dagenham, which had one of the largest housing estates in Europe. I thought that it was utterly liberating for ordinary people—good hard-working families—to have the chance to own their home. Not everybody will always manage that aspiration, but we need to make sure that it is there, that we help people in that way, and that we also assist those who, for a number of reasons, will not be in a position to meet it.

[Chris Williamson]

Will the Minister concede that, although the right to buy was liberating and gave access to home ownership for people who perhaps previously would never have been able to aspire to it, the decision to prevent local authorities from building, or to make it difficult for them to build, alternative affordable accommodation contributed to the massive housing crisis with which we are confronted?

[Robert Neill]

Those decisions were very much of their time and in response to it. I am not sure how much that in itself contributed, but I accept that, in the current age, we need a flexible approach to giving local authorities and housing associations the ability to build as is appropriate. That is why we are where we are now. It does not undermine the thrust of a policy that I think was necessary at the time.

[Mr Slaughter]

The average price of a property in Hammersmith is now more than £500,000, and 40% of my constituents have incomes of less than £20,000. It will require quite a degree of flexibility if the Government’s policy of prioritising home ownership is going to go ahead. They are just empty words, are they not?

[Robert Neill]

The hon. Gentleman is as specious as ever. I am sorry that he has managed to lower the tone of the debate, while his hon. Friend the Member for Islington North dealt with the issue in a serious fashion, as usual. The contrast between the two hon. Gentlemen is always instructive. Of course, as I have said, there will always be those who will not be able to own their own homes—the hon. Member for Derby North (Chris Williamson) rightly recognised that as well—so we need a policy that embraces that, but I shall not go down the route of point scoring which is so characteristic of the hon. Member for Hammersmith (Mr Slaughter). The fact is that it is by no means incompatible for us to encourage home ownership and also deal with those who, for a number of legitimate reasons, will never be in a position to own their own homes.

[John McDonnell (Hayes and Harlington) (Lab)]

Will the Minister give way?

[Robert Neill]

The hon. Gentleman has only just arrived, but he is an old chum so I will happily give way to him.

[John McDonnell]

I apologise for being so late. I was discussing another issue with one of the Minister’s ministerial colleagues and could not get here any sooner. Will he address an issue facing a number of us in London, particularly outer London, namely that of the growing number of homeless and rough sleepers? It is hitting the outer London boroughs on a scale that we have not experienced before. Inner London has had high numbers but the issue is beginning drastically to affect London boroughs as a result of the policies of housing suppliers in particular.

[Robert Neill]

It is worth looking at the fact that we are consulting on and overhauling the way in which rough sleepers are counted. We need to get a better and more complete picture of the issue, because the previous system did not do it effectively. It is also worth saying that, although there has been fluctuation, the current figures suggest that, overall, statutory homelessness remains at historically low levels. However, I accept the hon. Gentleman’s point that we need always to press down on the issue. It is not an easy area to cover accurately, and I know that the Department will happily keep in touch with him on this serious and important issue.

To return to the point that I was addressing before the hon. Member for Hammersmith intervened, I accept that poor affordability and difficulties with affordability create a gap for aspiring first-time buyers, which is exactly the point made by the hon. Gentleman. Average house prices have increased, so we need to address that. I believe, however, that the way to do that is not necessarily through more and more intervention—although some intervention is always appropriate—but through giving communities control of development in their area and greater freedom, which is the reverse of what the hon. Gentleman was advocating. That is the way forward and I have more faith in the ability of Hammersmith and Fulham council than in that of the hon. Gentleman to tackle their area’s housing needs.

The Government are determined to encourage local authorities, developers and housing associations to work together with communities to deliver the homes they need through schemes such as the new homes bonus, which is a powerful tool. The Government have set aside nearly £1 billion for that scheme over the period of the comprehensive spending review. In fact, hon. Members may want to look at the new homes bonus calculator on the Department’s website, which shows how any particular local authority can benefit from it.

[Mr Slaughter]

Will the Minister give way?

[Robert Neill]

In a moment. I would like to make a point, if I may. In addition to that scheme, we are introducing the community right to build, which will streamline the arrangements where there is local support for neighbourhood planning. That is often thought of in terms of rural and parish areas, but there is no reason why it should not also apply to communities in London and our other great cities.

Yesterday, my Department, together with the Homes and Communities Agency, published the affordable homes framework. It sets out details on giving housing associations much more flexibility on rents and use of assets, for which they have been asking for some time. The key part of that is the new affordable rent model, which will be a constructive and useful tool that is expected to deliver up to 150,000 new affordable homes over the next four years. The old, rigid models did not always work. We need to be prepared to think more imaginatively.

[Mr Slaughter]

I am grateful to the Minister for giving way. He is right that Hammersmith council knows how to co-operate with developers. The west Kensington development that I spoke about earlier is a joint venture between the council and Liberty International, which is one of the biggest property firms. It will see the demolition of 750 good quality, newly modernised council homes, and the building of up to 8,000 luxury, high-rise, 30-storey blocks. Last year, the Minister said:

“Instead we want to see communities coming together to take responsibility for meeting their own housing ambitions…This is about giving communities real power and real influence.”

In the community under discussion, however, 80% of the tenants do not want their homes demolished. They want the power from this Government to take over their homes in the way described by the hon. Member for Carshalton and Wallington (Tom Brake). Will the Minister support the tenants rather than the property developers who want to destroy their homes?

[Robert Neill]

As usual, the hon. Gentleman makes a serious issue simplistic. The Government are determined to make sure that those precise issues can be determined at a local level. He knows that it is probably not appropriate for Ministers, particularly in our Department, which has responsibility for oversight of the planning system, to comment on developments that might go through the planning process and end up being considered by our Department. It is appropriate to have a greater degree of nuance and flexibility in the system than was the case in the past, when rather rigid developments sometimes imposed unacceptable developments upon communities. The hon. Gentleman will, therefore, understand why I will not go down the same route as him.

The affordable homes framework is a bold initiative, and I believe that it will enable communities. It is also worth remembering that this Government are providing considerable funding towards the issues. We are investing more than £6.5 billion in housing, and we are investing considerable moneys in London, which has particular pressures that we all recognise and with which we seek to deal. That is why we are handing the Mayor of London the ability to take over the Homes and Communities Agency operations in London, so that he can align delivery more effectively with the strategic housing pot available, in co-operation with the London boroughs. That seems to us to be the right thing to do.

We need to address the issue of overcrowding. As the hon. Member for Islington North has rightly said, there are a significant number of overcrowded households. Although that applies to the private sector, I would not seek always to run it down, because responsible private landlords have a key role. There are also some 258,000 overcrowded households in the social rented sector, while 430,000 households in that sector are under-occupied by two or more bedrooms. That is why it is wrong to rule out our proposal to look at issues such as flexible tenancy. In some cases, people’s housing needs will change as their life histories progress, and it is sensible to give them the means to reflect that. It is not the right approach to have too rigid an adherence to subsidy based purely on bricks and mortar.

I have been generous with interventions, but I am running out of time, so I will write to hon. Members on the other specific and important points that they have raised.

Pupil Premium

Tuesday 15th February 2011 Westminster Hall

12:29

[Mr Stewart Jackson (Peterborough) (Con)]

It is a delight to serve under your chairmanship for the first time, Mr Hollobone. I welcome the Minister to his place. I know from experience that he is absolutely committed to driving up educational standards and to rigour in all that we do in our schools.

This is an excellent opportunity to raise a hugely important issue that not only affects my constituency, but has national purchase. I am indebted to the officers of Peterborough city council—particularly Gary Perkins, head of school improvement, and Jonathan Lewis, assistant director of children’s services—for the assistance they have given me in preparing for the debate. I am also indebted to the officers of Westminster city council for their assistance, research and comprehensive briefings.

For the avoidance of doubt, I would like to make it absolutely clear that my remarks are not a criticism of the pupil premium policy. I strongly welcome and endorse the policy and the fact that the coalition Government will be spending £625 million on free school meals for children in the next financial year. That is particularly aimed at children from lower socio-economic backgrounds, and such a policy is absolutely right. There will be £430 spent per pupil. The amount concerned will rise to £2.5 billion by 2014-15. Naturally, that will benefit my constituents who are in receipt of free school meals, as it will people across the country. That will be new funding on top of existing funding contained within the dedicated schools grant. This debate is not about criticising the pupil premium; it is about suggesting how it can be improved and enhanced to meet the challenges of particular circumstances in my constituency.

The free school meals indicator is a blunt instrument. I welcome the commitment given in the White Paper “The Importance of Teaching”, which was published in November, to ensure that schools funding is transparent, logical and equitable. I also welcome the commitment to ensuring that a new national funding formula is “fair and managed properly”. I am pleased that the Minister is undertaking to revisit the school funding formula and the fact a consultation will begin later this year, not least because the funding formula currently used is not based on current data. The formula is historical and misses some very acute issues in a relatively small number of local education authorities, including my own at Peterborough city council. I concede that the ethnic minority achievement grant, which is worth more than £200 million this year, has helped some local education authorities to cope with children who have English as an additional language and with minority ethnic new arrivals. However, as I will discuss later, I am concerned about the decision to incorporate that and other discrete funding streams into the dedicated schools grant.

I have read carefully the Department for Education consultation document published last year entitled “School funding settlement for 2011-12: the pupil premium and Dedicated Schools Grant”, and I have to tell the Minister that I am not entirely convinced that

“Known eligibility for free school meals is the only pupil-level indicator…that we currently have.”

Ministers should be rightly wary of including things such as tax credit receipts or social deprivation indices into the premium. However, the small number of LEAs with significant numbers of English as an additional language pupils, particularly at primary level, should be taken into consideration in designing the post-2011-12 architecture of the pupil premium for reasons that I will now move on to.

It would be inappropriate to rehearse all the historical issues around large-scale migration from eastern Europe that my constituency has experienced during the past seven years since 2004. Suffice it to say that we have had to tailor our public services—housing, policing, health and education—to fit 20,000 new EU migrants who have come to Peterborough as a result of the 2004 European Union directive on free movement. That has obviously put some strain on the delivery of public services. In addition, there is a significant cohort of Pakistani heritage children in our schools who, for cultural reasons, come to primary school speaking largely Urdu, after being brought up by mothers, sisters and aunts. That is the cultural reality. If we combine that situation with the fact there are also low-skill, low-wage, indigenous white British families, there is a perfect storm of very difficult circumstances for primary schools to deal with.

In Peterborough, 30.5% of primary school pupils do not have English as their first language, which is 4,767 pupils. Almost 3,000 pupils in the secondary phase do not have English as their first language, which is around 22%. Overall, 26.5% of pupils on the school roll in the local education authority do not have English as their first language. Let us consider some significant examples. I pay tribute to Tim Smith, who is the head teacher at Beeches primary school in Craig street—the central ward of Peterborough—where six out of 528 pupils speak English as their first language. That is an enormous challenge—I will come on to this later—in terms of tailoring lessons and delivering a national curriculum, particularly key stage 2 of the standard assessment tests. Indeed, what alerted me to the seriousness of the matter in a concrete form was the fact that underachievement and poor education attainment were occurring not because our governors or teachers are below par or our children are particularly dense, which they are not, or our parents do not care, but simply because of the demographics—the social and economic profile—of my constituency and local education authority.

In December 2010, Peterborough was placed sixth from bottom in the key stage 2 results for SATs. That is not acceptable, because we are not a city that is particularly socially deprived when compared with many other parts of the country, for example, the north-west, Yorkshire and Humberside, and the north-east. Some 15% of our children have special educational needs compared with the national average of 1.4%, and Peterborough has an extremely high turnover rate of pupils—almost double the national average. Of the 2,103 pupils with key stage 2 results in 2010, 21% were not in the city at the start of their school life. A further 22%, or 455 pupils, who had foundation stage were no longer in the city to take their key stage 2 tests. Therefore, we have a massive problem with churn and children coming in and out of school. Often those are the same children who have English as an additional language. Hon. Members might be surprised to learn that almost 900,000 children in England have English as an additional language. That lays bare the significant challenge we all have in dealing with the issue.

The problems are high levels of pupils with English as an additional language, minority ethnic new arrivals, non-standard entry and churn among those pupils and, of course, significant pockets of social deprivation in my constituency across all racial, religious and cultural groups. It would be unfair to place the blame on Peterborough city council. I have had my differences with the council from time to time and it has not always taken the issue on board with the alacrity and seriousness of purpose that it could have, for example, many years ago when I was raising the matter. However, the council is now trying to do its best to ameliorate a very difficult situation that is having an impact on my constituents and their children.

The council is doing its best to cope with the circumstances. An exemplar school in that respect is one of the largest in Peterborough: Fulbridge primary school. That school has a superb head teacher, Iain Erskine, who is coping with a school in which dozens of languages are spoken. Indeed, in the whole of the city of Peterborough, 94 separate languages are spoken across our schools. An Ofsted inspector recently stated:

“the local authority has been relentless in its pursuit of improvement.”

We have a stark issue with attainment, as has been proven by the specific figures on English and maths. At the end of key stage 2, the proportion of English as an additional language pupils attaining national average levels in English is 19.3% lower than for those who speak English and, for maths, the figure is 11.9% lower. If anything, that situation got worse between 2009-10.

I will not go into minute detail about how resource-intensive those children are in terms of lesson planning, teacher training, and interfacing with pupils’ parents, many of whom do not speak English. Culturally, those parents do not need to speak English—many are in low-wage, low-skill occupations where the need to speak English is not apparent. For example, even if Polish children, who are extremely good at science and mathematics and are generally very gifted, are up to speed in English and mathematics, when they go home there is no cultural pre-disposition to speak English. It is very difficult for them. Other children, whose parents are less skilled, from, say, Lithuania or the Czech Republic, are in a situation where their parents’ contract for packaging fruit or picking vegetables in the fields of south Lincolnshire, Cambridgeshire or Northamptonshire finishes after six months. They then leave their rented accommodation and withdraw the children from school, or they may go to another part of the UK. It is debilitating and resource-intensive to train teachers and to have the capacity to deliver real improvements and added value for those particular families.

I will return specifically to the pupil premium and to work by Westminster city council, in a very helpful briefing paper it prepared recently for the Minister for Immigration, my hon. Friend the Member for Ashford (Damian Green). The briefing paper makes it clear that the focus on the pupil premium is

“too narrow and that multiple pressures caused by the needs of migrants (including deprivation, EAL and mobility factors) ought to be included for the Pupil Premium basis in the future.”

Furthermore, the National Association for Language Development in the Curriculum, in response to the recent White Paper, argues:

“the Ethnic Minority Achievement Grant, should not be merged with the Direct Schools Grant (DSG) and that any changes should be postponed at least until the government has completed its review of the system of funding beyond 2011-12.”

What are the solutions? As a loyal Conservative, I might be expected to say that money is not necessarily the only issue that solves every problem, but it will really help a local education authority such as Peterborough. Ministers need to think about the impact of the ethnic minority achievement grant, what it achieved, and how rolling it up with the dedicated schools grant could be a retrograde step in making sure that the people who need the most help—governors, teachers, parents and children, and a specific number of schools in a specific number of authorities—continue to receive that fiscal incentive to try to improve results and educational attainment. To give a few examples, a local education authority, such as Peterborough, that is facing such problems could recruit more qualified and experienced bilingual staff; run more English as a second language classes after school; engage with parents to encourage them to speak English and improve their own English to help their children; employ more teachers, as opposed to teaching assistants, with those skills; and develop specific language programmes, such as holiday boosters and catch-up programmes.

I support Westminster city council’s advocacy—or at least I support the idea that it should be debated and discussed by Ministers—of a specific fund held in the Department for Education for new arrivals to the UK. It calls it a “cash passport” and makes the case that it is recognised that non-standard admissions and English as an additional language will not be reflected in the existing pupil premium funding. We need to look carefully at that.

In conclusion, I ask the Minister to look carefully and specifically at how the pupil premium regime can be ameliorated to assist children with English as an additional language when he looks at all the representations he receives from different organisations in the course of the consultation. It was important to have this debate to raise this issue. With all due respect to the Minister, he and colleagues have a lot on their plate with free schools and academy schools, and with taking on, to an extent, the vested interest of the producer and the teachers’ unions. I am not entirely convinced that the issue that I have raised was necessarily on the political and administrative radar, so it was important to do so. I hope that either the Minister or our noble Friend Lord Hill will be able to meet a delegation from Peterborough local education authority in the near future to understand the key challenges facing our children in the city.

The Minister has made an excellent start in his post at the Department for Education. This is an issue of great significance and importance, and of pressing need. I hope that the Ministers will listen and will take forward policy that reflects the very difficult and acute circumstances in Peterborough and in other places. I look forward very much to the Minister’s reply.

12:45

[The Minister of State, Department for Education (Mr Nick Gibb)]

It is a pleasure to serve, I think for the second time, under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Peterborough (Mr Jackson) on securing today’s important debate and on the way in which he presented his case. I know that my hon. Friend is a passionate advocate for his constituency and constituents, and also believes, as I do, in very high standards in our schools.

I understand his concern at the level of migration and the strain that it puts on his constituency, particularly in relation to the number of pupils who have English as an additional language. Between 2005 and 2010 there was a 59.6% rise in the number of pupils with English as an additional language in Peterborough. I can say immediately that I am very happy to meet my hon. Friend and a delegation from Peterborough city council to discuss the issues in more detail. Peterborough is, in fact, not one of the lowest-funded authorities in England. At £4,422 a pupil in 2010-11, the level of funding is slightly above the average figure in England of £4,398. That demonstrates, however, that even authorities with above-average funding can still have problems with the unfairness caused by the current system of school funding.

I certainly share my hon. Friend’s concern with the previous Government’s policy on migration. As a Government, we want to build a more integrated society, with greater equality of opportunity. That applies to adults as well as to children, and we are reviewing English language requirements across the immigration system to ensure that all those who come to the UK have the skills and language ability that they need to participate fully in society. We want to continue attracting and retaining the brightest and the best people who can make a real difference to economic growth. I agree, however, that unlimited migration places enormous pressures on public services, particularly schools, as my hon. Friend has outlined. The Government aim to reduce levels of net migration back to the levels of the 1990s and to achieve that we have already announced that we will introduce a limit on economic migration from April 2011.

My hon. Friend has set out the effect of migration on schools in Peterborough, the difficulties of coping with large number of pupils who do not have English as their first language, and the pressure on school places. It is important that children with English as an additional language should be given the support they need to improve their educational attainment and our policy is to encourage rapid English language acquisition to facilitate their integration. I know that the increase in pupil numbers, particularly in primary schools, is a major pressure in many areas of the country, and that the ethnic minority achievement grant has played an important part in recent years in helping to meet the additional needs of children with English as an additional language. Peterborough local authority received an EMAG allocation of £847,886 in 2009-10. The Department for Education is still finalising the figures for 2010-2011, but I can confirm that the final figures will be at least as much again. I understand the point that my hon. Friend made in his opening remarks, and the views of Peterborough city council, but it remains a key priority for the coalition Government that children with English as an additional language are supported.

As part of our school funding settlement for 2011-12, which we announced on 13 December 2010, we confirmed that to simplify the funding system we would be mainstreaming relevant grants, including EMAG, into the dedicated schools grant from April 2011. Under the new arrangements, schools will be able to continue targeting pupils with English as an additional language for additional support, but they will also have the freedom to target other underperforming groups if they wish to do so. Local authorities will be free to retain a portion of the funding to run centralised EAL services and, where allocations are small enough not to warrant devolving the sums to schools, they can choose to retain the whole amount centrally. It is important to stress that the mainstreaming of EMAG funding is not about cutting costs. For 2011-12, funding per pupil, including mainstreamed grants, is being maintained at 2010-11 cash levels. The grant will be included in the money that goes to Peterborough city council, albeit not separately identified. The quantum of the grant will still be there and will still go to the council.

I know that Peterborough has seen significant increases in recent years in the proportion of children with English as an additional language. That is why the authority was awarded an exceptional circumstances grant of £979,000 in 2009-10. I can confirm that the figure will rise to £1.5 million for 2010-11. We will be mainstreaming the grant in the 2011-12 financial year based on the 2009-10 figure rather than the 2010-11 figure. Funding for 2011-12 will also be based on schools’ actual pupil numbers in January 2011, which means that year-on-year increases in pupil numbers will be reflected in Peterborough’s final funding allocation.

My hon. Friend suggested that we might use the pupil premium to address the issue of English as an additional language. We introduced the pupil premium to support the most disadvantaged pupils in schools, targeting extra funding specifically at those from the most deprived backgrounds to enable them to receive the support that they need to reach their potential, and to help schools reduce educational inequalities. For this year, as my hon. Friend said, the premium will be set at £625 million, which amounts to £430 of additional funding for every pupil from a deprived background. We have decided that the indicator used to reflect deprivation for 2011-12 will be known eligibility for free school meals. Poverty is the single biggest predictor of poor attainment at school, regardless of ethnicity or country of origin. I know that he believes free school meals to be a rather blunt tool for deciding eligibility, but the link between free school meal eligibility and underachievement is strong.

[Mr Jackson]

Does my hon. Friend concede, notwithstanding the laudable aim of using free school meals as an indicator for accessing money for children in the most need, that, in the case of east European migrants particularly and other migrant groups, there is a cultural predisposition against claiming free school meals? Therefore, some of the children who would most benefit from extra funding are not able to do so, and that obviously has an impact on the overall educational attainment in their school.

[Mr Gibb]

I understand my hon. Friend’s point. Such points are made to us as we go through the consultation to assess what indicator to use. For example, some people argue that we should use “ever” free school meals, so that parents who have ever claimed free schools meals for their children within a period of six or so years should also be entitled, regardless of the fact that this year they no longer claim the benefit. We are considering what is the best indicator.

However, we believe that the best pupil level measure available for identifying and targeting underachievement is free school meals, or some component of it. We expect that more parents will apply for free school meals once it is made clear that pupils will attract additional funding for the school. Indeed, we are receiving reports even now that more parents are doing so, and we hope that that will help to solve the problem of under-claiming. The parents my hon. Friend referred to who do not claim for stigma reasons may well feel that they should claim because it helps the school more broadly if they do. It is our intention to extend the coverage of the pupil premium from 2012-13 onwards to pupils who have previously been known to be eligible for free school meals—as I just said, the ever free school meals indicator.

As my hon. Friend knows, we have concerns that the current funding system is unfair, illogical and opaque. The spend-plus system of allocating dedicated schools grant is currently based on historical accident and out-of-date assessments of need, and is inflexible in responding to change, as he knows from his constituency. That means that it is not able to adjust to reflect current needs in local authorities such as the high level of EAL needs in Peterborough. That is why we are committed to reviewing the underlying funding system so that schools with the same needs can receive similar levels of funding.

In our White Paper “The Importance of Teaching”, we said that we would consult on developing and introducing a clear, transparent and fairer national funding formula based on the needs of pupils. We are already working to develop options for the future funding of schools, with the aim of consulting in late spring, as my hon. Friend said. The consultation is likely to cover the merits of a national funding formula, transitional arrangements and the factors to be included in such a formula. English as an additional language will certainly be a factor in the review and consultation. We need to consider how best to provide the necessary additional financial support to schools with such pupils, taking into account how the additional need decreases—for example, as a pupil becomes more proficient in English. My hon. Friend will appreciate that I obviously do not know the outcome of the review, but I hope that he will take in good faith a commitment from me to study carefully the issues that he has raised in the context of the school funding review and in our consultation later in the year.

[Mr Philip Hollobone (in the Chair)]

I thank the hon. Member for Peterborough (Mr Jackson) and the Minister for taking part in the debate. We now move on to the next debate.

Holiday Accommodation

Tuesday 15th February 2011 Westminster Hall

12:57

[Mr Mike Weir (Angus) (SNP)]

I am pleased to serve under your chairmanship again today, Mr Hollobone.

I represent a largely rural constituency which covers more than 2,000 sq km from the fertile coastal strip of seaside towns to the mountainous and sparsely populated glens. What all parts of Angus have in common is their beauty, which has made tourism an important and growing part of the local economy. The latest Office for National Statistics classification discloses that almost 10% of jobs in Angus in 2008—the last year for which I can find figures—are tourist-related, which is significantly above the national average of around 8%. As well as the more traditional holiday tourism, my constituency also attracts a significant number of visitors from the UK and overseas who are attracted by field sports. It will therefore be no surprise that I maintain an abiding interest in tourism development issues, which affect the economic development of Angus and the prosperity and well-being of my constituents.

I should say at the outset that I am not here simply to lambast the Government for their attitude to tourism. I took a great interest in the furnished holiday lettings relief and its impact on the self-catering sector, and campaigned hard against the ludicrous proposals put forward by the previous Labour Government. I acknowledge that the present Government have introduced new proposals which, although still not ideal, are a significant improvement on what had been proposed, and last week I submitted to the Treasury my third response to consultation on the issue in less than a year. I do, however, wish to concentrate on a proposal which I believe could cause serious damage to this vital industry: the Minister’s proposal to do away with the current, widely recognised star rating scheme for holiday accommodation. He has suggested, in effect, that consumers instead look at private internet sites such as TripAdvisor.

I have pursued the matter through a series of parliamentary questions and have been somewhat perturbed by the answers, since it seems clear that the Government are moving towards self-assessment and feedback rather than the current star rating scheme. Incidentally, the Minister stated in one answer that tourism is a devolved matter for the Scottish Government. That is not the whole picture, at least at present, as VisitBritain is responsible for marketing tourism for the whole of the UK in significant parts of the world, including the crucial emerging markets of Brazil, China and India, under what I understand is referred to as the “quadrant model”.

Many tourists coming to the UK will be looking for a holiday that covers several centres, including Scotland. Therefore, the current hard-won system, with all the national tourist boards and the Automobile Association co-operating in a similar star system, has a great deal of merit. Allied to that, such a system is common overseas, so visitors from other areas will be familiar with the concept and be able to recognise easily what type and standard of accommodation is available for consideration in all parts of the UK. In particular, visitors from the emerging markets that I have flagged up are unlikely to fly directly to Scotland, unless arriving via charter arranged under an incentive scheme, or for a conference. In such limited cases, use of self-catering accommodation is extremely unlikely.

I cannot overstate how hard the tourist industry has worked to bring into being the common standard, which ensures that a three-star self-catering cottage will be of the same quality in Scotland, England and Wales. I cannot emphasise enough how much work was done by the tourist boards and the industry, which compromised on sometimes heartfelt positions for the greater good of the industry going forward. In a rolling programme, self-catering was the first sector to apply the common standard. Other sectors have now joined, but the self-catering common standard was the first to be reviewed as standards and visitors’ expectations have moved on.

I consider the mooted scheme to be a serious error. The star-rating scheme has built up considerable trust and recognition over the years as a robust scheme that gives us a good idea of the standard of accommodation we are likely to encounter, based on an objective assessment by an independent body.

[Anne Marie Morris (Newton Abbot) (Con)]

May I add to the hon. Gentleman’s argument? Will he consider that, whatever system we have going forward, we need to make it less onerous? The very small businesses in my constituency certainly find the current scheme difficult. If someone has a bed and breakfast and a cottage, the two assessments are separate, so whatever scheme we have, may we make it simpler and more affordable?

[Mr Weir]

The hon. Lady makes a good point. As I will explain in my remarks, the new proposals will make the situation even worse for self-catering small businesses.

I accept that the current scheme is not perfect, and many hoteliers believe it too prescriptive, homogenising and sanitising accommodation with what some deride as its tick-box approach, which can penalise quirky, extraordinary or mould-breaking properties. Subscription to the scheme has been less extensive than was hoped, especially in England and, more particularly, in London. However, for all its limitations, it delivers an objective assessment based on published and transparent criteria. TripAdvisor and its like do not. Instead, individuals can register their views on holiday accommodation on a website, but their views are totally subjective and could be influenced by a huge number of the variables encountered.

The comedian Michael McIntyre has a funny routine based on someone using TripAdvisor to rate a holiday. Like all good comedy, it has a germ of truth. He notes that someone looking at the various comments on TripAdvisor is most likely to believe those that are bad. Indeed, often, only the disgruntled care to write up the experience—others simply do not bother.

Last year, I holidayed on the beautiful island of Seil, in self-catering accommodation found on the VisitScotland website and chosen on the basis of the star rating. My family and I had a great holiday, and we would thoroughly recommend it to anyone but, on returning home, with many things to do, writing a review on a website was the last thing on our minds. That is a danger for good properties.

That strikes to the very nature of the problem. There is absolutely no quality control over what may be posted on such sites. There is no effective way for the hotelier or holiday cottage provider to prevent someone with a particular beef—perhaps they did not get on with them, perhaps they were unreasonable, or perhaps they were simply vindictive—from commenting on the website. Yet such a comment could have a serious impact on the business. If the Minister has any doubt about the capacity of rival tradesmen who have lost in legal disputes, or of the plain malicious, to pursue vendettas in acts of cyber-sabotage, he could do worse than consult the website www.ihatetripadvisor.org.uk.

While in theory the small business owner might have redress in law, few would have the resources to pursue such an action. Has the Minister looked at the jurisdiction section in the terms and conditions on www.tripadvisor.co.uk—in case he does not know the website address? If he does so, he will find:

“This Website is operated by a US entity and this Agreement is governed by the laws of the State of Massachusetts, USA. You hereby consent to the exclusive jurisdiction and venue of courts in Massachusetts, USA and stipulate to the fairness and convenience of proceedings in such courts for all disputes arising out of or relating to the use of this Website. You agree that all claims you may have against TripAdvisor arising from or relating to the Site must be heard and resolved in a court of competent subject matter jurisdiction located in the state of Massachusetts.”

Despite the somewhat impenetrable English, that appears to give sole jurisdiction to the courts of the state of Massachusetts.

I am sure I am not alone in finding it strange that a Minister of the Crown will be recommending that consumers in the UK should consult, and that UK taxpaying accommodation providers should find themselves at the mercy of, an organisation that specifically seeks to exclude the writ of Her Majesty’s courts, as a supplement to and eventual substitute for a state-sanctioned system of quality assurance. For a Government that pride themselves on reducing the burden on small businesses, that seems a curious tack to take.

Should the jurisdiction barrier be laboriously and expensively overcome, the hard-pressed business which seeks to obtain redress for defamation also runs up against a comprehensive disclaimer on the website:

“TripAdvisor takes no responsibility and assumes no liability for any Content posted, stored or uploaded by you or any third party, or for any loss or damage thereto, nor is TripAdvisor liable for any mistakes, defamation, slander, libel, omissions, falsehoods, obscenity, pornography or profanity you may encounter”—

which makes it sound much more interesting than it probably is.

TripAdvisor will retort that it makes provision for management responses, but experienced practitioners whom I have consulted advise that that can too easily fall into an entrenched argument of “He says” or “She says”, from which there is no easy way out, and all in the public domain. Others have reported difficulties in accessing that right to reply, being told that any robust defence of the business breaches the user guidelines.

If that were not bad enough, there can be serious differences between how hotels and self-catering are treated on such sites. In a recent article in The Sunday Times, Adam Raphael, editor of The Good Hotel Guide, made the point:

“TripAdvisor, the best known hotel review site, carries millions of consumer reviews, but its usefulness is marred by its failure to screen out collusive and malicious reviews.”

He freely admits to having an obvious interest in the matter but points out that, in preparing his publication, his team track every review sent to them and know who the writers are, where they are coming from and how sound their judgments are. Tellingly, he adds:

“When our readers disagree, we send an anonymous inspector to spend the night at the hotel or B&B, at our expense.”

Adam Raphael also makes the point that TripAdvisor and similar sites have no idea who is writing reviews and make only a feeble attempt to check that they are genuine. He cites one response to a hotel’s complaint that a critical report was planted by a competitor:

“Since reviews are posted by our members on an open forum, and we do not verify the information posted in this, we are unable to provide you with proof that this member reserved, stayed or actually visited [your] hotel.”

Perhaps the final nail in the coffin was when TripAdvisor published a list of its top 25 hotels in the UK—one of which was, in fact, in administration and closed. That sets out the problem. Adam Raphael was looking at it from a different, commercial angle, but surely a star scheme administered by the national tourist agencies within the UK is the best way to ensure that tourists—whether domestic or from overseas—know what they are getting and can trust.

Bad as matters are for larger hotels, however, a much more serious situation could be faced by holiday lets in more rural areas such as mine in Angus, or that of the hon. Member for Newton Abbot (Anne Marie Morris) in the south-west. Just to show my inclusiveness and to demonstrate that this concern is not just a Scottish one, I made some inquiries as to how many English self-catering properties were listed on TripAdvisor. I thank the chief executive of the English Association of Self Catering Operators for doing the spadework.

The Minister might be interested to know that in the whole of England there are 3,706 such properties—in Devon only 239, in Cornwall 362, in Norfolk 76 and in Dorset 167. He might agree that those numbers are very small for some of the principal holiday destinations in England. Clearly, that is a small fraction of total self-catering accommodation in England. My understanding is that to get listed, a business has to pay to get on such a third-party site or hope that a client nominates them. As Adam Raphael notes in his article, that has already led to allegations that some hotels are offering inducements for good reviews on the sites.

The main point, and the thing that concerns me most, is that most self-catering accommodation would get very few reviews on such sites, unlike larger hotels, and therefore the impact of one unreasonable review would be far more detrimental to a small business. Will the Minister consider the difference between the accommodation types and the business models that they operate? A self-catering property that is let out for 25 weeks a year—fairly good going in the current market—might see 35 bookings made. If an average of three people visit per booking, that gives 75 people per property per year who might leave feedback on sites such as TripAdvisor. That includes children and close family members. Contrast that with a 10-bedroom hotel. According to the most recent annual UK occupancy survey for UK serviced accommodation, published in 2009, room occupancy averaged 58%. An average of two people per room would give 2,117 bookings and 4,234 visitor nights that could result in feedback on sites such as TripAdvisor. Put simply, such sites do not work for self-catering. The allied system is called FlipKey, but it is expensive to use as there is no linked booking engine for self-catering to generate funding, as Expedia does for TripAdvisor. FlipKey take-up has been understandably low.

The internal systems in Scotland and the other nations of the UK are devolved, and I understand that VisitScotland is likely to continue offering a quality assurance scheme along the lines of the current star-rating scheme. It sees the scheme as offering opportunities rather than being a burden, and in answer to initial reports on the proposed changes it responded that Scotland’s star-rating quality assurance scheme is recognised as a world leader. VisitScotland has recently signed a three-year contract with the Swedish agency for economic and regional growth to develop a quality assurance scheme for visitor attractions and the accommodation sector. It has worked with Namibia and South Africa on quality schemes, and is currently in discussion with Norway, Finland, Estonia and Swaziland.

A huge amount of effort has been put in over the years between VisitScotland, VisitWales and VisitEngland to produce a common standard for those visiting all parts of the UK and, in the case of foreign tourists, those encouraged by VisitBritain. If the Minister goes down the road of self-assessment, that will render the common standard meaningless and tourists will have to deal with at least two competing systems. At a time when we need to work together to encourage economic development in our rural economies—of which tourism is a vital part—that seems a backward step.

The chief executive of Farm Stay UK wrote to me yesterday:

“As we position the UK on the world stage with the Royal Wedding, the Olympic and Paralympic games and the Rugby World Cup, now is not the time to be pulling away from a quality initiative.”

I would add the Commonwealth games in Glasgow to that list.

I will be interested to hear the Minister’s response. I urge him to reconsider this matter before it is too late, and to meet with the chair of the Federation of National Self Catering Associations, and the CEO of Farm Stay UK, whom I am sure can put the case for the self-catering sector more forcefully than me.

13:13

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose)]

It is a pleasure to see you in the Chair, Mr Hollobone. I am delighted to respond to the hon. Member for Angus (Mr Weir) on this important issue, which has been slightly distorted in the public debate thus far, so I am glad for the opportunity to respond to his points and to set the record straight.

The hon. Gentleman has helped me by securing this debate—for which I thank him—and by kindly asking me a written parliamentary question, which I answered on 2 February. There were a number of associated questions, but one was specifically on this topic and I shall start by reading part of the answer that I gave him at the time. I hope it will provide answers to much of what he has spoken about today. I stated:

“We are not considering abolishing the schemes, but rather passing them over to be run by the industry itself instead.”—[Official Report, 2 February 2011; Vol. 522, c. 819W.]

That is crucial because a large part—although not the entirety—of the hon. Gentleman’s argument was based around the principle that we are scrapping the star-rating schemes. We are not. I made that clear to the hon. Gentleman in a written answer, and I am happy to repeat it now. I accept that star-rating schemes have a purpose and are valued and useful. That use has historically been strong, and it will continue in the future.

It is all very well for people to get over-excited about the wonders of the internet; it has many great things that it can provide for us all. However, many people are still not particularly comfortable using the internet or find it hard to afford—we talk about the digital divide—and those people need an alternative source of information. Trust has built up in star-rating schemes over time, and we would be foolish to abandon that.

[Mr Weir]

I understand what the Minister says, but will he clarify what that implies for the cost to small businesses—the point raised by the hon. Member for Newton Abbot? Is money being provided to the national tourist board—in England, in the Minister’s case—to continue the scheme in its current forum? Are considerable increases in cost to the small holiday-letter expected, so that the scheme can continue?

[John Penrose]

As I am sure the hon. Gentleman knows, these schemes are typically run on a combined cost basis. At the moment, the Government provide a modest amount of funding through VisitEngland to pay for a small number of staff who are involved in administering the scheme in England. There is more than one scheme, such as that sponsored by the AA and various other organisations around the country. I was in the New Forest the other day visiting its impressive local tourism organisation. It has a New Forest accommodation rating scheme. In most cases, people typically pay a small sum to be part of such a scheme, and in the best-run ones, the sums paid by the participant are graded according to the size and type of accommodation provided. No one is suggesting that that system is due to change.

In this country we still have a system where Governments get involved in rating the quality of hotels and other kinds of holiday accommodation. I find that bizarre because we do not have—thank goodness—a Government rating system for cars or cornflakes or almost any other kind of consumer product. There is good reason for that, because in most fields of life we trust people to make up their minds based on good consumer information. It is important that people have good consumer information when booking a holiday or accommodation, but the emphasis should be on providing that information rather than on the Government saying, “We know what ‘good’ looks like.” Anyone in the tourism industry would accept that the goalposts are moving fast, and there is a welcome proliferation of different kinds of accommodation for different niches. It is difficult for any star-rating system to keep up with that, particularly a state-mandated and sponsored system.

[Mr Weir]

The 2008 report by the Select Committee on Culture, Media and Sport pointed out the importance of the star-rating system in driving up quality. At that time, the Department listed the scheme as one of its great achievements. The Minister’s arguments seem to turn that on its head.

[John Penrose]

I do not think they do. I have repeated something that I had already told the hon. Gentleman in a written answer: we are not planning to can the scheme; we plan to continue with it, but to allow the industry to take it over. I have spent the past five minutes explaining some of the strengths of such a scheme, but it is peculiar at the very least, and unusual compared with other industries, for such a scheme to be state sponsored.

I started by agreeing with the hon. Gentleman that star-rating schemes are an important part of a holidaymaker’s assessment of where they want to go and stay. They are not the only thing, and increasingly there are other sources of information. I will come on to the different sources of information, including the hon. Gentleman’s jeremiad against TripAdvisor and all its ills. Clearly, star-rating schemes have a place, but I find it bizarre that in a world where we have many star-rating systems other than the state-sponsored one, and where we do not have state-sponsored quality approval schemes for all sorts of other consumer goods, we somehow think it sensible and right for the Government to be the author and intermediary of something for hotels. That is a bizarre anomaly.

The hon. Gentleman went on to talk about some of the alternatives, saying that they also have flaws. I will come to that in a minute. It is important to realise that although star-rating schemes have their strengths and are a trusted brand in many cases, they also have their limitations. As I was beginning to point out, a welcome and increasing variety of accommodation is available. In the last 18 months to two years, across Britain as a whole we have seen a huge increase in the amount of self-catering accommodation that people are using for their holidays. There is also in the hotel sector an increasing proliferation of types of hotel—niche players of one kind or another. There are people providing green hotels, which have a very low carbon footprint and are environmentally sensitive; high-style boutique hotels; and everything in-between. That is to be welcomed, but it is extremely difficult to argue that one star-rating scheme can capture that breadth and richness.

It is quite instructive that we have only to think of the expectations that people have of what a typical three-star hotel will provide today compared with 10 or 15 years ago to illustrate how things have changed and will continue to change. The chances are that 10 or 15 years ago, people would have expected a reasonable hotel room to have a trouser press in the corner and a phone. Nowadays, whether or not people like the trouser press, they are much more likely to be concerned about whether there is wi-fi access. The fact that a great many people have mobile phones nowadays makes the phone relatively less important. All I am saying is that the criteria need to move with the times. The industry is reacting well and rapidly to reflect that diversification of market opportunities. It is extremely difficult to expect a single state-run star-rating scheme to keep up with all that, even though—let me agree with the hon. Gentleman once more, just for the sake of clarity—he and I both accept that star-rating schemes are important. I am arguing about how we provide one, rather than whether they are a good thing.

Before I talk about some of the alternatives and whether TripAdvisor is the worst or best thing since sliced bread, I should pick the hon. Gentleman up on one other point. He began by acknowledging that tourism is a devolved matter, and he is absolutely right. For the sake of clarity, let me point out that VisitBritain is in charge of marketing Britain as a whole—as one would expect from the name—to the world outside to drive inbound foreign visitors to the UK. We are taking all sorts of measures to get it properly funded and make it able to do that in the most effective way possible in the next three or four years, because we have an amazing set of international events that will be attracting people to this country.

I am thinking of events such as the royal wedding, which is due very soon, but also, in 2012, we have the Queen’s diamond jubilee and the Olympic and Paralympic games, plus the cultural Olympiad. In the years following, we have two different flavours of rugby World cup; we have another Ryder cup coming up in golf; and of course in Glasgow we have the Commonwealth games. There is a huge opportunity for us to sell the UK as a destination. Even if people are not coming here to see those events, they will probably be viewed by some of the largest TV audiences the planet has ever seen, so they present an unparalleled marketing opportunity in attracting people here in the years following the events, just because they liked what they saw on TV.

The hon. Gentleman is right to say that VisitBritain has that pan-Britain role. However, it is also worth pointing out that the decisions by Scotland, Wales or England on things such as a star-rating scheme are entirely local; they are fully devolved. Therefore, although I appreciate his remarks at the start of his speech, I gently say to him that a great deal of his concern about the star-rating schemes in Scotland must be directed to the Scottish Executive, rather than here. I do accept, however, that there is a point about consistency between the different nations.

[Mr Weir]

I am listening to what the Minister is saying but I rather fear he has missed my point. I fully accept that, internally, these things are devolved. Indeed, VisitScotland has made very clear its support for the existing scheme. However, that is not the argument. The point I was making about VisitBritain is that, given all the events that are coming up, most of the tourists will fly into London because Heathrow is the premier international airport and there are very few direct international flights to Scotland’s airports—apart from certain destinations—particularly from many of the countries where VisitBritain operates. My concern is that if tourists come to the UK, they should be able to be assured that the type of starred accommodation available is similar throughout the various countries of the UK. I suspect that many of them will travel about a great deal while they are here. The worry is about breaking up a hard-won scheme that has taken many years to establish. If Scotland, Wales and Northern Ireland keep their schemes, as I think they probably will, and England goes its own way, there is a real danger of causing confusion and affecting important international tourism to the UK as a whole.

[John Penrose]

I take the hon. Gentleman’s point, and I suppose the most reassuring response I can give is that the good news is that the tourism industry, both collectively and individually, is not stupid and understands the importance of common standards. He will understand that all the different existing schemes—I mentioned the AA scheme and the very local example that I saw in the New Forest—take notice of, and in many cases contribute to, a common set of standards, so there is a direct read-across between, for example, the AA scheme and others. That is clearly to the advantage of the entire tourism industry. Handing the English scheme back to the industry is very unlikely to endanger that, because it is clearly to its commercial advantage. I hope that that reassures the hon. Gentleman.

In the couple of minutes I have left, I shall move on to the hon. Gentleman’s point about some of the alternatives. There was a long and impassioned section in the middle of his speech about the evils of TripAdvisor and all the things it gets wrong. For the sake of clarity, I point out that this Department and this Government do not hold a brief for TripAdvisor or anyone else like that at all. It would be entirely wrong of us to pretend that we did, or even to do so. TripAdvisor is the most commonly used such website in this country. It is used by people who are not stupid and who find what it says helpful—although I think many of them take what it says with a pinch of salt, because some of the reviews need to be viewed with a careful eye, for the reasons the hon. Gentleman laid out. However, there are plenty of alternatives, and many of those have very tight—and perhaps in some people’s view, tighter—quality controls on the kinds of postings they allow. For example, many of them allow postings to be made only by people who have genuinely visited and stayed the night in the accommodation in question. Therefore, postings are made only by customers. They cannot be made by the people running the bed and breakfast down the road, who feel like posting something nasty even though they have not stayed in the accommodation. There are different ways of dealing with the quality control angle.

Websites of any kind that provide customer reviews live or die by the trust the British public place in those ratings. If someone visits such a site and thinks it is being spiked or generally misused, they are much less likely to go back to it. Therefore, there is a huge reputational risk for any websites that allow low-quality reviews to become too large a proportion of the total. For example, if, in the hon. Gentleman’s view, TripAdvisor is getting it wrong too often and others are doing a better job, we would logically expect people to transfer their affections very quickly, given the rate at which things move in the digital world, from that website to another one. The hon. Gentleman is right to say that such websites are not perfect, and there are concerns about them, but there is an eminently sensible self-correcting mechanism whereby people can vote with their feet—or, in this case, with their mouse.

[Mr Philip Hollobone (in the Chair)]

After that five-star debate, we move to a debate on funding for technology innovation in wave power.

Wave Power

Tuesday 15th February 2011 Westminster Hall

13:29

[George Eustice (Camborne and Redruth) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone, in this important debate on the funding of wave-power innovation and technology.

Let me start by saying a little about the potential of this new industry. About 25% of all wave and tidal technology development is going on in this country. Our marine resource is second to none, and that is nowhere truer than in the south-west of England. The extraordinary resource around our coastline is backed up by lots of the skills and expertise that we need to develop the technology. The Carbon Trust has estimated that wave power could eventually meet 15% to 20% of our current power needs and that it might produce enough electricity over time to power 11 million homes. Furthermore, with the extraordinary development of this new energy resource comes a lot of economic potential. It is estimated that the industry could be worth £2 billion by 2050 and that it could create more than 16,000 jobs. Some estimates suggest that the wave and tidal power industries together might employ 10,000 by as early as 2020.

My constituency is home to the wave hub project, which is the first project of its kind anywhere in the world. It is the first time we will have a commercial-scale facility to test arrays of wave-power devices at deep-water locations. The project consists of a long cable 16 km off our coast at Hayle, with a plug anchored on the sea bed to take up to four arrays of devices for testing. Currently, the maximum power produced by each device is 4 or 5 MW, but it will be possible to expand capacity over time so that the wave hub could feed no less than 50 MW into the network. One company has already signed up to plug into the wave-power device. Ocean Power Technologies will test a commercial-scale version of its PowerBuoy system, which is one of the leading systems being developed.

My constituency is also home to the Peninsula Research Institute for Marine Renewable Energy, or PRIMaRE, to give it its short name. The institute is based at the Tremough campus near Falmouth. At the institute, academics from Exeter university and the Camborne School of Mines are doing a lot of important work, which is needed to support the development of wave-power technology. I visited last summer to see some of the work that is being done on moorings. The Cornish coast is famous for wrecking boats, and the sea can be quite choppy at times, so getting the strength of moorings for wave-powered devices just right is an important part of the development of wave power. PRIMaRE is also doing a lot of tests on new devices to see how each device works in commercial situations.

That brings me to a point about the importance of developing and funding technology innovation. The marine renewables deployment fund will be phased out in March 2011, although according to those in the industry, this £40 million fund was never very satisfactory. It was notoriously difficult to access; in fact, I am not sure whether anybody ever successfully accessed it. The reason is that one of the criteria stipulated that a device had to have been actively and successfully working in commercial situations for at least three months before someone was eligible to apply for a grant. However, the key thing about wave-power technologies is that developers need support before that point; they need support before they get to the stage of keeping a device in the water for three months, not after they have achieved that extraordinary feat. Some estimates suggest that the cost of developing and deploying a commercial-scale device is in the region of £30 million, so developers need support much earlier in the process.

Some improvements were made under the marine renewables deployment fund, which was deliberately designed to come in a bit earlier. However, we now need to think carefully about how we move from the proving stage—testing small devices at the European Marine Energy Centre—to the stage of developing wave power on a much bigger scale.

[Andrew George (St Ives) (LD)]

My hon. Friend is making a good case. In the previous Parliament, my constituency included the Hayle area, so I was involved in the development of the excellent project he is talking about. However, does he agree—I think he is coming to this—that if the project, which enjoys perfect conditions, is to become a commercial success, we need public sector support, such as renewables obligation certificates or other means, to bridge the gap between where it is now and where it needs to be?

[George Eustice]

Yes, I absolutely agree. Although the wave hub technically comes ashore at Hayle, my hon. Friend has told us once before that it is actually in St Ives waters, and we have both had discussions with representatives of the fishing industry, who have concerns about where the wave hub is located. However, I absolutely agree with my hon. Friend, and I was coming to the point he raises.

The Government have announced a review with the Technology Strategy Board. They have also announced the new idea of technology innovation centres. Those involved with the wave hub and the PRIMaRE institute at Tremough are keen to develop a TIC for offshore renewables in the south-west. What I want from the Minister today is some idea of the criteria that will be applied. We know that a technology innovation needs assessment—TINA, in the jargon of the trade—is being carried out for projects that want to put themselves forward for a TIC. I was recently pleased to hear the Minister repeat his pledge about trying to develop a marine energy park in the south-west, and there is no better place for that than Hayle. A lot of infrastructure improvements are being carried out on the north quay, and a small marine business park will be located near the wave hub project.

I am keen, however, to understand the criteria that will be applied. I am not a big fan of ring-fencing these budgets and pots of money. Some in the industry say that we should make x amount of the £200 million available for wave-power development, but it is much more important to apply the right criteria to determine where to allocate the funds. The marine renewables deployment fund failed because we were far too risk averse. The whole reason for having public subsidy and public investment in these areas is to bridge the gap between risk and potential. When it comes to wave power, we have extraordinary potential, with a source of energy that could meet 15% or 20% of our energy needs. However, there is also a large risk in that it is much harder to develop devices to use out at sea in difficult conditions. As I said, it can cost up to £30 million to develop these technologies. The Government’s role should be to come in and bridge that divide between risk and potential.

The second key point about the criteria is that they must look at what stage the development of the technology has reached. Those involved in wave power have just gone past the phase of testing devices in a tank in the laboratory and have moved to testing commercial-scale arrays, so the industry really needs some additional funds to help it make the next step. A lot of the other renewables industries that will be competing for the same funds are quite a bit further along the development road, and we should be making much tougher demands on them so that they start getting private sector investment. We should also remember that providing public sector investment can unleash a lot of additional private sector investment. The £100 million that the Government have already invested in wave power has brought in an additional £200 million of private sector investment. There is private sector money, but those concerned need to know that there is a commitment to develop things to the next stage.

Finally, geography is another factor to take into account in relation to the capacity to develop an industry, and I want to say a little about ROCs. In Scotland five ROCs per megawatt-hour are paid at the moment for wave power that is generated, but there is not the capacity on the grid to develop an industry there. We need to avoid a situation in which all the development of the industry takes place in Scotland, but in a few years we find that there is insufficient capacity in the grid to capitalise on the industry properly. It would be far better to develop the industry in the south-west where there is capacity on the grid to upscale and expand the industry.

I believe strongly that in addition to the right technology push we need the right support framework to create the pull conditions to enable the industry to go beyond the development stage. There is no doubt that the answer is to increase the number of ROCs that we pay on the commercial devices to five ROCs per megawatt-hour, so that we match Scotland. That would give a level playing field.

[Andrew George]

My hon. Friend has got to the nub of the biggest hurdle to taking the project forward. As the Government are reviewing the ROC regime it is clear that some intense negotiation is needed between the UK Government and the Scottish Executive, to give sense and sanity, and an even playing field across the border.

[George Eustice]

I agree with my hon. Friend. There was quite a bit of criticism of the decision by Scotland to go unilaterally for the five-ROC regime. Others in the industry say that perhaps five are not needed and perhaps three or four would be acceptable, but we need that level playing field, so that the people developing the technology can make rational judgments rather than just chasing those paying the highest amount of money.

We are clearly entering an era of energy needs in which there is no magic bullet. We shall need many different sources of energy to come on stream. The Minister once told me that wherever he goes, and whatever conference he attends, people say “This is the magic industry that is the future” whether it be biomass, anaerobic digestion, nuclear or something else. The truth is that we shall probably need a range of sources to supply our energy needs in the future. It is clear that wave power could be one of those important sources, but only if we are willing to back it to the next stage, to get it to a commercially viable situation.

[Mr Philip Hollobone (in the Chair)]

With the permission of the hon. Member for Camborne and Redruth (George Eustice) and the Minister, I invite Mr Shannon to make a contribution, but I want to call the Minister at 1.45.

13:43

[Jim Shannon (Strangford) (DUP)]

Thank you, Mr Hollobone. I thank the hon. Member for Camborne and Redruth (George Eustice) for securing the debate. I want to make a couple of quick comments, as I understand that time is limited.

I fully support the points that the hon. Member for Camborne and Redruth made. There is wave and green energy creation in my constituency, at SeaGen at Portaferry, which is a very successful venture that took a lot of private enterprise spending as well as Government support. What discussions has the Minister had with the Minister of Enterprise, Trade and Investment in Northern Ireland, Arlene Foster? Have there been any discussions with her about how to introduce wave energy?

I am always concerned about the impact on the fishing industry, which the hon. Member for Camborne and Redruth alluded to in his speech—obviously the issue is of concern elsewhere, too. The fishing industry is not against wave energy but there is concern about and awareness of the need to maintain fishing stocks and fishing areas. I want to know what will happen in that regard.

We have European and Government targets for green energy, which we must meet. I am keen to support wave energy, and I keen that the Government should support it. I am also keen that something should be established to ensure that the fishing industry will not be disadvantaged. Wave energy is one of those on-tap resources of which we should take more advantage.

13:45

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I congratulate my hon. Friend the Member for Camborne and Redruth (George Eustice) on securing the debate today. My hon. Friend is already known as a champion of his constituency, but he is becoming an experienced and articulate advocate for the wave and marine industry generally, which has huge potential not only as an energy source but as an employer and generator of wealth, particularly in the south-west. As I hope I shall show, we see that as something with real potential for the south-west, and—as I am sure that the hon. Member for Strangford (Jim Shannon) will be delighted to hear—all around the British isles.

My hon. Friend the Member for Camborne and Redruth began by talking about his constituency, which is famous for, among other things, being the home of Wave Hub. That is a good example, as he pointed out, of how the UK is currently leading the world in the nascent industry of wave and tidal energy development. It is a unique facility, as he said—it is the only grid-connected facility where arrays of commercial-scale wave energy devices can be tested in a live hostile environment. It is an important asset as we develop the sector, and one that the UK Government take very seriously. Together with the other UK marine energy testing facilities—the European Marine Energy Centre in the Orkneys, and the onshore marine drive train testing facility, which is being developed at the National Marine Energy Centre in the north-east of England—it helps to provide Britain with a unique offer to the emerging sector, which is already helping to concentrate the global focus on our waters. I believe that a globally competitive opportunity is emerging.

I am glad to tell my hon. Friend, if he did not already know, that the Secretary of State will be visiting Wave Hub later this month as part of a visit to the south-west, to see how the commissioning of the facility is progressing. I look forward to getting an update from him, and I hope in due course to have the opportunity to visit Hayle myself. I assure my hon. Friend that I am personally committed to marine energy and that I share his level of ambition. Not only that, but the coalition Government, who are determined to be the greenest Government ever, are absolutely committed to harnessing the benefits that a successful marine renewables industry can bring to the UK. Support for the development of the sector is explicitly written into the fabric of the coalition agreement. I also assure my hon. Friend that I am committed to leading the way to ensuring that that commitment, unlike others made by previous Governments, will be realised.

There are real gains to be had from creating a successful and vibrant marine energy sector in the UK. If we can capitalise on our natural coastal resources, those gains will be manifold. Marine energy can certainly contribute to our renewable energy generation mix and help us meet our longer-term carbon saving targets, but the benefits go beyond that to providing us with secure, clean electricity, which enhances our energy security. Certainly, in our appreciation of marine energy we need to look more widely at the sector than through the prism of our relatively short-term and narrow 2020 carbon targets. We need to take on board, as a Department and across Government, the opportunity to build a new manufacturing sector in the UK. However, that should be seen in the context of the coalition’s wider ambitions to rebalance the economy, recognising that among other renewable sectors it gives us the opportunity to create new jobs and more opportunities, both at home and globally.

We can capture that opportunity only if we capitalise on the hard work already done by that sector, ensuring that the right foundations and support are in place to build on its success. For too long, previous Governments have failed to provide the sector with a clearly articulated long-term vision of what they want to achieve in the marine energy sector. That needs to change, and we are determined to change it. That is why I have established the marine energy programme; and I want to create a dynamic new cluster in the sector with the establishment of a network of marine energy parks around the UK. I hope that the first marine energy park will be in the south-west.

We clearly need to give greater focus to our marine efforts. I recently attended a meeting at No. 10 with Eric Schmidt of Google, chaired by the Chancellor. Out of that came a sense that we can learn a lot from the growth of other sectors that are based on scientific innovation, such as IT. The clustering of companies in silicon valley in the US was a key driver of that innovation and growth, because it fostered information sharing and competition and ultimately led to a reduction in investment risk, the fertilisation of new ideas and an increase in investor confidence.

[Andrew George]

I am most encouraged. I entirely endorse the Minister’s saying that this Government should be the greenest Government ever and his commitment that, with this project, our country should lead the world in marine energy. That said, and with the £42 million investment in place and annual insurance for the project already being met, what can the Government do to ensure that wave devices are placed on that site? Ocean Power is the only company that proposes doing so, but we need more, and I believe that that needs Government commitment. What can the Government do to assist this project?

[Gregory Barker]

I shall endeavour to explain. The Government need to do a number of things.

Marine energy parks could draw together research and development, manufacturing and other sector expertise in one place to achieve that, not on an exclusive basis but as a hub with many spokes. In a number of locations around the UK that is already beginning to happen, and the building blocks for future marine energy parks are already beginning to form—for example, activity in and around the Pentland firth in Scotland, off the coast of Anglesey and in south-west England is creating exactly the right conditions for marine energy parks. As I have made clear, we see the south-west leading the way. It has the potential to be the first marine energy park, given its unique mix of renewable energy resource and home-grown academic, technical and industrial expertise in the sector.

At the first meeting of the UK Marine Energy Programme Board, which was held in Exeter last month, I set a challenge to stakeholders in the south-west and elsewhere to come forward with ideas on collectively creating a marine energy park that will be successful in attracting additional investment and helping to boost the UK’s offer on marine energy. I look forward to working with those stakeholders and harvesting their ideas. However, my hon. Friend was absolutely right to say that public sector capital is only the beginning. We need to ensure the long-term growth of the industry, crowding in private sector capital and creating the conditions in which such capital will dwarf what the public sector can provide in these hard times. That is the real opportunity that we have to play for.

We still have a lot to do to achieve the level of deployment suggested by my hon. Friend the Member for St Ives (Andrew George), and he was right to press the matter. Over the next three or four years, I want us to be talking about deployment and scaling up in real time. We need a big vision and clear leadership, but it really is rubber-on-the-road time when it comes to working collaboratively with the industry, so that we can make real progress on the ground and at sea. Marine energy has been a Cinderella industry for far too long, and we need a programme that will set out our vision and the key stepping stones for implementation. I hope that the Marine Energy Programme Board will help me during the next few months to marshal the various pieces needed to ensure an effective deployment programme.

Turning to energy market reform, feed-in tariffs and the renewables obligation, the message from the first Marine Energy Programme Board meeting in Exeter was clear. First, we need to focus on getting the right levels of revenue for the sector to attract investment. Secondly, investment in innovation to reduce risk is absolutely necessary. That investment must be pulled in and made available in the near future.

We are already consulting on whether to offer generators a choice of renewables obligation certificates or a new feed-in-tariff mechanism between 2013-14 and 2017, once the electricity markets review legislation is in place. That will give marine generators access to the new forms of FITs from the start, which will provide added certainty and a more stable revenue stream. It will be a while before the new FITs are in place, and the marine sector needs to be confident that appropriate support will be in place before then, so as to ensure that longer-term investments will be made.

The longer-term future of the sector is clearly tied up with the new FITs, but we shall deal with the immediate problem through the review of the current ROCs. The coalition Government acted immediately after coming into office to review the banding of ROCs. As a result, investors will have certainty about what support is available a full year earlier than previously planned, with a Government response this autumn and legislation in place on the new ROCs banding by April 2012.

I cannot prejudge what that review will say, but the message given by my hon. Friend the Member for Camborne and Redruth was echoed powerfully at the meeting in Exeter. I am well aware of what the industry needs in order to expand and go forward, but that clearly needs to be balanced by other factors and other demands for renewable subsidy, which is, in effect, what ROCs are. Evidence obtained from the marine industry will feed directly into the ROCs review, and I am taking a personal interest in it.

That brings me to technology. The history of the marine renewables deployment fund—the MRDF—and its failure to spend is well known, and my hon. Friend briefly cantered around that course. It is a real indictment of the previous Administration’s failure to turn good will into good progress. The MRDF has been sitting on £50 million of the environmental transformation fund since it was created in 2005—as my hon. Friend said, the fund will close in a matter of weeks at the end of this financial year. That budget was allocated for the current spending review period, and the Department will have to make decisions over the allocation of new innovation funding. We secured more than £200 million of innovation funding in the comprehensive spending review; to date, we have allocated £60 million for ports infrastructure, but there are other competing areas. However, we will listen carefully to the needs of the marine industry.

The development of criteria for technology innovation centres is being undertaken by the Department for Business, Innovation and Skills. However, my Department is working closely with our BIS colleagues to ensure that those criteria are effective, appropriate and sufficient to drive innovation and technology. Detailed proposals have yet to be developed, but an offshore-focused TIC would make a valuable contribution in moving the sector forward, and we are actively engaged with our colleagues in that dialogue.

One of the Britain’s great strengths is its expertise in research and development. That is particularly true in the marine energy sector. With the Minister for Universities and Science, I co-chair the low carbon innovation group, which brings together the key Government bodies that support low carbon innovation, which allows us to ensure that they act in concert. That group has been developing the technology innovation needs assessments referred to by my hon. Friend, and marine energy and bio-energy are part of that programme.

This is clearly an important time for the industry. I would like to give more detail, but time does not allow it.

14:00

Sitting adjourned without Question put (Standing Order No. 10(11)).

Written Ministerial Statements

Tuesday 15th February 2011 Written Statements

Tuesday 15 February 2011

ECOFIN

Tuesday 15th February 2011 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

The Economic and Financial Affairs Council will be held in Brussels on 15 February 2011. The following items are on the agenda:

Economic Governance

The Council will hold a policy debate on the legislative proposals on economic governance. The Government agree that member states should have robust national fiscal frameworks. However, it will continue to work to ensure that any legislation on fiscal frameworks does not impinge upon UK fiscal sovereignty.

Savings Taxation Directive and Anti-fraud Agreements with Third Countries

Following agreement on the Administrative Co-operation Directive at ECOFIN in December, the Council will hold an orientation debate on proposals to amend the Savings Directive and to pursue anti-fraud and tax information exchange agreements with Andorra, Liechtenstein, Monaco, San Marino and Switzerland. These are related measures which aim to improve transparency and exchange of information to combat cross-border tax evasion. The measures have been discussed on previous occasions but progress has been difficult due to political reservations by two member states. The Government support the presidency’s aim to maintain momentum on the good governance in taxation package with a view to legislative agreement in May.

Preparation of the European Council (24-25 March 2011)

a) Macro-economic and fiscal guidance

Ministers will adopt Council conclusions on macro-economic and fiscal guidance for the EU, under the new European semester. The conclusions focus on implementing a rigorous fiscal consolidation, correcting macro-economic imbalances, ensuring stability of the financial sector, growth and job-enhancing structural reforms, and mobilising community level growth drivers. The Government believe the reform priorities set out in the conclusions are important and necessary steps to help promote economic growth in the EU and its member states.

b) Appointment of an Executive Board Member of the European Central Bank

Council will also adopt a recommendation for the European Council on the appointment of an Executive board member of the European Central Bank. Two candidates have officially been put forth to replace Austria’s Gertrude Tumpel-Gugerell when her eight-year term on the ECB’s Executive board expires 31 May: Peter Praet, executive director of the National Bank of Belgium; and Elena Kohutikova, former member of the Slovak central bank’s monetary policy board. The Government support strong governance for the ECB, although as a non-euro area member state, the UK will not vote on this item.

Implementation of the Stability and Growth Pact

The Council will discuss the assessment of action taken by Bulgaria, Cyprus, Finland and Denmark in the context of their excessive deficit procedures, on the basis of a communication from the Commission. The Government expect the Council to agree that these member states have taken effective action regarding their deficits.

Preparation of the G20 Meeting of Finance Ministers and Governors (18-19 February)

The Council will discuss and agree a terms of reference which will form the basis of the EU’s contribution to the meeting of G20 Finance Ministers on 18-19 February. The meeting is scheduled to discuss: the global economy and framework for strong sustainable and balanced growth; reform of the international monetary system; commodities; financial regulation; follow-up of the report from the UN advisory group on climate change financing; and development issues.

Discharge procedure in respect of the implementation of the 2009 EU budget

Finance Ministers will discuss the Council’s recommendation to the European Parliament on the 2009 discharge procedure following the report from the European Court of Auditors (ECA) on implementation of the 2009 EU budget. The Government consider it unacceptable that the ECA has not been able to grant a positive statement of assurance on the EU budget as a whole for the 16th year in succession.

Budget guidelines for 2012

Ministers will adopt conclusions on the budget guidelines for 2012. These note that rigorous fiscal consolidation efforts will continue in 2012, and it is therefore essential that the 2012 budget take into account member states’ economic and budgetary constraints. They also stress the need for realistic budget estimates. The Government are determined that the efforts made to curb the EU budget’s growth in 2011 must be stepped up for the 2012 budget.

Asset Protection Agency

Tuesday 15th February 2011 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The interim report for the Asset Protection Agency (APA) has today been deposited in the Libraries of both Houses.

The report contains commentary on key developments in relation to the APA and the Asset Protection Scheme (APS) over the period from 1 July 2010 to 31 December 2010.

I am pleased to note the statements in the report that the likelihood of the Royal Bank of Scotland (RBS) being able to make a claim under the APS has receded slightly.

I have also placed in the Libraries a number of legal documents relating to the APS which RBS and HM Treasury have executed since RBS’s accession to the scheme in December 2009. These reflect changes to the implied write down trigger for long-dated assets, revised arrangements for the assessment of APS performance-related remuneration for relevant RBS staff, a move from annual to quarterly fee payments and a number of operational matters.

Protection of Freedoms Bill: Public Reading Stage

Tuesday 15th February 2011 Written Statements

[The Deputy Prime Minister (Mr Nick Clegg)]

The Government have pledged in the coalition agreement to introduce:

“a new “public reading stage” for Bills to give the public an opportunity to comment on proposed legislation online, and a dedicated “public reading day” within a Bills Committee stage where those comments will be debated by the Committee scrutinising the Bill”.

In their first report to the House, the Select Committee on Reform of the House of Commons (the “Wright Committee”) noted there have been “very few individual submissions” made to Public Bill Committees. While individuals are not discouraged from participating, the Committee warned that:

“nowhere are the public positively invited to comment in any detail on the provisions of Bills or to propose amendments which might at least be worthy of debate”.

The Government have an interest in ensuring that the process of making law is more transparent and open to the public, so that their legislative policies have been publicly tested at every stage from the initial proposal through to implementation.

The Government have already involved the public in generating some of the ideas contained in the Protection of Freedoms Bill through the Your Freedom website. So that this involvement can be maintained, the Government are today launching a website (www.publicreadingstage. cabinetoffice.gov.uk) that will allow the public to comment on the Protection of Freedoms Bill online, before the House of Commons commences its considerations at Second Reading.

The public’s comments will be published in an appropriate form and made available to the House to assist and inform its debate and scrutiny of the Bill. The pilot will not involve changes to Standing Orders or the procedures of the House; nor will it affect the scheduling of the Bill. This pilot will allow the technology to be tested that could, subject to the views of the House, facilitate the introduction of a “public reading stage”, as outlined in the coalition’s programme for Government.

Equality Act 2010

Tuesday 15th February 2011 Written Statements

[The Minister for Immigration (Damian Green)]

I have made an authorisation under paragraph 17(4)(a) of schedule 3 to the Equality Act 2010, to enable the UK Border Agency to give greater scrutiny or priority to particular nationalities in carrying out entry clearance, border control and removals functions.

This authorisation came into force on 10 February 2011. It replaces the Race Relations (Immigration and Asylum) Authorisation 2004, which came into force on 12 February 2004 and has been revoked.

The authorisation allows the UK Border Agency to target its resources effectively in managing UK immigration controls. In particular, it lets entry clearance and border control staff give greater scrutiny, and staff removing immigration offenders greater priority, to particular nationalities on the basis of statistical and intelligence-based evidence of the risk they pose to those controls.

The authorisation is made under the nationality exception for immigration functions contained in the Equality Act 2010. It replaces an equivalent authorisation for border control functions and removals made in 2004 under the Race Relations Act 1976, and allows a similar evidence-based approach to risk assessment and targeting to be applied overseas by entry clearance staff. The nationalities covered by the authorisation will be reviewed each quarter by the UK Border Agency and submitted for ministerial approval.

I have made an equivalent authorisation for Northern Ireland under article 20C of the Race Relations (Northern Ireland) Order 1997. This authorisation came into force on 10 February 2011.

I am placing a copy of the authorisations in the Libraries of both Houses of Parliament.

National DNA Database (Ethics Group)

Tuesday 15th February 2011 Written Statements

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

I am pleased to announce the following appointments to the Ethics Group which provides Ministers with independent ethical advice on the operation and practice of the national DNA database (NDNAD):

Professor David Latchman CBE

Dr Nina Hallowell

Professor Latchman and Dr Hallowell replace two members of the group who have now stepped down.

Eight current members of the Ethics Group have been reappointed for a further three-year term. They are:

Dr Derrick Campbell

Mrs Wendy Coates

Ms Madeleine Colvin

Dr Jane Pearson

Dr Clive Richards

Dr Sameer Sarkar

Ms Sarah Thewlis

Dr Suzy Walton

Departmental Expenditure Limit (2010-11)

Tuesday 15th February 2011 Written Statements

[The Secretary of State for Transport (Mr Philip Hammond)]

Subject to parliamentary approval, the Department for Transport departmental expenditure limit (DEL) for 2010-11 will be decreased by £792,000 from £12,730,039,000 to £12,729,247,000.

Within the DEL change, the impact on resources and capital, are as set out in the following table:

Departmental Expenditure Limit (2010-11)

Tuesday 15th February 2011 Written Statements

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

Subject to parliamentary approval, the Office of Rail Regulation departmental expenditure limit (DEL) and annually managed expenditure (AME) will be increased as follows:

DEL: £792,000

AME: £243,000

The impact on resources and capital are as set out in the following table:

House of Lords

Tuesday 15th February 2011 Lords Chamber

Tuesday, 15 February 2011.

14:30

Prayers—read by the Lord Bishop of Derby.

Prisoner Transfer Agreements

Tuesday 15th February 2011 Lords Chamber

Question

14:36

Asked By

[The Lord Bishop of Liverpool]

To ask Her Majesty’s Government what plans they have to review prisoner transfer agreements.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, we have a small number of bilateral arrangements which we keep under review, including on prisoner consent. The UK is a signatory to multilateral agreements for prisoner transfer which would require the agreement of all parties to a review.

[The Lord Bishop of Liverpool]

My Lords, I thank the Minister for his Answer. Will he look into the case of Steven Willcox who, on transfer from Thailand, is having to serve a 29-year fixed sentence for possession of a small amount of drugs, when a number of other transferred prisoners on much more serious charges are released much sooner? Will he also look into the disparity of treatment between those transferred prisoners on fixed-term sentences that cannot be changed and those on whole-life sentences that can be reassessed, and even reduced, by British courts?

[Lord McNally]

My Lords, officials of the Ministry of Justice have recently concluded a review of the Anglo-Thai agreement and submissions will be considered shortly by Ministers. The issues raised by the right reverend Prelate will be considered by Ministers when we receive that review.

[Lord Corbett of Castle Vale]

Will the review explain why some foreign national prisoners are able to serve their sentences in their country of origin and some are not?

[Lord McNally]

In some cases we have agreements with the countries of origin. Where we do not have agreements, obviously we cannot send those prisoners back. We have recently concluded an agreement within the EU that will come into force on 5 December this year which will extend that two-way process to 27 countries. There is also a protocol with the Council of Europe which extends to 34 countries, so we are building this up. We are seeking other bilateral arrangements which will allow such exchanges.

[Lord Avebury]

My Lords, I appreciate that officials are now considering whether amendments to the Anglo-Thai prisoner transfer agreement might be drafted to bring the time British nationals spend in prison following transfer into line with that required by other European countries. What does my noble friend think of the suggestion that we should approach the Thai Government at ministerial level with a view to getting round a table and eliminating all the random variations among sentences served under the present arrangements? Better still, since my noble friend has explained that the US and some other countries refuse a prisoner a transfer when they think that it will result in an unacceptable reduction in the time actually served, could we propose an international conference of states that participate in PTAs to discuss ways of eliminating anomalies that may arise?

[Lord McNally]

I will certainly take back to my right honourable friend the Secretary of State the idea of an international conference, which I presume would also come within the bailiwick of the Foreign Secretary. The key thing to remember, however, is that the idea of the prisoner exchange is for prisoners to have the right to return—for most British prisoners, to return to Britain to serve their sentence is a considerable advantage in the first place—so the aim is not to second-guess the authorities in countries where they have committed offences. It is important that we keep that in mind.

[Lord Bach]

We on this side absolutely accept that this is a difficult problem that needs careful handling. While making it quite clear that I am not talking about any individual case—it would be wrong to do so from the Front Bench—I think that the right reverend Prelate has a point, which I hope the Minister and his officials will look into. If someone on a fixed sentence is transferred back to this country, very little can be done in terms of releasing that person earlier than when the fixed sentence finishes, whereas if they have committed a worse offence but are on a whole-life sentence, it is easier to release them earlier. That seems to be a bit of an anomaly, and the Government of which I was a member obviously faced the same anomaly as the noble Lord’s Government. Does he agree that that is the general point that needs carefully to be looked into?

[Lord McNally]

I agree. I am not a lawyer, but I am advised that that is exactly the position we have in this country: the people in jail on very long fixed terms and those on life sentences are treated differently when trying to vary those sentences. I go back to the central issue, which is that the transfer of prisoners home is to allow them to serve their sentences back home, not to benefit from a review of sentences. However, I acknowledge that the points made by my noble friend Lord Avebury and the right reverend Prelate are worthy of review by Ministers. We have now received a submission from officials on this, which we will study along with the remarks made in these exchanges. When possible, we will make the House aware of our conclusions.

[Lord Taverne]

My Lords—

[Lord Ramsbotham]

My Lords, when discussing this matter with some overseas territories from where foreign nationals have come, there has always been a sticking point over the length of sentence and the length of time that people might be expected to serve. If people go back from this country, there has been a fear that they might be released before the end of the sentence awarded by our courts. The key part of the sentence that we are talking about is at the end, when people are appropriately resettled into their country of origin. Can the Minister confirm that it is the resettlement end of the sentence which will be the subject of the discussions in the review that he mentioned?

[Lord McNally]

On this particular matter, no; we are looking at the broad issue. However, it is interesting that the noble Lord should say we are concerned that we send back to their country of origin prisoners who may then be given an easier sentence than the one imposed by our courts. Perhaps I may suggest that that precisely may be the concerns of countries that send our prisoners back. Countries have a right to their own system of justice, and some of them take matters such as drug offences very seriously indeed. When you are resident in those countries, you should be aware of the seriousness with which they view such offences.

Universities: Student Immigration System

Tuesday 15th February 2011 Lords Chamber

Question

14:45

Asked by

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government what will be the impact on universities of the proposed changes to the student immigration system.

[Earl Attlee]

My Lords, a consultation on the student immigration system closed on 31 January. It sought the views of all respondents on the effect of the proposals. The results of the consultation, and an impact assessment, will be published in due course.

[Lord Hunt of Kings Heath]

My Lords, I am grateful to the noble Earl. Last week, the noble Lord, Lord Green, who is Trade Minister, spoke warmly of the role of British educational institutions as export earners. Why is the noble Earl's department undermining that by proposing to cut the number of international students coming to the United Kingdom? Does he understand that this will have a devastating impact on the finances of many of our universities and will do enormous damage to UK interests?

[Earl Attlee]

My Lords, we are clear that we are not targeting genuine students at universities. The measures that we propose will ensure that the system is more selective for the brightest and the best. We will protect the areas that pose the least risk, including the universities sector, target the areas where risk of abuse is highest and ensure that genuine students will still be able to study at our world-renowned universities. The noble Lord is quite right to raise the issue. International students are vital for our trade position and for our soft power position.

[Baroness Butler-Sloss]

My Lords, as chancellor of the University of the West of England, I am extremely concerned about the effect on Malaysian students who come to Bristol to do the bar vocational course or the solicitors course in order to go back and better run the rule of law in Malaysia, which is extremely important. When is the Minister likely to know the outcome of the consultation? I shall be in Malaysia next month and will be attacked because of the fear that people there will not be able to get their legal training here to improve the way that they operate the law in Malaysia.

[Earl Attlee]

My Lords, I very much hope that Malaysian students will not be disadvantaged in the way that the noble and learned Baroness suggests. She can tell them that she will be able to attack me in the House if we get this wrong. We had 31,000 responses to the consultation, many of them online. Our first task is to analyse those responses. We are grateful for the responses from academia.

[Baroness Gardner of Parkes]

As the Minister will know, citizens of the original Commonwealth countries cannot come here on Commonwealth scholarships any more, because these are not awarded. However, reputable universities can still get visas without any trouble for students who are doing important courses; I think that the Malaysians would be in this category. Is this not aimed more at stopping pseudo-students who are not intending to come to study? In the past, many never even appeared at some of these so-called colleges.

[Earl Attlee]

My Lords, my noble friend is absolutely right in all respects.

[Lord Morgan]

My Lords, has not this been seen by Universities UK as a deeply harmful policy to our universities that threatens both their global reputation and perhaps £2 billion of their income? Is not the Government's policy founded on the fallacy that students are considered as migrants—in other words, as permanent rather than temporary residents of this country? Given the Government's policy on university fees, is this not a further serious blow to the well-being of one of the glories of our country?

[Earl Attlee]

My Lords, I seem to be struggling to convince the House that we are determined to protect our overseas students, whom we value immensely.

[Baroness Benjamin]

My Lords, I declare an interest as chancellor of the University of Exeter. If international students who are already studying here wish to take a new course, will they be expected to go back home and apply from overseas? The timeframe between finishing, getting their results and enrolling is very short, which will mean that many students will go elsewhere to study and we will lose good will internationally.

[Earl Attlee]

My Lords, the noble Baroness makes an important point and it is something that we are considering carefully. However, the difficulty that we experience is that students go from low-level course to low-level course, along the lines set out by my noble friend Lady Gardner, without making any academic progression at all and while no doubt working in the UK. It is a difficult point that we shall consider very carefully.

[Baroness Howells of St Davids]

My Lords, as chancellor of the University of Bedfordshire, I should like to give some figures which I hope will help. International students contribute £75 million per year to the local economy—money which we all agree is needed in Luton. They contribute £5 billion to the UK economy, which in turn generates wealth and jobs, and is equivalent in income terms to that contributed by a major industrial sector. The presence of international students makes courses financially viable, which they would not be if only UK students were recruited. Are these draconian rules really going to affect people who come here without real study value? We will lose good students, who will go to Canada and elsewhere if they have to comply with these rules.

[Earl Attlee]

My Lords, I am not disputing the figures that the noble Baroness quotes. That is one reason why we welcome overseas students. It is important to remember that comparable states have similar rules. Sometimes our rules are tougher; sometimes theirs are. However, we pay attention to the rules that obtain in similar states.

Airports: Heathrow

Tuesday 15th February 2011 Lords Chamber

Question

14:52

Asked By

[Lord Spicer]

To ask Her Majesty’s Government whether they plan for London Heathrow Airport to continue to be the world’s busiest airport in respect of international passenger traffic.

[Earl Attlee]

My Lords, we are committed to producing a new policy framework for UK aviation that supports economic growth and protects Heathrow’s status as a global hub, as well as addressing aviation’s environmental impacts. We intend to issue a scoping document in March 2011 setting out the key strategic questions that we are seeking to answer, followed by publication of a draft policy framework for consultation by March 2012.

[Lord Spicer]

I thank my noble friend for that response, but does he accept that the growth of the British economy will be seriously affected if there is capacity constraint at Heathrow Airport?

[Earl Attlee]

My Lords, we have made it absolutely clear that we do not support the construction of additional runways at Heathrow, Gatwick or Stansted. We believe that such runways would cause an unacceptable level of environmental damage, undermining our efforts to combat climate change and significantly damaging the quality of life of local communities. Instead, we have established the South East Airports Taskforce with key players from across the industry to explore the scope for measures to make the most of the existing airport infrastructure and to improve conditions for users of Heathrow, Gatwick and Stansted.

[Lord Kennedy of Southwark]

My Lords—

[Lord Clinton-Davis]

My Lords—

[Lord Borrie]

My Lords, does the noble Earl agree that one of the great difficulties that Heathrow Airport has in expanding and trying to keep at least level with our competitor airports on the continent of Europe is the higher air passenger duty that people have to pay when they leave Heathrow for destinations abroad?

[Earl Attlee]

My Lords, decisions on matters concerning taxation, including aviation, are for my right honourable friend the Chancellor. On 22 June 2010, the Chancellor announced that the Government would explore changes to the aviation tax system, including switching from a per-passenger to a per-plane duty and that they would consult on major changes. My right honourable friend will of course take into consideration all shades of opinion.

[Viscount Montgomery of Alamein]

If the Government wish the UK to have an international hub airport, as we do, why do we not build one in the Thames estuary, which would be a greenfield site, would produce a lot of employment and would have lines that go straight into the European network?

[Earl Attlee]

My Lords, the department has no plans for a new airport in the Thames estuary or in any other part of Medway or Kent. We want to get the most out of existing airport infrastructure in the south-east, which is why we have established the South East Airports Taskforce.

[Baroness Scott of Needham Market]

Will consideration of more effective use of the airports include a look at the provision of take-off and landing slots, which currently owes a lot to history and very little to common economic imperatives?

[Earl Attlee]

My Lords, a future airspace strategy is being undertaken, which includes proposals to enable aircraft to fly in more environmentally efficient ways. For example, the introduction of new onboard and ground-based systems will allow pilots to fly more direct routes and therefore reduce fuel burn and enable aircraft to arrive punctually at the approach to Heathrow, which will provide controllers with much better opportunities to guide aircraft into Heathrow without first placing them in a stack.

[Lord Brooke of Alverthorpe]

Is the noble Lord aware that the simple problem is that we do not have enough tarmac or concrete at either Gatwick or Heathrow to get more planes in and out? Therefore, we either expand facilities in terms of more tarmac and concrete or we accept that the answer to the Question asked by the noble Lord, Lord Spicer, is that, no, Heathrow will no longer be the busiest airport in the world.

[Earl Attlee]

My Lords, Heathrow will remain a hub airport.

[Baroness O'Cathain]

My Lords, what about the second runway at Gatwick? Surely that must be up for a rethink and consultation.

[Earl Attlee]

My Lords, I made it clear in my initial responses that there would not be a second runway at Gatwick.

[Lord Davies of Oldham]

My Lords, the noble Lord knows, as do his colleagues, that Heathrow is operating at 97 per cent capacity. He also knows that, at the general election, his party was committed to blocking a third runway, which of course has effects on Heathrow’s future capacity. Today he has said that we have a South East Airports Taskforce. Is that the best response that the Government can make after years of policy formulation in this area?

[Earl Attlee]

My Lords, I think that I have made our policy clear. We cannot carry on increasing the number of airport runways in London and the south-east without adverse environmental effects.

[Baroness Kramer]

My Lords, the Minister will be aware that the night-flight regime, which limits night flights at Heathrow, comes to an end in 2012. Given the appalling history of consultations at Heathrow—narrow, biased and incomprehensible—will he meet with MPs and local community groups, or will he ask the Secretary of State to do so, so that a consultation is properly formulated, properly specified and meets the needs and purpose?

[Earl Attlee]

My Lords, I am confident that my ministerial colleagues have meetings as appropriate. On 7 September, the Minister of State laid a Written Ministerial Statement before Parliament on Heathrow operating procedures. That Statement confirmed that the Government would not approve the introduction of mixed mode, disturb the current arrangements for early-morning runway alternation, westerly preference and night-time rotation of easterly and westerly preference, or reopen the previous Government’s decision to end the Cranford agreement.

[Lord Clinton-Davis]

My Lords, I declare my interest as president of BALPA. In view of the Minister’s woeful comments, does he agree that there is really no alternative to Heathrow? Uncertainty is inimical to British aviation, particularly as far as passenger transport is concerned. Would it not make more sense to ensure now that the present situation at Heathrow is not imperilled and that the airport is expanded? What viable alternative is there?

[Earl Attlee]

My Lords, I have to say again that we believe that an additional runway would significantly damage the quality of local communities. It would also cause an unacceptable level of environmental damage, undermining our efforts to combat climate change.

Olympic and Paralympic Games 2012

Tuesday 15th February 2011 Lords Chamber

Question

15:00

Tabled by

[Lord Higgins]

To ask Her Majesty’s Government what steps they are taking to ensure that an athletics track remains a permanent feature of the Olympic stadium after the end of the Olympic and Paralympic Games.

[Lord Higgins]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and declare an interest as patron of Herne Hill Harriers.

[Baroness Garden of Frognal]

My Lords, the Olympic Park Legacy Company is responsible for determining the legacy of the Olympic stadium. Subject to its board’s recommendation on the preferred bidder for the stadium being approved by its founder members, the company will move into contractual negotiations with West Ham United Football Club and the London Borough of Newham to agree acceptable terms of lease, based on the bid proposals, which included the retention of a running track.

[Lord Higgins]

My Lords, I thank my noble friend for that reply. Does she agree that it would seriously damage Britain's reputation and make it difficult for any other sports to bid successfully for major international events if we did not fulfil the obligations we undertook with the IOC regarding the Olympic legacy? Does she further agree that any contract of this kind for the future of the stadium must ensure that the track remains a permanent—rather than a temporary—feature after the contract is signed, that the facilities for field events remain and, more particularly, that the stadium is available on a regular basis for all major athletic events?

[Baroness Garden of Frognal]

My Lords, my noble friend speaks with great authority, having himself been twice a member of the Olympic team. The points he raises are all highly relevant, and they will form part of the negotiations which are under way. On the specific issue of the track being available for other events, should all the recommendations be approved, it would be possible to bid for the 2017 world athletics championships, for which expressions of interest are not expected until March.

[Baroness Trumpington]

My Lords, will the Government take steps to eliminate the horse track and everything to do with the equine Olympics at Greenwich and restore Greenwich to its original, beautiful site?

[Baroness Garden of Frognal]

My Lords, I entirely respect the expertise of my noble friend, but I have to say that that is slightly outside the area of the Question and would perhaps make the subject of another Question.

[Baroness Grey-Thompson]

My Lords, as may be expected, I applaud the decision to support a legacy for athletics after the 2012 Olympics and Paralympics. I declare an interest both as a member of the board of UK Athletics and as a retired athlete. Now we know that the track will be in place, what specific measures are being taken to support the bid for the 2017 world athletics championships, given the huge sporting and financial benefits that would come to the UK and given that they would present us with another opportunity to inspire a generation of young people to be fit and healthy and to excel at what they do?

[Baroness Garden of Frognal]

My Lords, I entirely agree with the noble Baroness. On the matter of supporting the bid for the 2017 world athletics championships, at this stage of the negotiations we cannot commit to that because we are still in the process of the bid being considered. I am sure that, if all the recommendations go through, that issue will be high on the agenda for the successful team.

[Lord Faulkner of Worcester]

My Lords, the noble Baroness will be aware that there has been some cynical press comment that the moment that West Ham United Football Club takes over the stadium after the end of the Olympics, it may well find the opportunity to abandon its commitment to maintain the running track. Is she satisfied that the Government are sufficiently robust in their negotiations to prevent that happening?

[Baroness Garden of Frognal]

My Lords, I should never believe everything you read in the media. We are confident. In the words of the noble Baroness, Lady Ford, who chairs the legacy company,

“We are confident that this represents the very best legacy for the Stadium—it’s good for the community of East London … for Londoners … for the UK taxpayer and it’s a good outcome for sport”.

Within the bid, there will be constraints on how the stadium can be used.

[Lord Mawhinney]

My Lords, does my noble friend agree that it would be a weak and cowardly decision to reverse what the legacy organisation has already decided as far as the Olympics are concerned? Does she take seriously the point made by my noble friend Lord Higgins that this country would never again in the foreseeable future win the right to host any international sporting event if it was proved in this case that our word was not our bond?

[Baroness Garden of Frognal]

My noble friend also speaks with great expertise in these matters. At this stage of the negotiations, I regret that I must not comment further on this. We are still at a stage in the process where matters have not yet entirely been determined.

[Lord Addington]

My Lords—

[Baroness Billingham]

The decision to ensure that the athletics track remains in the Olympic stadium would undoubtedly be right. No one could question that ethically. That was part of the bid, as has already been said, as was the pledge to hold an annual school sports Olympics in that magnificent stadium. How can the Minister reconcile that promise with the total elimination of sport from the curriculum, as proposed in the new Education Bill? Where is the next generation of Olympians going to come from if it does not get the start in school that it deserves?

[Baroness Garden of Frognal]

My Lords, as I have attempted to reassure the noble Baroness before, this Government are entirely committed to sport for young people. There has been a review of the arrangements for the school sports partnership and there are other ways in which sport in schools and competitive sport between schools and in schools are being encouraged.

Jobseeker’s Allowance (Work Experience) (Amendment) Regulations 2011

Tuesday 15th February 2011 Lords Chamber

Housing and Regeneration Act 2008 (Consequential Amendments to the Mobile Homes Act 1983) Order 2011

Mobile Homes Act 1983 (Amendment of Schedule 1 and Consequential Amendments) (England) Order 2011

Mobile Homes Act 1983 (Jurisdiction of Residential Property Tribunals) (England) Order 2011

Motions to Refer to Grand Committee

15:07

Moved By

[Lord Strathclyde]

That the draft orders and regulations be referred to a Grand Committee.

Motions agreed.

Civil Procedure (Amendment No. 4) Rules 2010

Tuesday 15th February 2011 Lords Chamber

Rules of the Court of Judicature (Northern Ireland) (Amendment No. 3) 2010

Motions to Approve

15:07

Moved By

[Lord Sassoon]

That the rules laid before the House on 23 December 2010 be approved.

Relevant document: 14th Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument). Considered in Grand Committee on 7 February.

Motions agreed.

European Union (Definition of Treaties) (Stabilisation and Association Agreement) (Republic of Serbia) Order 2011

Tuesday 15th February 2011 Lords Chamber

Legislative Reform (Civil Partnership) Order 2011

Motions to Approve

15:07

Moved By

[Lord Wallace of Saltaire]

That the draft orders laid before the House on 25 October 2010 and 10 January be approved.

Relevant documents: 13th Report from the Joint Committee on Statutory Instruments and 4th Report from the Regulatory Reform Committee. Considered in Grand Committee on 7 February.

Motions agreed.

Pensions Bill [HL]

Tuesday 15th February 2011 Lords Chamber

Second Reading

15:08

Moved By

[Lord Freud]

That the Bill be read a second time.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I would like to pay tribute to those whose diligent work underpins this Bill, in particular the former pensions commissioners the noble Lord, Lord Turner, and the noble Baroness, Lady Drake, and the noble Lord, Lord McKenzie, for his work on the previous Pensions Acts. I am sure that this will be a very interesting and well informed debate.

It is the nature of the legislative process that this Bill sharpens and defines the Pensions Acts that have passed before. The foundations of the current pensions regime stretch back to Lloyd George's epoch and we strive, as many have done before, to enhance the system and ensure that stewardship of the pensions system in our own era is worthy of our predecessors.

Even since the noble Lord, Lord McKenzie, stood in this spot in this House in 2008, our pensions landscape has continued to change. In 2008, the Office for National Statistics produced new population projections. If noble Lords would indulge me for a minute, it is worth putting this change into context. In 1981, someone retiring at 65 had on average 16 years in retirement. Today, someone retiring at 65 will spend on average over 21 years in retirement. In future, this is forecast to increase, with some spending half their adult life in retirement. With every new demographic forecast comes a continuing increase in life expectancy.

The very fact that people are living longer is testament to the many welcome advances made in medicine, in technology and in standards of living. Yet the increase in life expectancy places a great deal of pressure on the pensions system. Despite the policies implemented by the coalition Government that are aimed at restoring sustainable public finances, the Office for Budget Responsibility has projected that the impact of an ageing society could wipe out any progress on deficit reduction. Furthermore, the OBR's projections indicate that if the impact of the longevity challenge is left unaddressed, public sector net debt could reach 100 per cent of GDP by 2050. This is simply untenable.

Pension reform has traditionally proved the ability of the legislature to build consensus on an issue. We all agree that something must be done; that much is clear. Therefore, as we celebrate the fact that people are living longer, healthier lives, we also have to recognise that we need to establish a fair and sustainable pensions system to meet the inevitable challenges of increasing longevity.

We need a fair system that provides a decent income for an individual in retirement and distributes the costs appropriately between the generations; we need a sustainable system that acknowledges the changes in life expectancy and adapts to the reality of the society in which we live; and we need a balanced system in which the state, individuals and employers all play their role in achieving a fairer balance between work, saving and retirement.

This Bill makes amendments to existing legislation by correcting, revising and adding, where appropriate, to ensure that our pensions legislation is up to date and fit for the 21st century. A higher proportion of people are now living to 65 than ever before. Life expectancy beyond 65 is increasing steadily. Yet under existing legislation, the timetable for the state pension age increase to 66 was not due to be completed for another 16 years.

The Pensions Commission's 2005 report stated unequivocally that,

“A policy which allows each generation to spend an increasing proportion of life in retirement financed by an increased level of public pension expenditure as a percentage of GDP will be unsustainable in the long run and unfair to subsequent generations of taxpayers”.

In short, the timetable that provided the foundations for the 2007 Act is out of date, since that Act was based on the 2004 ONS projections of average life expectancy.

Noble Lords will be pleased to hear that 2006 was a golden year for all of us, because in that year the ONS updated its expectancy projections; and compared with 2004, many of us lucky individuals gathered here ended the year nearly a year younger than at the start because of this revision. Of course I am looking at age in terms of how long you are expected to have left rather than how long you have had. No anti-ageing cream or time machine can be as effective as what we saw in that wonderful year. But there is a price. If you take just the cohort of people retiring in 2010, the latest increase in life expectancy equates to an estimated £6.5 billion in cost, in constant price terms, over the lifetime of that single pensioner cohort. Given the scale of these costs, it is simply not affordable to wait to increase the state pension age, and it is certainly not fair to the working-age generation who fund the state pension. As outlined in the Government’s Command Paper published in November 2010, Clause 1 of the Bill will bring forward the timetable to complete the equalisation of women’s state pension age with men’s by November 2018. We will then raise the state pension age for both men and women to 66 by April 2020.

Noble Lords may wish to note that increasing the state pension age is something of a trend internationally. Ireland has already legislated for the pension age to be raised to 66 by 2014. Similarly, the Netherlands and Australia are increasing the state pension age to 66 by 2020. There is widespread recognition across the developed world that this is an issue that must be addressed.

The Government want all pensioners to have a decent and secure income in their retirement. That is why we have introduced the triple guarantee, for example, to ensure that the basic state pension will help to provide a more solid financial foundation for pensioners from the state. But alongside this, the Government must also encourage and enable a culture of individual savings. Around 7 million people are currently not saving enough to meet their retirement aspirations. This means that if we do not address the issue of under-saving now, huge numbers of people reaching retirement will be met with a pension income that is less than they hoped for. It is imperative that we encourage individuals to save for their retirement now rather than as a belated afterthought. The automatic enrolment of individuals into a workplace pension means that people will start thinking about their retirement in good time.

So, under the Pensions Act 2008, all employers will be required automatically to enrol all eligible workers into a qualifying workplace pension scheme from 2012. For the first time, employers will be obliged to make a contribution to that arrangement. I would describe this as an example of asymmetric paternalism—policy benefiting those who would perhaps not plan ahead but simultaneously allowing choice for those who do.

The principle of automatic enrolment has already been debated in this House during the passing of the Pensions Act 2008. We are absolutely committed to that principle. The Bill will tweak some of the parameters of the policy to ensure that automatic enrolment works as effectively as possible. This is what was set out in the recent independent review, Making Automatic Enrolment Work.

We propose a slight increase to the earnings threshold at which automatic enrolment is triggered, aligning it with the basic rate tax threshold. This simplifies the administration by aligning automatic enrolment with existing thresholds that employers use. We believe that this measure will create a buffer against de mimimis contributions without creating a significant contribution cliff edge.

The Bill introduces measures to ease the regulatory burden on employers by allowing a waiting period of up to three months. This is on the proviso that employers must provide a notice of their intention to invoke a waiting period and workers are able to opt in to pension saving if they wish to do so within this period.

The Bill also contains a measure to enable employers who are using money purchase schemes to certify that their scheme satisfies the relevant quality requirements. My department has worked closely with employers and industry bodies, including the ABI, CBI and NAPF, to design a straightforward test that will work in practice. The details of the test will be set out in regulations, but this clause sets out appropriate parameters to deliver an easement for employers to continue delivering quality pension provision while protecting individuals.

As a result of the workplace pension reforms, we expect 4 million to 8 million people to start saving, or save more, in all forms of workplace pension schemes. These savings could make all the difference to a comfortable retirement. To put this in financial terms, we estimate that someone earning £28,000 a year and saving into a workplace pension, with an employer contribution of 3 per cent, could increase their pension pot by an extra £650 a year as a result of the reforms. This will transform the pensions landscape in this country and help steer individuals towards a more secure future.

Part 3 of the Bill covers occupational pension measures. The Bill amends a few rogue references to the retail prices index in existing pensions legislation to set occupational pension schemes’ indexation and revaluation at the “general level of prices”. This follows on from the Government’s decision to use the consumer prices index, as announced in the emergency Budget. We believe that the CPI is the most appropriate measure of the general level of prices in this country for the uprating of pensions. If noble Lords will indulge me, I shall explain this approach. For example, as only 7 per cent of pensioners have a mortgage, with about 70 per cent of pensioners owning their own homes outright, the Government consider it appropriate and correct to use an index that excludes mortgage interest payments. The CPI excludes these costs.

Furthermore—a technical matter which I find fascinating—the CPI takes account of consumers trading down to cheaper goods when prices rise: the so-called substitution effect. The RPI does not do this. That does not make the RPI an inappropriate measure, but it makes the CPI a measure that is more appropriate in this instance. Who does not switch brands of teabags or biscuits when feeling the pinch on the wallet? It is basic budgeting. The CPI reflects the changes that people make. Suffice it to reiterate the words spoken about CPI in 2003 by the then Chancellor, Gordon Brown:

“It is more reliable … It is more precise”.—[Official Report, Commons, 10/12/03; col. 1063.]

I shall not weary your Lordships now with the details of the methodology behind the two indices and the advantages of that employed by the CPI. The comparison between the two indices is what fuels this debate—the question of which is the most appropriate index for pension payments to reflect inflation.

We must remember that the key legislation for setting the statutory minima for the revaluation and indexation of occupational pensions is not in this Bill. The Occupational Pensions (Revaluation) Order 2010 was laid in December and came into force earlier this year. Legislation requires the Secretary of State to consider the “general level of prices in Great Britain”, not a specific index or a specific price. Furthermore, indexation is aimed at protecting purchasing power, and the use of the CPI does indeed protect an individual’s occupational pension from inflation. Noble Lords may also note that any schemes wishing to pay the higher of RPI or CPI are perfectly able to do so. In similar vein, the Bill amends references to compensation paid by the Pension Protection Fund. Provisions are also included to remove the indexation requirement for cash balance benefits.

The Bill also introduces provisions to allow for contributions to be taken from members of the salaried judiciary towards the cost of providing personal pension benefits. The interim report of the noble Lord, Lord Hutton, found that the value of public service pensions had been increasing following dramatic increases in life expectancy at retirement. The Government have accepted the noble Lord’s recommendations that the most effective way to make short-term savings on the cost of public service pensions is to increase member contributions. In view of this recommendation, it is right that judges, like other public service pension scheme members, should begin to contribute towards their own pensions.

In 2009-10, judges paid £4.3 million in total towards dependants’ benefits, compared to a contribution by the Government—and, ultimately, the taxpayer—of nearly £84 million. There is clearly a good reason for members of the judiciary to make a greater contribution if their pensions are to remain fair to them and to taxpayers, as well as remaining affordable for the country. I would therefore argue that the provisions for the judiciary included in the Bill represent a fair, affordable and responsible way forward.

Indeed, the principle of contribution is already contained within judicial pension schemes. Existing provisions are in place for contributions to be taken from members of judicial pension schemes towards the costs of widows’, widowers’, surviving partners’ and children’s benefits. The Bill proposes to extend the contributory principle to cover personal pension benefits, with rates to be set through secondary legislation, consistent with the approach taken for existing contributions. However, judicial officeholders who have already accrued full pension benefits will not be required to contribute under this measure. The Bill legislates for this provision to be phased in from April 2012, and the savings on pension costs will make an important contribution to our commitment to deficit reduction.

I must also acknowledge that esteemed body, the Delegated Powers and Regulatory Reform Committee, which has published a report on the delegation of powers contained within the Bill. The committee commented on one of the amendments, in Schedule 4 to the Bill, relating to the Pension Protection Fund, and it has requested an explanation of the relative financial significance for pension schemes of the PPF levy in comparison with the pension protection levy and the general levy.

I would be happy to clarify this matter for the House. The amounts to be recovered on behalf of the Secretary of State through the PPF administration levy and the general levy are broadly equivalent. For both the financial year ending 31 March 2011 and the financial year ending 31 March 2012, the PPF administration levy was set to recoup £22 million; for the same periods, the general levy was set to recoup £43 million a year. By comparison, the amounts to be recovered on behalf of the board of the Pension Protection Fund through the pension protection levy are much higher. For the financial year ending 31 March 2011, the pension protection levy was set to recoup £720 million; for the financial year ending 31 March 2012, the levy was set to recoup £600 million. I hope this satisfies the request of the committee.

The Bill contains several parts, but these parts are joined together by a common thread—readjusting the pensions landscape to work towards a more sustainable system in the face of increasing longevity. I do not need to labour the point about the scale of this challenge: many noble Lords present have contributed richly to writing the book on pensions reform, including taking legislation through this House and another place. I will, however, reiterate that the Bill provides the essential amendments needed to ensure that we have a fair, affordable and sustainable pension system to pass on to the next generation. I beg to move.

15:28

[Baroness Drake]

My Lords, I thank the noble Lord, Lord Freud, for introducing the Bill and I acknowledge his willingness to discuss matters. We are pleased that the Government are pushing ahead with the automatic enrolment of workers into workplace pensions, thereby continuing the reform programme, introduced under the Labour Government, which commanded widespread consensus across political parties and stakeholders. We want to work with the Government to maintain that consensus and to build on it. However, we believe that they should not proceed with the accelerated timetable for equalising the state pension age; that the proposals for the threshold of earnings which trigger the automatic enrolment of workers into a pension have the potential to detract from enabling low to moderate earners to save; and we have concerns about the employers’ self-certification and occupational pensions indexation.

In the face of increasing life expectancy, I accept that raising the state pension age is part of the solution to maintaining a sustainable state pension system that supports private pension saving. I accept that when improvements in life expectancy accelerate at a greater rate than anticipated, it becomes necessary to revisit existing plans. As a principle, however, the manner and timing of any increase in the state pension must give people fair and proper notice and sufficient time to adjust, and ensure that the impact is not unfair and disproportionate for particular groups. The acceleration of the timetable to achieve the equalisation of pension age for women and men, from April 2020 to November 2018, does not meet that principle and breaks the promise made in the coalition agreement not to start increasing the state pension age to 66 for women before 2020. The Government should honour the 2020 timetable for equalisation and focus the acceleration of the timetable for the state pension age to rise from 65 to 66 for both men and women to between 2020 and 2022

Let me state the nature of the unfairness. Under the Government’s proposals, some half a million women will receive their state pension at least 12 months later than they had previously been advised. For 300,000 women born between December 1953 and October 1954, this delay will increase to between one and a half to two years. For 33,000 women born between 6 March and 5 April 1954, it increases to two years. For them, the loss in state pension is around £10,000; for those on full pension credit, the loss is closer to £15,000. These women, with five years’ notice of the timetable change, have little time to prepare for their income loss, which is neither fair nor reasonable. The impact of the accelerated timetable is too harsh on women in their later 50s, the poorest of whom will have to wait longer for their pension credit. The argument that women live longer than men, so draw their state pension for longer, is not mitigation for women in their late 50s being given so little time to adjust to their loss of income. It is simply not realistic for women in their later 50s to be able to save sufficiently to address the loss. The introduction of the employer duty to enrol workers into a pension scheme will not conclude until 2017, just 12 months before the start of the move from 65 to 66 in 2018 and 12 months after the start of the accelerated timetable in 2016.

Women in their later 50s are less likely to be in a pension scheme and more likely to be working part-time, earning low incomes. Many are inactive because of looking after family. Even the Government, in their report A Sustainable State Pension, concede that speeding up the pension age equalisation timetable will not significantly reduce the gap in the proportion of women aged 55 to 65 who are out of the labour market compared to men. Women in their later 50s have fewer savings: the median pension saving of a 56 year-old woman is just £9,100, almost six times lower than that of a man, which stands at £52,800. Although as a result of reforms introduced by the Labour Government, most women reaching state pension age in late 2018 will be entitled to a full basic state pension, they will still have a lower entitlement to additional state pension. Nearly 40 per cent of women approaching retirement are not part of an ongoing marriage so many cannot rely on their partner's income to cushion the financial loss.

In summary, women in their later 50s, for historic reasons of gender discrimination, will have lower state pension and private savings than men, will have earned less over their lifetime, may have been unable to join a workplace pension, had interrupted careers and are more likely to be carers. This inequality will remain and is exacerbated by the accelerated timetable, which does not give them sufficient time to prepare for their income loss. The fiscal benefit from the acceleration of the equalisation timetable will not impact on the deficit reduction in this Parliament. The savings will start to flow from 2016, when net borrowing is forecast to have fallen significantly.

We are pleased that the Government are pushing ahead with automatic enrolment, but the changes to the earnings threshold, which triggers a worker’s enrolment into a pension scheme, cause deep concern. The Government have set the threshold at £7,475 in 2011-12 earnings terms so that it is aligned with the threshold for income tax. However, the Government’s aspiration for the income tax threshold is to raise it to £10,190. If the threshold to trigger auto-enrolment were to rise to £10,190, it would exclude nearly 1 million workers per year from workplace pensions, 76 per cent of whom would be women, with the loss of £40 million of employer pension contributions. Consequently, of the group targeted to benefit from the workplace pension reform, 66 per cent would be men and only 34 per cent women. The earnings threshold for auto-enrolment should be set and maintained in relation to the national insurance threshold, not the income tax threshold. Raising it to £10,100 would not, if I may say so to the Minister, be a slight increase, but directly undermine the objective of enabling low and moderate earners to save, which is confirmed by the Government’s own impact assessment and the Paul Johnson review. Nearly half of those in the lowest earning group are in couples, where one works part time and the other full time. The Johnson review says:

“Many or most very low earners are women, who live in households with others with higher earnings and/or receive working tax credits. These may well be exactly the people who should be automatically enrolled”.

Yet we have a set of proposals that would exclude them.

A key principle of pension reform is to enable women to build up a pension in their own right. The higher the threshold for auto-enrolment, the less the reforms will work for women. Evidence also shows that earnings are not static and that for many workers, men and women, they can change significantly over their lifetime. Most low earners go on to earn more, so saving will still be very beneficial, because of the continuing contribution to their pension over their working life. The Johnson review presented a variety of evidence to show that relatively few people have persistently low earnings over their lifetime. If the threshold is raised to £10,190, it is not sufficient to say that the impact can be mitigated by those earning below this being allowed voluntarily to opt in. Inertia prevents people from saving, which is why we have these reforms. So it is really not credible to say that the lower paid still have to overcome these barriers but that those earning higher incomes would benefit from auto-enrolment—or asymmetric paternalism.

A higher threshold disregards how working-age benefits can make it pay to save. Individuals’ pension contribution is disregarded from income when calculating entitlement to tax credits. Just over one-third of those earning between £5,000 and £10,000 are in receipt of tax credits. That, for some, can produce an implied tax relief of 50 per cent to 60 per cent, which provides a very positive incentive to save.

The Bill provides for an employer to certify, subject to a regulatory test, that their company arrangements meet the requirements on minimum pension contributions. Although the Bill prescribes the powers of the Secretary of State in setting the test, our concern is that, in trying to accommodate the good employers, a compliance loophole is created for bad employers. The test is still subject to consultation, and there may be pressure to change further. Although the Johnson review asserts that under the proposed test, based on ONS figures, 92 per cent of workers would match the qualifying earnings, post auto-enrolment an incentive may have been created to reduce basic pay and arbitrage between the 8 per cent on the band of earnings test and the certificate of alternative test.

I must take the opportunity of this Bill to refer to the decision to use CPI as a measure of increase in the general level of prices, which is estimated to deliver—in estimates revised upwards by the Government—an £83 billion reduction to occupational scheme members’ pension benefits over the next 15 years. This change effects a switch of assets and benefits from scheme members to scheme sponsors but does not directly impact the public deficit. While one can see the merits in a change for a limited period, the permanent change will be felt even after the fiscal deficit is long gone. I say this against a background of concern over whether the CPI index is appropriately constructed, given the basket of goods that it captures, notwithstanding the merits or otherwise of an argument on the way in which the mean and the substitution effect is calculated.

The Bill allows employers to defer enrolling eligible workers into a pension for up to three months and consequently reduces annual employer pension contributions by some £150 million. Given that individuals have, on average, 11 different labour market interactions during their working life, this could add up to nearly three years of pension savings or a 7 per cent reduction in an individual’s fund. Will the Government be monitoring the impact of the three-month waiting period and how widespread the usage of that facility will be by employers? Finally, stakeholders need timetable and policy certainty so that they can understand and prepare. The Bill leaves a significant amount to regulation. Can the Minister therefore confirm in writing when the regulations will be available in draft?

15:42

[Lord German]

My Lords, I begin by stating my interest as a pension trustee for the National Assembly for Wales pension fund. I also thank the Library here for its detailed note on this Bill, along with the many organisations and bodies, some of which have been referred to already, which have provided some briefing on and support and criticisms of the matters which are now before us. One must start, I suppose, by looking at the work of the noble Lord, Lord Turner, and his view on this issue, which started in train the changes from which we are seeing some conclusions today. His conclusion was about longer life and I am grateful to the Minister for informing me that I am now a year younger than I was. Perhaps that will mean that I will no longer be able to claim the state pension this year. Maybe the Minister will want to refer to that context later.

The conception that the noble Lord, Lord Turner, had was that a variety of different tools were available to us to make the necessary changes to deal with the longer time that we are going to be spending alive in this world. The first option was to make pensioners poorer; I think that everyone concluded that that was not realistic—a conclusion which we would all want to share. The second option was that taxes would rise or that there would be cutbacks in expenditure on other public goods and services. There were the options, thirdly, that savings would rise and, fourthly, that retirement ages would rise. His conclusion, which has subsequently been resolved through many debates in this place and the other place, was that there is a range of choices but that a combination of the three factors—tax rises or service cuts, rises in personal savings and rises in retirement ages—is necessary.

The demographic challenge, which has been referred to, is the fundamental that we all need. From the work that has already been concluded, both by the previous Government and in the commissions that have taken place, I suspect that there is a general acceptance that the number of years should bear some sense of how long we can expect to live after retirement. In other words, there should be a life expectancy general rule which seems to be a thread throughout these changes. That is why we are bound to revisit this matter. The noble Baroness, Lady Drake, said that this is undoubtedly something that we will have to come back to since, if the trend continues, we will have to alter the state pension age.

However, it cannot be looked at in isolation without including the potential and announced changes to the basic state pension. I come now to the question of deficit reduction, to which the noble Baroness, Lady Drake, referred. She said that we will not see the savings in terms of a contribution to deficit reduction until 2016. What we can do is use some of these changes to assist in ensuring that we have a fundamental review and a fundamentally improved basic state pension. While we have already put in place the triple lock from this April to ensure that pensioners will not be worse off, I have read in the newspapers and other publications that ambitious changes are proposed for the basic state pension. That is a consequence of these measures as well, and I hope we will be able to say something about it at the same time.

There is, however, the issue of acceleration in respect of one group of women. I call it the acceleration bubble. One group of women will bear more of the brunt of the changes than others—those who were born around 1954. On the shoulders of that bubble, it will affect those born between 1953 and 1956. Those women who are still travelling along the same road as people of roughly the same age will see the horizon moving further away from them faster than those around them will. In the most extreme case under these proposals, two women who were born one year apart could see a three-year difference in their pension ages. The crucial thing about this bubble is the extra working months that some women will have to put in, compared to those who are nearly the same age. That is a genuine concern: there is a cohort of women who will be treated differently.

While the announced and prospective changes to the basic state pension will assist us, the Government should give careful consideration to this group of women who will be more affected by the changes—those within the biggest area of that acceleration bubble. Rather than say that the acceleration must be slowed down, there are changes that the Government could make for that specific group of women because it is a one-off. They could, for example, start by making exemptions or providing additional support for those who are seriously ill. They could make adjustments to the pension credit arrangements, which might make a difference for that group of women. They could make changes that affected the whole cohort born between 1953 and 1957, rather than only those who were born in 1954. There is a difference of effect between people with different years of birth.

The Government could also look at some of the other measures that are not a consequence of this Bill but where longevity has produced policy issues that need addressing. The most important of those is health inequalities. Where people live longer, some will do so because of the inequality in their life as a whole. That could be something to do with work opportunities and is usually also to do with poor housing. There are areas that the Government should address in those respects to reduce such health inequalities, particularly in older age.

On age discrimination, both in and outside the workplace, I welcome the removal of the retirement age. It means that people will be treated with dignity whatever age they wish to work to. A basic state pension should be the crucial tool to take people out of poverty. I hope that the changes which are likely to be announced will provide that help. Fundamentally, we must protect those with disabilities or caring responsibilities.

I accept the Government’s need to remove the cost of auto-enrolment to business as we want to encourage as many as possible to participate. However, as regards the three-month waiting period, the key issue for the Government to address is the right to opt in. The Bill states that you can opt in during that three-month period, but to be able to do so you need to have received clear information from your employer. Is the Minister prepared to consider introducing legislation to enable that information to be provided as of right to people in companies affected by the waiting period? Migrating between jobs also affects auto-enrolment if the threshold is not reached—for example, if you work a different number of hours from month to month and your wages fall below the threshold one month and above it the next. The key issue is whether that three-month period has to be consecutive, or will the waiting period end as soon as three qualifying months have been achieved, even if they are not consecutive? I welcome clarification from the Minister on that.

One of the big problems with re-enrolment is that there is a two-year period in which an employer can simply return the contributions which a member has made in a pension fund during that period, excluding the employer’s contribution. The member does not have the right to reinvest the contributions and re-enrol in the scheme. Members who defer their pensions from these pots are often charged an extra 1 per cent in service charges. Over a lifespan, that can amount to a considerable sum. Is there a role here for the FSA to regulate to ensure that those people get a fair deal? What benchmarking will be put in place to enable a scheme to be approved for auto-enrolment? Clarity is needed in that regard. We need to be given assurances about the quality of a scheme so that a NEST scheme can be compared with others. Employers need to be able to assure their workforce that a quality standard is in place with regard to pension funds.

The legislation is silent on the previous commitment to remove the contributions cap, which will be £3,600 in 2017, moving up to about £4,270 at present-day prices. In the previous legislation that cap was due to be removed in 2017. I hope that that will be possible because this affects a group of workers who often have very small pots of money which they need to reinvest and who want to avoid the bureaucratic burden of moving their pension pot every time they change job. I understand the concerns of the pensions industry regarding the restriction on transfers to the new pension fund but a balance has to be struck between meeting the needs of the pensions industry and those of the workers and those companies that are paying their contributions to ensure that a fair deal is arrived at which works for everyone.

As regards the RPI/CPI impact of the Bill, as the Minister said, no housing costs are included in the CPI. He said that only 7 per cent of pensioners have mortgages. However, 21 per cent of pensioners pay rent, which is the other important housing statistic. Pensioners who pay rent and are on low incomes are protected by housing benefit. However, I understand that the Government wish to include some housing costs in future CPI arrangements. I should be grateful if the Minister could tell me when the Bank of England will return to this matter and advise the Government on it. It is welcome, by the way, that there is no override on pension funds where the scheme specifies that RPI will be the measure of increase, and that the Government do not intend to override these private pension schemes.

It is clear from the figures presented in the impact assessment and by companies and bodies that have advised us on the Bill that some defined benefit schemes may now be able to continue if they switch to CPI. The Pensions Policy Institute believes that this could affect between 20 per cent and 40 per cent of schemes. I hope that the Government will monitor that effect, because it would be useful to obtain a quick evaluation of whether schemes that have been in severe difficulty will be able to retain the rights for their pensioners. The overall change will benefit poorer pensioners, but we may find that richer pensioners have to pay a bit more. I do not know whether other Members of this House consider that to be acceptable or not, but I believe it is the right way to do things.

I noticed that the noble Baroness, Lady Drake, did not refer to judges’ pensions, but I will poke in my toe to test the water. This matter is clearly out of kilter with the current culture of saving for the future, and there is a need for transparency. There is a place not too far from this Chamber where pay awards were made and refused by others on their behalf, and consequently other measures were included in a sort of compensation package that caused a lot of trouble for Members of the other place. It should be clear that if the question is about there being no pension contribution because it is a reflection of a lower salary, it would be much better to improve the salary, and that would be transparent for the public to see. I hope that the Minister can advise us on this matter.

Finally, this is a compendium Bill, in the sense that it has a broad title—the Pensions Bill—and the Minister might consider other measures that are not in the Bill. One of those is of course the rights of pensioners to receive information from those who manage their pensions on their behalf, particularly the need for an annual report to pension holders and a report that can be passed down the food chain on the risks inherent in the investment strategy of pension funds, whereby those affected by pension change will know those risks. It is a world in which people have little knowledge of what is happening on their behalf. Perhaps if they were given more information, the level of awareness would be raised for those who are about to receive pensions or will receive them in the future.

In conclusion, this is undoubtedly an area to which we will return. I expect to see changes in the basic state pension, and I expect that the review by the noble Lord, Lord Hutton, of public sector pensions will undoubtedly attract discussion here. As the Minister said, longer life goes on.

15:58

[Baroness Greengross]

My Lords, I declare an interest in that I head up ILC-UK, one of 12 organisations across the world that look at planning for the future in the light of demographic change. I agree with the Minister that, while we all celebrate the incredible changes in life expectancy and we all hope to benefit from them, they present us with enormous challenges that we all must try to meet in a fair, just and realistic way. I am therefore pleased to take part in this Second Reading debate.

I am sure that all of us in this House would support the aim of getting more people to save for their old age. I particularly welcome the fact that NEST is designed particularly to meet the needs of people who are largely new to pension saving. I am certain that NEST will be a valuable addition to the pensions landscape and I welcome the incorporation into the Bill of the recommendations of the 2012 review team to widen pension provision and to help to keep existing schemes open.

One good aspect of the earnings trigger of £7,475, which the noble Baroness, Lady Drake, was worried about, is that it should help to prevent employees and employers from making very small contributions. However, while welcoming the Bill, we must be alert to the possibility of unintended consequences. Unless we deal with them, there could be a lot of losers as well as winners, as other noble Lords have pointed out.

I will make brief comments about the three key areas of the Bill: auto-enrolment and its particular relevance for older workers; raising the state pension age and, in particular, the impact on older women, as has been mentioned; and the move from RPI to CPI and its impact on older people.

The Bill introduces an optional waiting period for auto-enrolment so that an employer can give an employee notice that their auto-enrolment will be delayed by up to three months. However, to ensure that those workers who have their auto-enrolment deferred are aware of their rights and to encourage consumers to take personal responsibility for their pension saving, it is important that the notice should state clearly that the worker retains the right to opt in to the pension scheme at any time.

The full implementation of auto-enrolment throws into sharp focus some of the remaining unresolved issues surrounding the NEST proposition. Any amount saved in a personal pension has to be better than nothing and even a small pot may make a difference at the marginal level, where most people are. A minor issue that immediately springs to mind is the fact that transfers to NEST are currently heavily restricted. Allowing an employee to transfer pension pots—especially small ones—into NEST would encourage better pension savings and take away the burden of administering small pension pots from the employer and the pension scheme. I hope that the Minister will consider this point.

Personal accounts may not be suitable for all employees, particularly for low-earning individuals of 50 and over, as the charging structure of NEST and the phasing in and staging of auto-enrolment and the employer contribution could significantly reduce the size and value of savings pots for those close to pension age, particularly single people. At the same time, depending on overall household income, they could lose their entitlement to means-tested benefits. It is worth considering whether these people would get better value from devoting their funds to other forms of saving, such as ISAs, during their working life. Perhaps the noble Lord will consider that.

In order to manage expectations and to reduce the risk of disappointment at retirement, would it not make sense to impose the simple requirement on the employer that at enrolment the jobholder would be provided with an annual pension benefits forecast based on their statutory retirement age, which would include the impact that such benefits could have on any entitlement to state means-tested benefits? Such a forecast would complement any state pension forecast obtained from the Pension Service. The jobholder would then have the option to seek further advice and, if appropriate, to opt out of a personal account and consider alternative savings arrangements.

The raising of the state pension age was due to take effect between 2024 and 2026 but, because it is being brought forward, the timetable in the Pensions Act 1995 will be accelerated so that the state pension age for women will reach 65 by November 2018. The effect is that, although no men will have to work longer than an extra 12 months, half a million women will have to work at least a year longer, as the noble Baroness, Lady Drake, said. Three hundred thousand of those are going to have to work an extra 18 months, while 33,000, born between 6 March and 5 April 1954, will have to work two extra years.

I understand that deficit reduction is a priority for the Government, but the legislation is discriminatory against women born in 1954. I do not expect that I am alone in having received several letters illustrating this point from people who are, or feel, caught out by this change. It will hit them very harshly but make no impact on the deficit reduction in this Parliament. My concern is that those who will suffer are the most vulnerable women. Many are single; they have not had a chance to accumulate a private pension and will be reliant solely on the state pension. Many will also be unaware of the changes and will not be prepared. We need to give people time to order their affairs. For those who are going to have to work an extra two years, this is very unfair. The changes seem to be contrary to the coalition agreement, which said that any rise to 66 would not start sooner than 2020 for women. Therefore, could Her Majesty’s Government consider leaving the increase in the state pension age to 66 until 2020, when under the current timetable women’s state pension age will reach 65? I do not know whether the Minister can give me any reassurance on that.

Although the removal of a default retirement age will be welcomed by those who would prefer to continue working beyond 65, the recent Marmot report on health inequalities in England—mentioned by the noble Lord, Lord German—highlighted the fact that around 75 per cent of the population will not be healthy enough to work until the age of 68. Such figures are a clear argument in favour of more investment in preventive healthcare. If the Government are to succeed in extending the working age without creating inequitable outcomes, they need to place more emphasis on job quality, support for people with care responsibilities and the creation of transferable skills among the older workforce. In addition, not only is ill health a major factor in early retirement but it is more likely to affect lower-skilled workers, who tend to have less generous pension arrangements. We wonder what will happen to those who are forced to retire before the state pension age because of ill health but who do not have access to private or personal pension income to tide them over until they receive their state pension at this later age. Perhaps the Minister can elaborate a little on that.

Lastly, I wish to make a brief observation on the decision to use CPI rather than RPI as the measure for inflation indexation. As we know, the major difference between them is that CPI does not include housing costs—the effect of mortgage rates or council tax being part of that. Last week, the DWP published an impact assessment of the costs of the Government’s decision for members of defined benefit pension schemes. The effect of the move from RPI to CPI for protecting the value of future pensions is to reduce the value of benefits over the next 15 years by £83 billion. As the DWP puts it:

“The main cost of this policy is to members of private sector DB pension schemes who will see the anticipated value of their pension rights reduced and the value of their total remuneration package reduced in the short term”.

The value of this reduction in pension rights and total remuneration equates to a significant £5.7 billion per annum. For 2 million relevant active members of pension schemes, the reduction in their annual rate of pension accrual is broadly the same as a pay cut of between £2,250 and £2,500 a year on average. That is the implied fall in their total remuneration, including the value of the pension promise made to them by their employer. However, they will not feel it until they retire, when their pensions will be up to 12 per cent lower than would otherwise have been the case in real terms in 2027 and 20 per cent lower in 2050. This is a reduction in the value of pensions to pension scheme members and is a transfer from them to shareholders.

The changes in inflation indexing that will occur as we move from RPI to CPI will impact older pensioners in particular. According to Age UK’s silver retail prices index, the impact of inflation on those in later life is far greater than estimated by official measures. For example, since the beginning of 2008, those aged over 55 have experienced price rises at almost two percentage points above that suggested by headline RPI figures, rising to four percentage points for those over 75. The gap between real and headline inflation over that period has cost the average 60 year-old £620 a year, rising to over £700 for someone aged between 65 and 69. This is mainly down to the different impact that fuel and energy price increases, reductions in savings rates, increases in mortgage interest payments and so on have on older people’s, versus younger people’s, spending power.

The Government have said that CPI is a more appropriate measure of pensioners’ costs than the RPI but they have not given any detailed explanation of that. I do not agree that it is a better measure. Since 1997, the CPI has, on average, been around 0.8 per cent lower that the RPI. One important reason for this is that it excludes housing costs, as has been said. I believe that the Government should retain the RPI as the main measure to be used where pensions and state benefits are linked to price increases. I hope that the noble Lord can assure me on some of those points.

16:11

[Baroness Noakes]

My Lords, I support this Bill. It is a bit of a ragbag of measures but I think that it has two main themes. The first is the need for pensions to contribute to deficit reduction and, importantly, to the restoration of our economy to a sustainable path for the future. The second is to support the need, which is supported on all sides of the House, to generate more savings to contribute towards retirement.

I shall start with restoring the nation’s financial health. I fully support the proposals in the Bill to increase the state pension age to 66. That is long overdue. Taxpayers currently spend about 5.5 per cent of GDP on state pensions alone. Bringing forward a planned increase of the state pension age will be a useful contribution to controlling the inevitable upward trend in that cost.

My concern is that increasing the age to 66 does not go far enough and that instead we should be looking at accelerating and extending the current plans to increase the state pension age to 68 by 2046. The Government should be bolder and reflect the fact that life expectancy continues to outpace cautious expectations. Can my noble friend the Minister say why the Government are not using the Bill to go beyond this first step of accelerating the age to 66?

Last year, the European Commission published proposals to increase pension age automatically in line with life expectancy. Although I do not think it is any business of the EU to tell member states what they should do in this area, I think that it has some promise as an idea. Do the Government believe that there is merit in creating a more automatic link in future so that further increases in state pension age can be a matter of evidence rather than a matter of politics?

I also support the Government’s decision about converging the pension ages of men and women. I support it despite the small transitional impact on some women, to which other noble Lords have already referred and doubtless more will do so. The initial plan to bring women and men into line was far too leisurely. I never understood why women were allowed to draw a state pension much earlier than men, because their life expectancies have always been longer than those of men. Doubtless that was due to some misguided notion about the weaker sex. Your Lordships' House is proof that such ideas are long past their sell-by date.

Another key aspect of controlling the cost of pensions for taxpayers is dealing with the increasing cost of public sector pensions. Like many noble Lords with an interest in this area, I am looking forward to the final report of the noble Lord, Lord Hutton, later this year. His commission recognises that there has to be some way of controlling the burden of public sector pensions on taxpayers. If most public sector pensions were funded rather than unfunded, I have no doubt that the logical path would be for public sector pensions to follow private sector pensions and move away from defined benefit terms. Since the previous Government took power, the number of active members in open private sector defined benefit schemes has plummeted by about 80 per cent to about only l million people. By contrast, almost all of the 5 million or so active members in public sector schemes are in defined benefit schemes. The Government must deal with this inequality. Taxpayers simply will not tolerate funding public sector pensions at levels significantly beyond the opportunities available to them.

The real barrier to change is that the majority of public sector pensions are funded on a pay-as-you-go basis. If we shift to a defined contribution basis, we might have to pay out in cash on both bases simultaneously, which is of course impossible in the context of the nation's poor financial position. So I support the initial emphasis on pragmatic ways of reducing the cost of those pensions. This must inevitably involve greater employee contributions, as the interim report of the noble Lord, Lord Hutton, recognised. For this reason, I support the provisions of the Bill which bring judicial pensions into the real world of employee contributions. I hope that the Government will ensure that the contributions will be realistic relative to the very significant benefits which are obtained by members of the judicial schemes. I also hope that the Government will remain resolute when the inevitable judicial lobbying starts and that they will not cave in, like their predecessors.

Let me turn now to the improvements to auto-enrolment which underpin the policy, which has always had cross-party support, of generating more pension savings. I support auto-enrolment because it should dramatically increase the numbers saving for their retirement but my support has always been subject to the caveat that the very real needs and concerns of employers have to be recognised. If we overburden employers, we will kill jobs, which will defeat the object of increasing work-based pension provision. I do not believe that the previous Government always gave due weight to the concerns of employers.

The current Government were absolutely right to initiate a review of auto-enrolment, and the changes being made in this Bill are welcome. In particular, I welcome the higher earnings trigger and the optional waiting period, both of which will make it easier for employers to accommodate the new requirement.

I particularly welcome Clause 10, which introduces alternative self-certification requirements. The noble Lord, Lord McKenzie of Luton, may well recall the many discussions that we held during the passage of the Pensions Act 2008, when I tried, with only partial success, to shift the Government from their stance of requiring private schemes to match the Act's curious calculations at the level of every single employee. The best was very much the enemy of the good, and I applaud this Government's decision to help good private schemes to exist on a much more pragmatic basis. I hope that the Government will also ensure that the impact of phasing does not undermine the good work that they have done in Clause 10 and that phasing can be allowed to go alongside meeting the new self-certification tests.

My greatest regret is that the Government have not heeded concerns about micro-employers. We are talking about the vast majority in terms of numbers of employers—probably two thirds of the total—but, of course, a far smaller proportion of affected employees. The Government have decided to include micro-employers fully within auto-enrolment, notwithstanding the very much higher cost burdens on them. Many of these people are simply private individuals employing personal staff. Real burdens will be imposed. I am aware that the Government's review recommended no change on micro-employers, but that was hardly surprising given the composition of the review team. I do not believe that flagging and communications, which have been put forward as solutions to the problems of micro-employers, have any beneficial impact. They are bureaucratic activities which will do nothing to reduce the regulatory burden on micro-employers, let alone to reduce the cost of auto-enrolment, and we have to remember that the Pensions Regulator has no experience of dealing with micro-employers. I predict that there could well be a backlash from micro-employers once they understand the requirements. I hope that the Government will keep an open mind and be prepared to be flexible as the impact of this policy unfolds.

I should declare that I am a sceptic on the value of NEST. I believe that there were alternatives to one big nationalised pension scheme which could have been pursued. I have seen nothing to suggest that NEST will be incentivised to do other than behave like all monopolies—that is, in an inefficient and unresponsive way—but it is not a part of this Bill, and I do not, in many ways, blame the Government for taking the line of least resistance, given the large amounts of money that have already been invested in the development of NEST. We shall see whether NEST justifies the trust that the Government are placing in it.

The last topic that I would like to address is the use of CPI rather than RPI in revaluation and indexation. First, I support the Government's decision to use CPI to uprate public sector pensions and many benefits. It should provide a welcome contribution to reducing the costs of those items over time. However, as the Minister pointed out, that is not in this Bill. I regret the fact that the Government are not using this Bill to help private sector employers shift from RPI to CPI, and I disagree with the noble Lord, Lord German, on this. If CPI is a proper measure of inflation for the purpose of increasing benefits and public sector pensions, it is difficult to see why the Government have not helped private sector employers to make an equivalent change. The Government know full well that without statutory help it is not easy for employers to make this change, except by very costly negotiation. Having said that, I support the intention of Clause 14 in trying to avoid the ratchet effect on private sector revaluation and indexation when CPI exceeds RPI. I have already mentioned to my noble friend the Minister that the CBI is concerned that this clause may not quite achieve the clear policy intent set out for it, and I hope that he will consider an amendment in Committee to put this right.

16:24

[Baroness Hollis of Heigham]

My Lords, I thank the noble Lord, Lord Freud, for his clear introduction of this Bill and congratulate my noble friend Lady Drake on a very impressive first performance on the opposition Front Bench. I hope, of course, that she will not be on the opposition Front Bench for very long.

There are two issues for me in this Bill. The first, which has been mentioned by other noble Lords, is women’s retirement age. Like others, I have no problem with the equalisation of women’s retirement age, but I have a problem with its speed, which is unacceptable. After the Government made the same sort of mess when changing the SERPS widows pension many years ago, we had to add an extra eight years before implementation to allow women the opportunity to rearrange their financial affairs.

We have been here before and we should learn from that. As the noble Baroness, Lady Greengross, said, raising the retirement age will require some women to stay two years longer in the labour market—although very few will actually do so because of health, caring responsibilities and so on—or linger on lower benefits and go into retirement in even greater poverty.

The second issue is NEST, which needs to be made more women-friendly, but I fear that most of the changes in this Bill will make it less women-friendly. I will put three big questions, two smaller questions and a thought to the noble Lord, Lord Freud. The first issue was raised by my noble friend Lady Drake. The Government seek to raise the point at which women enter NEST under auto-enrolment so that they will enter not at the lower earnings limit of £5,204 at which you get credited into the NI system—as was originally proposed—nor even at the earnings threshold, where bizarrely you pay NI but do not pay tax, but instead at £7,475, which is the personal tax threshold. Women earning above the LEL but below about £7,500 will, however, be able to opt in voluntarily.

The Government’s proposals to raise the tax threshold ultimately to £10,000 will have serious implications for the constituency of NEST. Given the proposed threshold of about £7,500 before automatic enrolment, 1 million people—mostly women—who have incomes below £7,500 but at the LEL, will be excluded. If the tax threshold is raised to £10,000, which is around half of women’s average earnings, some 2 million people—three-quarters of them women—will not be automatically enrolled.

The whole point of NEST and auto-enrolment was to nudge into a pension scheme precisely those low-paid and part-time workers who would otherwise not join—that is why we have it. Raising the entry threshold ultimately to £10,000, which is half of average earnings for women, will mean that those most in need will in effect be excluded from NEST. A woman on half of average earnings will have no NEST pension at all, and a woman on average earnings will have only half her earnings covered by NEST. Under Labour, she would have ended up with a pot of £20,000; with a pension threshold of £10,000, a woman on half of average earnings will have no pension at all. The Government intend to allow such women to auto-enrol voluntarily if their earnings are between the LEL—about £5,200—and the current £7,500 threshold, which will ultimately be raised to £10,000. However, NEST exists precisely because voluntary self-enrolment has not worked for most low-paid women. Such women feel that they cannot afford a pension, so they think it selfish to save or they cannot access their money.

In any case, the Government must do more than merely allow those with incomes above the LEL to opt in; the Government must allow all women who earn above the LEL not only to come into NEST at that point but, if they so choose, to contribute on their entire income from the first pound, as in all other occupational pensions. Only NEST excludes potentially half or two-thirds of the income of the poorest women from a pension contribution. I argue that if a woman chooses to contribute, employers must also do so. A woman on half of average earnings could then potentially have a pot of £40,000 after 25 years; under the Government’s proposed scheme, she would have a pot of zero.

If the Government do not move, NEST will not do what it says on the tin, which is to bring the poorest women, by virtue of nudging them, into auto-enrolment.

The second big issue around NEST is the risk—a word that we have not heard today—associated with auto-enrolment. We know that a few women should not enrol, especially if they are likely to be on housing benefit and, possibly, on pension credit. The difficulty with pension credit is that, when people are 30 or 50, it is completely unpredictable as to whether they will need pension credit in retirement. If you are partnered in retirement, your partner’s income will almost certainly float you off the pension credit threshold; if you are single, divorced, widowed or a cohabitee with no financial interdependence, you will probably lose 40 per cent of your savings to pension credit. That risk is entirely unpredictable for any individual—no one can foresee what their private lives will look like five years down the line, let alone 20 or 30 years on—yet, on such an issue, the household income of many women will depend almost entirely on whether, in retrospect, they made the right decision to enter NEST.

So what to do? I firmly believe that, in any nudge activity of the Government, the Government have a moral responsibility to build risk out of the situation so that what the Government want for all of us is in the best interests of each of us. How? It is really very simple. We need a new state pension, promoted by the Minister’s right honourable friend Steve Webb, at or above pension credit level—the £140 a week proposed by the Pensions Minister—by bringing together the basic state pension, the state second pension and pension credit. With early flat-rating and capping of S2P, that could be introduced by 2020 within the same financial envelope. That is absolutely key because, without it, we have “Hamlet” without the prince.

Such a pension, based on 30 years of NI contributions, would ensure that almost all women would carry their own full state pension, which, if they are in a partnership, would give them together a family income of £14,000 a year before occupational pensions. That would be a real attack on pensioner poverty, especially that of women. More than that—and relevant to this Bill especially —such a pension would encourage women to save, because it would build out the risk that the value of a woman’s savings would be depleted by pension credit, depending on whether she was single or partnered. It would become safe to save. Industry, the financial institutions, the NAPF, women’s organisations, patients’ organisations and the trade unions have all called for it. I repeat that it could be done within current costings.

So where have the proposals got to? We were promised a Green Paper at Christmas, which we have not had. Minister, when can we expect that? I support strongly the work by the noble Lord, Lord Freud, on universal credit for people of working age, but a new state pension is the major equivalent reform for people as they face retirement. I failed to persuade my Government of both of these; if the Minister can achieve both, I shall be cheering him on.

The third major question about NEST is: where has the Government’s consultation paper on early access to pensions got to? Poorer women cannot afford rainy-day savings, such as ISAs, alongside pensions. As a result, they usually have neither. If we could develop a joint product such as a lifetime savings account—which was first a Conservative thought—poorer women could have the same advantages as those who are more comfortably off in smoothing, with an accessible slice of their pensions, the possible financial traumas of their working life, from divorce to disability to debt incurred by unemployment. Incidentally, that would be much cheaper than having to borrow from someone else.

In my view, that would mean earlier access to the tax-free lump sum of 25 per cent, which until last year was accessible at the age of 50 but is now accessible at 55, and which can be drawn independently of drawing the pension itself. Why is it okay for people to spend that lump sum on a conservatory when they are 55 but not okay for them to use it to protect their home from repossession at 45? As I have said, all the research shows that the main reason for women not contributing to a pension is that they think it selfish, but the second reason is that they cannot afford to tuck away that money for 40 years, given that the working lives of women are financially much more precarious than those of men. Therefore, we should make it easy and attractive for them so that, for every pound that goes into an occupational pension—including NEST—75p is ring-fenced for their pension and 25p for a savings slice. They may never need to draw on that, but the fact that they could would encourage them to join NEST. The industry believes that that would encourage the very group that most needs help.

My other concerns about NEST have been heard in the House previously, but I hope that, given the proposed universal credit, the noble Lord, Lord Freud, may be able to help us. First, what are we doing to help the self-employed? For too long, we have done very little. By what means, if any, can we bring them within NEST, particularly the lower paid? Secondly, what about mini-jobs and pensions? Of the 50,000 women who have a part-time job with earnings below LEL, it is believed—although the stats are not very robust—that something like 15,000 may have a couple of part-time jobs, which, if the earnings from both jobs were added together, would take them above the LEL and bring them into the national insurance system. However, that is not possible at present, because the figures cannot be added together, so such women stay out of the contributory element to the basic state pension and, as a result, may lose the possibility of a full pension.

I appreciate that the noble Lord, Lord Freud, is anxious to solve this unfairness, so I hope to hear a little more today about how it might be done. The issue is increasingly urgent, because 90 per cent of the latest 200,000 new jobs are part-time. Given that universal credit will rightly encourage mini-jobs and more women may find it easier to build a portfolio of mini-jobs rather than one full-time job, particularly in rural areas, the problem may grow. There needs to be a solution if women who work more than 16 hours a week but in a variety of smaller jobs are to come within the NI system.

Another issue is orphan assets. For example, a hairdresser may have £20K in NEST as well as two small £2K pots from previous employment. Within NEST, she cannot commute her small orphan pensions, but, equally, those are too small to annuitise. At the moment, from her £24K savings, she may lose £4K entirely. It is a disgrace that this continues. She should be able to bring such savings into NEST at the point of retirement at the very least and hopefully—as the noble Baroness, Lady Greengross, said—earlier than that with a higher contribution cap. I hope that the Minister will agree with me.

I have one final, somewhat off-the-wall suggestion. We are desperately in need of more social housing. The Minister’s right honourable friend Mr Pickles has proposed that most new housing should be paid for at intermediate rents in the social housing sector, which will be financed quite heavily, I suspect, by the DWP’s benefits bill—I declare an interest as chair of a housing association, which will certainly do its best to ensure that happens. Alternative finance has conventionally been raised from the banks, but, given the pressure on banks to lend to small businesses and to hoard reserves, it will be increasingly difficult to secure social housing finance from the banks. Indeed, it looks as though things may stagnate altogether. As the Minister will appreciate from his very appropriate City background, could not pension funds—including the hundreds of millions of pounds of new savings that will flow into NEST—be a commercial funder of social housing, which after all, being bricks and mortar, is a triple-A asset? That would add to social housing and would reduce the benefit bill, so there would be a virtuous circle indeed. I wonder whether the Minister could apply nudge here, too.

The major issue on which we disagree strongly with the Government is the speed with which they propose to change the state pension age for women. The Minister knows where we stand on this, which is against. But I hope that, on the more technical but also important issues of NEST, and its potential interconnectedness with universal credit, the Minister will be forthcoming and constructive. I know that he wants NEST to work, and I believe that he knows what needs to be done.

16:40

[Lord Stoneham of Droxford]

My Lords, the Bill seeks to build on the previous Government’s work to implement the Turner commission recommendations. I accept that there will be differences on the details of the implementation but I hope that we will maintain cross-party consensus on an issue which has long-term implications. I congratulate the Government and the ministerial team on the excellent consultative papers we have had in preparation for the Bill. I would have expected nothing less of the current Minister for Pensions.

On pensions, three fundamental issues need to be addressed, many of which have been covered in the debate. We cannot ignore the pressures of longevity on funding. There has been a severe decline in private sector provision for pensions overall and an emasculation of the defined benefit schemes. The noble Baroness, Lady Hollis, referred to it as Hamlet without the prince, but today’s debate cannot also fail to consider the low level of the basic pension which simply supplements the problem of credits acting as a disincentive to saving, an issue to which I will return in a moment.

Turner highlighted the longevity problem. Everyone appreciates—particularly in this House—improving longevity, but it is a disaster for pension planning. There is no alternative but to raise the pension age—the figures speak for themselves; the intergenerational balance and the social contract between generations demands that attention—and resources should be made available to fund pension improvements. The impact on funding, if we do not deal with this issue, will be disastrous across all pension schemes, whether private, public or in the state sector, and will create huge imbalances and pressures.

The only question concerns the exact detail of how we implement the change. Clearly, in the development of this Bill there has been a trade-off with the Treasury and I accept that the swiftness of the change places more disadvantage on women than on men. That is unfortunate, as is the fact that in making these changes we are departing from the previously agreed principles of 15 years’ notice for women and 10 years’ for men. However, the particulars need to be examined as the legislation goes through both Houses. It would be easier if we could spell out what people will get in improved benefits in return for the raising of the pension age in order that this is not seen simply as an exercise in cost-cutting. I shall return to that point in a moment.

On the second issue, the decline of private pension provision, the figures are frightening. They have accelerated even further than Turner predicted and the current private sector coverage for defined pension schemes has declined from 45 per cent to 35 per cent since 1997. We know that defined benefit schemes have been emasculated. There has been a decline in confidence in funded schemes and people have started looking at alternative forms of savings and moving out of pensions. We know that many defined benefit contribution schemes have been oversold and that only later will people discover the poor returns they are to receive, which will be too late. There is a trend among employers to move towards more flexible, lower contribution schemes; they are moving away from defined benefit schemes and following the trend to flexible benefit structures.

Effective pension provision means starting contributions early in life, and automatic enrolment may help. In theory, it will help those most in need of pension improvement and where insurance companies are least interested in making provision. State support is needed and the NEST scheme will help, but it is unlikely to transform matters quickly and it is a myth to think otherwise.

The problem is that the contributions envisaged are actually quite small beer. They may work for those starting contributions early in their working life but they will be of little benefit to the women in their 50s who are going to be most affected by the rise in the pension age. The pots will be small and are hardly likely to provide a very significant pension for those people; and what they do get could well be eaten up by the withdrawal of other benefits.

This therefore takes me to the other prime issue, that of the basic pension. This is where the previous Government gave us least encouragement in these reforms. Raising the basic state pension, reforming the second state pension and reducing benefits’ complexity remain a priority if these changes we are discussing today are to be effective. The earnings link is already a major reform for this Government. It seeks to address the fact that since that link was abolished back in the 1970s, the relative position of the basic pension has declined by about a third, which neither Conservative nor the Labour Governments have addressed. It needs correcting, and it is not simply keeping up with earnings—we now have to try to correct the fact that there has been a fall. I notice that the one area in the coalition agreement dealing with pensions was about deciding what we were going to say and do about addressing this problem, because it is pretty fundamental. It is easier to accept a change in retirement age if there is a direct link to improved pensions and not simply cost savings.

I was directly involved with Steve Webb in working on our party’s proposals for a citizen pension. I hope the Government will use the talents of Steve Webb—one of the foremost pensions experts in this country—to bring in a radical reform of the basic state pension and I hope they will announce the principles for doing this during the course of this legislation. Until we do, we cannot help those in most need of it, who are nearing retirement and are having their working lives extended. Auto-enrolment will be diminished if the effective marginal tax rate associated with reducing credits and benefits undermines the incentives to save and the savings people are making through NEST. If we do not use some of the savings from a higher pension age, we will lose that opportunity forever. Frankly, the Treasury needs to put some petrol in the engine to achieve these reforms.

When it comes to the detail of this Bill, I hope that we will look at the smoothing of the pension age change; but it should be seen in the context of what the Government are going to do on the basic pension, because that is where the trade-off should be. We should make sure that the higher threshold does not discriminate against women doing more than one part-time job and does not encourage employers to increase part-time work in order to avoid making pension contributions. We must work to improve confidence in, and understanding of, private pension schemes, because these proposals assume quite a massive expansion in such schemes. However, we know from history that that expansion can lead to exploitation and mis-selling. We must therefore protect individual consumers and look very closely at the regulation that will do that.

Fourthly, we must improve the relative position of the basic pension to illustrate the direct benefit of raising the pension age. Turner, and now Hutton, recognises that pension reform is required. Whether we like it or not, it will require a combination of higher contributions, a higher pension age and some sharing of risk between stakeholders. This basic, technical Bill will deserve all-party support and should be an important component of delivering the coalition’s plans for pensions, provided that some of the concerns I have raised are dealt with during its passage.

16:49

[Baroness Hayter of Kentish Town]

My Lords, in thanking the Minister for introducing this Second Reading, I hope he will forgive me for paying particular tribute to my noble friend Lady Drake, for her extraordinary work for many years in this area. The noble Lord, Lord Stoneham, has just talked about the Turner report, but it was of course the Turner, Drake and Hills report—and, had it been alphabetical, it would have been the Drake, Hills and Turner report.

The aim of the Turner report was to enable a future generation of retirees to enjoy a meaningful income, partly by having worked longer but partly by having saved more, with a little help from the state and the employer. That is an aim that we all support. As for working longer, in 1995 the law equalised the state pension age for men and women and said it should be achieved by 2020. Of course this change hurt only women as it was their pension age that was changed, from 60 to 65. However, more than 25 years were allowed for this change to happen. Then there was the 2007 Act, which was influenced very much by what I have newly named the Drake, Hills and Turner report. It was agreed on a cross-party basis that both men’s and women’s pension age was to rise first to 66 by 2026, then to 67 by 2036 and, finally, to 68 by 2046. In each case, however, there was plenty of notice and time to plan, especially for women, for whom this increase from 65 to 68 would come on top of the earlier rise from 60 to 65. Overall, the increase of eight years in the pension age for women, phased over that 36-year period from 2010 to 2046, gave effectively a working life to prepare. How different it is with this Bill.

The first difference is that there has been no all-party consensus. The second is the accelerated rise for women, which we have already heard of, to 65 by 2018 instead of 2020. Furthermore, the pension age for men and women of 66 by 2020 has been brought forward a full six years from the original date of 2026. That is not just a minor adjustment for a small number of people. Some 4.5 million of our citizens face an increase in the age at which they can draw the pension to which they have contributed and which they have anticipated over perhaps 30 years. Some women will have to wait more than a year longer for their pension. Some of those will have got used to the idea of the uplift from the 60-year retirement age only in the second half of their working life.

I give the example of Linda Murray, who is one of the 500,000 women born between 1953 and 1954. In her words, she,

“will be confronted by real hardship… It means working a further 22 months before I can draw a pension”.

Linda Murray has worked continuously since she was 16 years old, nearly always full time apart from a brief period when she looked after her mother, and she expected to draw a pension at 60. However, she accepted the 1995 increase, which saw her retirement date set as July 2018, when she would be 64 years and two months. But, as she says,

“having to wait an extra 22 months at such short notice before I daw a pension is not something I had planned for. I work in a physically demanding job”—

she says that; it is not me—

“at a dry cleaners, 46 hours a week just to make ends meet. I have never had the means to save for a private pension. We paid our contributions and assumed we would draw a state pension”.

Even part-time retirement is no longer an option for her. She would need to save at least £12,000 to be able to work part time from the age of 64. I think that the House will understand that, with a take-home wage of £270 a week, saving is out of the question for her.

Do the Government even begin to understand the predicament of Linda Murray and others like her? I ask the noble Baroness, Lady Noakes, whether this is really someone she wants to have to continue to work, standing on her feet in the dry cleaners 46 hours a week until she is 68. I think that I must have misunderstood what was being said, as I do not think that that is what we would wish on women like that. What Linda Murray cannot understand, although she accepts the original increase, is how the goalposts have been moved with so little warning. I shall read from her words again, as they are worth repeating:

“Women of my generation have faced years of inequality in the workplace. Many took time out to raise families, and on average we earned much less than our male counterparts. We have not had the same opportunity to build up private pensions, and now we are facing severe financial losses, of between £10,000 and £15,000, without the time or opportunity to prepare”.

Another correspondent, Joy Walters, wrote:

“I have no problem with the principle of equalisation but this is too fast and has placed an unexpected burden on women of my generation that was not foreseen earlier in our working lives”.

This same Joy Walters will have to wait another 23 months to claim her pension. This is not fair—the word that was used earlier—as it affects women with little private pension and no time to make alternative plans. This is inequality laid on inequality. These women did not have equal pay at the start of their working lives and many were barred from company pensions simply for being part-time. These women have been given only seven years’ notice of a further two years’ increase in their pensionable age; men, by contrast, were given eight years’ notice of an increase of one year.

Furthermore, under this Bill, as other noble Lords have said, there will be a three-year difference in pension age for women born just one year apart and an even bigger jump from my very lucky generation. I am only five years older than Joy Walters but I drew my pension at the age of 60, while she will have to wait until she is 66. It is Joy and her cohort, the women born around 1954, who have shouldered the burden of the increase in retirement age to equate with that of men. Funnily, when I was young, I thought that equality was going to help my gender. I did not realise that we were going to be the ones who ended up paying for equality, but such it is. It is a gross injustice that this group of women will be subject to a loss of pension greater than anyone else’s. Joy Walters wrote:

“It has been difficult to get used to an increase of 4 years in pension age when we were already middle aged, but we accepted this without complaint. This further unexpected increase of another 2 years has left me devastated”.

What is the cost to women of all this? As my noble friend Lady Drake said, a third of a million women will face an increase of 18 months or more, while 33,000 will have an increase of two years, retiring just weeks before their 66th birthday. These women, who are now in their mid-50s, will lose over £10,000 each. With just seven years to prepare, they have been told that they must work an extra two years. We already know the disadvantage that they have within private pension schemes. As my noble friend Lady Drake also said, the median pension saving of a 56 year-old woman is £9,100—one-sixth of a man’s—which probably produces an income of £11 a week. That is not enough even for nice biscuits and teabags, I am afraid. It would be only £11 a week even if the whole of their savings could be put into a pension. I wonder what these women born in 1953 and 1954—the noble Lord, Lord German, referred to them as the bubble—did to upset the coalition so that they are being asked to bear the burden of this policy change.

There is an alternative. We must give men and women a chance to plan for their retirement, with time to plan and time to save, as the noble Baroness, Lady Greengross, said. No one should be put in the position of having an increase in state pension age of more than a year; everyone, I believe, should have at least nine years’ notice. I urge the Government to retain the current timetable for the equalisation of pension age and delay the move to 66 until after 2020. At the very least, they should heed the wise words of the noble Lord, Lord German, in his specific suggestions.

I turn briefly to the second aspect that I want to touch on—auto-enrolment. Women have always done worse at work and worse at retirement. At work they have had low pay, and many have worked part-time. Fewer are in company pension schemes, and fewer have savings with which to boost their state pension. That is why the Labour Government legislated for auto-enrolment, which is vital for three reasons. First, it covers everyone, particularly the low-paid and part-timers. Secondly, by being an opt-out rather than opt-in scheme, it uses inertia—or the nudge, perhaps—to increase participation. Although it is true that I would have liked it to be compulsory, even that most brilliant Labour Government did not give me everything that I wanted in life. The opt-out nature of auto-enrolment was an important part of the scheme. Thirdly, it means doubling your money. For every pound that the employee puts in, the employer and the Government together then double it. This is a real incentive and a proper recognition of the responsibility of the state, the employer and the individual to put aside money for retirement. As for the question from the noble Baroness, Lady Greengross, about the use of ISAs, I wonder whether those accounts would double one’s money as auto-enrolment does. I am sure the Minister will come back to that.

Finally, there is NEST, for which we have to thank my noble friend Lady Drake. She did so much to prepare for NEST during her chairmanship of PADA, a body on which I served for a few months. It is a brilliant organisation. It is the default pension scheme, so employers do not have to set up or run their own scheme. It has a low cost for members, is open to all employers and has a clear focus on members’ interests. It is not a monopoly; it is a choice for the employer. Not everyone has to join. I warmly welcome the Government’s confirmation of auto-enrolment and NEST. I congratulate NEST on its progress to date in preparing to open on schedule, within budget and with language and processes targeted precisely at the intended audience: the lower-paid, first-time savers and part-timers. Unfortunately, however, the Government have tinkered with auto-enrolment and will allow workers to wait three months before signing up. This undermines the inertia and means that people will have three months of getting used to their salary before feeling the loss of some of it into a pension scheme. That is just the moment at which they are likely to opt out. Three months may not seem a long time but if people get used to that income, they might be less keen to start paying into a pension scheme.

As has already been said, increasing the threshold would mean that as many as 6 million people are not eligible for auto-enrolment. Those are exactly the people whom the scheme was engineered to assist—women and part-timers. Even the Government’s own impact assessment admitted that the changes, which aimed to ease the burden of employers and industry, are,

“likely to affect women more strongly than men due to underlying inequalities in private pension provision”.

I rest my case. I urge the Government to think again and, at the very least, if they will not move on the threshold, to give us an assurance that it will not be increased further after this jump, and certainly that it will not go up with the tax threshold. If they do not do this then—in 10, 20 or 30 years—we will find ourselves with another cohort of people with inadequate retirement income.

I cannot help but note that it was mostly men in the City who got us into trouble over financial debt, yet it is women who are being made to pay the price. Perhaps if there were more women in the Cabinet—maybe women Ministers dealing with this—we would not find so much of the burden falling on women. The Minister used the word “fairness”. I am not certain that the Bill is fair to women. I urge the Government to look at the timetable again.

17:04

[Lord Brooke of Sutton Mandeville]

My Lords, it is a particular pleasure for me to follow the noble Baroness, Lady Hayter of Kentish Town, not least because she was so staunch an ally in relation to the City of London during the later stages of the Parliamentary Voting System and Constituencies Bill. She has just made a much better speech than I shall. I am batting higher up the order than I should be.

I come to this subject as an innocent and shall describe my motivation in a moment, but first I should declare one interest not contained in the Register; namely, that my brother is a retired Lord Justice of Appeal, which will, at least in my view, preclude me from speaking on Part 4 of the Bill. I suppose, given the actuarial dimension of this subject, that I should declare an intellectual interest, which no one in the same condition so far has done, in belonging, like many in your Lordships' House, to that two-decade cohort uncovered by my right honourable friend David Willetts, MP and Minister, who were born between 1930 and 1950, and thus find that the austerity of their upbringing, with its beneficial effect on their health, adds at least four unexpected years to their lives beyond the normal expectations of the mortality tables.

I call myself an innocent, but a reckless ignoramus might be more appropriate. Briefly, in the dying days of the second 1974 Labour Administration—those halcyon days of the Rooker-Wise amendment—I joined a small band of volunteers under my now noble friend Lady Chalker—then a DHSS shadow spokesman in the Commons—to take an interest in these matters. A co-volunteer, in those days before the big society was christened with a name, was my noble friend Lord Hodgson of Astley Abbotts. My only qualification to join was that a definition I had constructed for the benefit of my own small firm to illuminate the difference in purpose and detail between a 364—or was it a 384?—scheme and a 379 one in the then pensions legislation—the digits come back from long ago—so impressed our auditors at Arthur Andersen that they sought my copyright approval to use it throughout their practice’s literature. However, the fall of the Callaghan Government on 28 March 1979 marked the last parliamentary interest I took in this subject through different ministerial responsibilities thereafter.

Wiser men, especially those who have listened to my noble friends Lord Higgins and Lord Skelmersdale, the noble Baroness, Lady Hollis, the noble Lord, Lord McKenzie of Luton, and the late, great Earl Russell—Conrad Russell—discussing these subjects in the past decade, would maintain their distance from these technicalities, whose language to an untrained eye seems sometimes as arcane as Sanskrit, though to no one’s discredit. But for better or worse I regard the reconstruction of a major social part of domestic government, which is being so nobly essayed by my noble friend Lord Freud in this and future related legislation, having as good a chance as any in the spectrum of the coalition’s programme of being the monument by which the coalition will be remembered. I do not imagine that I shall myself add many pebbles to that notable cairn, but if one is to be a bystander at the making of history, it is better, if possible, to be an informed one.

Before leaving the great sweep of history, let me say how apposite it is that this essay, in the French sense, is being conducted by a coalition in which the great Liberal Party tradition of Lloyd George and Beveridge is so vitally and vividly represented. Of the six members of my family who have sat in the House of Commons in each of the six generations since the Great Reform Bill, the first four sat in the Liberal interest, and only my late noble kinsman and myself sat as Conservatives. I do not think that my late noble kinsman, who was in the Clintonian phrase more of a policy wonk than I have ever been, or shall be, would dissent from the felicity of this coalition coincidence.

What is certain is that we are engaged in the early stages of a massively monumental project. Anyone who doubts it need only go back to the dinner Lloyd George gave on the evening the Third Reading of the 1909 Budget Bill concluded. He gave it for the colleagues who had assisted him at the Dispatch Box during the passage of the Bill. Mischievously, the menu card that evening listed the voting records of those present during the course of the Bill. We think that yesterday’s Third Reading was the culmination of a prolonged battle, but the scale of activity in the Division Lobbies during that Bill resembled largely that manoeuvre of my military youth—a tactical exercise without troops. In 1909, 554 Divisions were recorded on the menu card, with Lloyd George heading the role of honour at 462 personal appearances and Winston Churchill concluding it at around 200, with the engaging parenthesis “(twice in pyjamas)”. That index of all-night sittings may eventually overtake us on this Bill and its successor universal credits legislation.

One of the iron behavioural laws of your Lordships’ House is that if you put your name down to speak at the Second Reading of a Bill, anyone interested in briefing interested parties will immediately do so. The price you pay is that you then sit through the entire Second Reading debate, however long. I agree that in an emergency you could put your name down and then withdraw it, but you could do that decently only once. I congratulate my noble friend the Minister on, and thank him for, devising a Bill that is intellectually interesting without being incomprehensible to the layman, and which has had the effect of reducing the number of speakers by a third compared with those who will speak on postal services tomorrow. Of course, I am creating a rod for my own back, especially in understandable and reasonable correspondence from women approaching pensionable age, but in other respects the Second Reading duty works effectively, as I did not put my name down to speak until tea time yesterday. Yet Ros Altmann’s admirably clear briefing from Saga was put on my desk between 7 pm and 9.30 pm last night. I realise that it is nothing to the torrent that may follow, just as I also realise that my noble friend Lord Freud is, in these cash-hungry days, between a rock and a hard place. Resolving these dilemmas lies ahead of us.

I do congratulate my noble friend on the ingenious intelligence which has gone into devising the auto-enrolment procedures. I appreciate that it was always the case that the big battalions, the small platoons and their collective champions would react differently to the procedures and that a decently lengthy Committee stage to examine this Bill sympathetically stretches out ahead of us. However, I am pleased that the TUC regards the project at least as well as it would a curate’s egg, and, since the TUC approves the principle and resiles only from the detail, it may be an archdeacon’s egg anyway.

I support my noble friend’s praise for those who have prepared the Bill. I also congratulate my noble friend on the impact study, especially because it is noticeably not written in Sanskrit. My only whispered dissenting note on the Bill’s initial presentation today is best reflected in an episode from my past, when in the 1970s, before I entered the other place, I was responsible for helping Rolls-Royce, then a somewhat inbred company, to recruit the chairman of another FTSE 100 company to its board. After his first board meeting, he took the company secretary aside and said that there had been 55 acronyms in the board papers without an accompanying legend, and that he would not attend a second board meeting unless he was provided with a code. The company secretary was apologetic, and within 24 hours he generated a list of 89 corporate acronyms and their underlying rationale, saying that in a fair number of cases the acronyms had been new to him as well. The problem is nothing like so severe in the departmental briefing, but the explanations are not universally reliable, and it is easier to approach the Sanskrit passages if a Sanskrit dictionary is to hand.

I look forward to the remaining stages, which have the lure of a seminar. As a penance for not adding more solid pabulum for these proceedings, I conclude with the light relief I was offered by the Treasury when I had to travel the country as Paymaster-General, explaining to British business the obligations placed on it by the Single European Act. This took the form of an illustration of a non-tariff barrier in the context of a level playing field; namely, that in the life insurance industry a British actuary could tell you how many people were going to die, whereas a Sicilian actuary could give you their names and addresses. To be fair, I suppose that in our marvellous continent a Sicilian insurance broker might be similarly mystified by the character in Saki who had to have his 21st birthday three years running because it would have been indelicate for him to move on and up until his mother admitted to more than 35 years. However, all these minutiae are for tomorrow. The Bill is a necessity today.

17:14

[Baroness Turner of Camden]

After that, another Pensions Bill. This time it follows legislation on pensions provision introduced by the previous Labour Government. In passing, I congratulate my noble friend Lady Drake for the way in which she introduced the debate. I support much of the new Bill, but I will draw attention to a few points.

The new Bill makes provision for auto-enrolment into the National Employment Savings Trust. The requirement for compulsory employer contributions and auto-enrolment into either NEST or an existing good-quality employer-provided pension is very important. Millions of people will for the first time save for a pension. That is a very good development.

The first part of the Bill deals with the state pension and state pension ages. It introduces equalisation for men and women. This was expected, as was the increase in the retirement age. The timetable set out in the Pensions Act 2007 was between 2024 and 2026. In the Bill, the timescale has been brought forward. For women, the SPA will reach 65 by November 2018 and 66 by April 2020. There will be equalisation for the sexes. A number of noble Lords have already drawn attention to the difficulty and unfairness that might be imposed by this arrangement on women born in 1954. I hope that their comments will be taken on board by the Minister.

Increasing the pension age will affect poorer people most, since they are much more likely to rely solely on the state pension. Those who are better off will have other resources such as an occupational pension or other means and will not be much concerned about the state pension age.

Of course, many people want to continue working after the current retirement age. They will include many—mostly men—who have jobs in which they are deeply interested. That is fine, but not all jobs are the same. It is in no one's interest for older workers to continue in employment that is physically demanding: construction is one such industry. It might not even be safe to continue employing older workers in such work. Retirement would be better, unless lighter work could be found. Many women who have done heavy, uninteresting and exhausting work will not welcome the idea of having to work until 66 before they get their state pension. There is a case for flexibility.

There may also be some disadvantage for disabled people, since the Bill indicates that their entitlement will be based on pensionable age and, under the new arrangement, that will be much later. I am sure that nobody would want to disadvantage disabled people through changes in the pensionable age.

Last year, the Government announced the triple guarantee to increase the basic state pension by the highest figure of earnings, prices or 2.5 per cent. This is very welcome, although not quite as good as it appears. For many years I have urged that the state pension should be increased in line with the wages index. My late friend Lady Castle was indefatigable in her campaign for this, but we did not succeed. Had it been introduced many years ago, pensioners would be much better off now. The wages index now is relatively flat; in fact, many wages are going down rather than up. Moreover, the Government are using the consumer prices index rather than the retail prices index as their chosen measure. It does not include housing and a number of other items, and produces a much lower amount. Over the years, provided that the economy improves, the wages index may produce higher figures, so I hope that pensioners may profit in future. However, they will not profit much now, particularly since the rise in inflation is having a dire effect on many household incomes.

The second part of the Bill relates to auto-enrolment, which, as I said, I welcome. However, I do not know why there should be an optional waiting period of up to three months before an employee must be enrolled automatically into a workplace pension. Employers must make sure that employees know from day one that they have a right to enrol and to receive the employer's contribution.

I am not sure about arrangements for transfers in and out of NEST. Many people in a working life could build up an entitlement to a number of pension pots. Is it intended that it will be possible to make arrangements for transfers in and out of NEST? Employers’ contributions are rightly regarded by employees as part of a deferred salary package, and it should be wrong for employers to have the right to reclaim them.

Returning to the question of indexation, the Government have unilaterally decided that CPI should be applied rather than the retail prices index in regard not only to the basic state pension but to the state second pension, public service pensions, many occupational pensions, pension protection compensation payments and the financial assistance scheme. I understand that it cannot apply to private occupational pensions if increases in line with the retail prices index are covered by contract. However, everyone else is likely to lose out and that does seem very unfair. I understand that certain public sector employees have already been advised that that is on the cards and that their future increases will be in line with the CPI. My sister, who is a retired teacher, has told me that she has already received a notification to that effect regarding her pension. Why should employees, through no fault of their own, lose accrued pension rights? I hope that the Government will be persuaded to reconsider this.

Therefore, there are issues which could be pursued further in Committee but there is much to welcome in the new Bill—particularly the arrangements for auto-enrolment. As everyone knows, we have an ageing population, as has been referred to by everyone who has spoken in the debate. It is vital, however, that resources are available for people’s final years to be spent in dignity and without the fear of grinding poverty, which has been the fate of many working people in previous generations.

Armed Forces: Redundancies

Tuesday 15th February 2011 Lords Chamber

Statement

17:22

[The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever)]

My Lords, first, I am sure that the whole House will wish to join me in offering sincere condolences to the families and friends of Private Martin Bell, 2nd Battalion The Parachute Regiment, Ranger David Dalzell, 1st Battalion The Royal Irish Regiment, Warrant Officer Class 2 Colin Beckett, 3rd Battalion The Parachute Regiment, Private Lewis Hendry, 3rd Battalion The Parachute Regiment, and Private Conrad Lewis, 4th Battalion The Parachute Regiment, who were all killed on operations in Afghanistan recently. My thoughts are also with the wounded, and I pay tribute to the courage and fortitude with which they face their rehabilitation.

With the leave of the House, I shall now repeat a Statement made in the other place by my right honourable friend the Secretary of State for Defence:

“As a result of the strategic defence and security review and the comprehensive spending review, it has sadly been necessary to plan for redundancies in both the Civil Service and the Armed Forces. At all times this should be done with sensitivity to the individuals concerned, with an understanding of the impact that this will have on them and their families.

There are two cases where this has not happened recently. Let me deal with them both. The first concerns the 38 Army personnel who have received an e-mail, as reported in today’s press. This is a completely unacceptable way to treat anyone, not least our Armed Forces. The correct procedure was not followed. I regret this and want to reiterate the unreserved apology already made by the Army and on behalf of the Ministry of Defence. Arrangements have already been put in place to ensure that this does not happen again, and the Army is already investigating the particular circumstances.

The second case concerns the redundancy of trainee pilots. It was always going to be the case that, with fewer airframes, we would need fewer pilots. The fact that they found out through the publication of inaccurate details in a national newspaper will, I am sure, be deprecated by both sides of the House and can only cause the individuals concerned undue distress. I understand the concerns of those facing redundancy and the temptation of those in Opposition to exploit every issue to political advantage but I hope that, with issues as sensitive as individual redundancies, we can refrain from making a sad situation worse for the individuals and their families”.

My Lords, that concludes the Statement.

17:25

[Lord Tunnicliffe]

My Lords, I and these Benches wish to join in the sincere condolences to the families and friends of Private Martin Bell, Ranger David Dalzell, Warrant Officer Class 2 Colin Beckett, Private Lewis Hendry and Private Conrad Lewis. Like, I am sure, everyone in the House, I share the sentiments of the Minister about the grave impact that these operations are having not just on those who die but on those who are seriously injured. They put themselves in harm's way on our behalf.

Yesterday, the Opposition chose not to take a Statement on Afghanistan because we are working in a largely bipartisan way with the Government on Afghanistan. I commend the Minister for the efforts that he makes to keep interested Ministers so well informed of what is happening and I decided that it was inappropriate to take the time of the House on that issue. I can assure noble Lords that we will continue to work with the Government on a bipartisan basis in this important area.

The same does not apply to the events of the past couple of days. I note the Statement that has been repeated in the House. I welcome the fulsome apology about the 38 warrant officers, but I note that we only deprecate the article in the Daily Telegraph. I think the Government should go further. Short of this article being a figment of the Daily Telegraph's imagination—I doubt it can be, given its usual care—the Ministry of Defence is responsible, one way or another, for a leak which will have been profoundly hurtful to the people involved. I hope that the Minister will be able to make a rather more fulsome statement in his response to this event.

What assurances can the Minister give us that this will not happen again? It is important in this difficult period that Ministers take personal responsibility for this difficult area of managing personnel, ensuring that statements are made in an orderly way, that proper discipline of information is maintained, that there is proper support and that people hear bad news from those who should be giving them bad news; for example, those in their chain of command. I hope that the Minister can go further in his assurances about how these events will be prevented from happening in the future.

However, I feel that these events are not just in themselves sad and wrong but that they are actually symptoms of the SDR. It was done too quickly. The document turned out to be a simple Treasury-forced cuts exercise. It was ragged and, if we are to believe newspaper reports, not fully worked through. It is not the job of the Opposition to lay out how we would run the country, but it is our job to comment and to hold to account. We believe that the deficit is being reduced too deeply and too fast. We fear that what we have seen over the past couple of days are symptoms of chaos occurring in the Ministry of Defence. The redundancies of which we have heard seem to have been crudely worked out, inefficient in their long-term effects and, of course, executed in a grossly insensitive way. What assurances can the Minister give us that we are not creating holes in our medium and long-term capability? What assurances can he give us that these redundancies have been thought out with the care that should have been applied to the cutting of resources in the incredibly complicated world of defence? Will he be able in future to make those cuts in a way which assures us of that all round capability?

I hope that the Minister, perhaps repeating a Statement made by the Secretary of State, will be able to come to the House in the not-too-distant future to make a Statement on that very big task: 17,000 service personnel are to go; 25,000 civil servants are to go—that is 29 per cent. Knowing, as I do from my previous experience, the sheer complexity of the Ministry of Defence, I fear for our military capability if that is not done in a thoughtful, careful way. I hope that the Minister can give us some assurance on that and some promise of a future more detailed Statement about how redundancies will occur, how they have been thought through and where they will occur.

Finally, I turn to the issue of morale. From this Government, our brave men and women have seen cuts in pensions, cuts in allowances, pay freezes, a most amazing U-turn by the Prime Minister on his commitment to put the military covenant into law and, finally, this fiasco. What is the Ministry of Defence going to do to arrest the inevitable erosion of morale that these events will have brought about?

17:31

[Lord Astor of Hever]

My Lords, first, I am very grateful to the shadow Minister for reasserting the bipartisan approach to Afghanistan. That is very important for our national security and for the morale of our Armed Forces.

Turning to today's Statement, I agree with the noble Lord that it is completely unacceptable for members of the Armed Forces to be treated in this manner. No one should ever be informed that they are to lose their job by e-mail. The Army’s procedure of informing its personnel through the chain of command has clearly failed in this case. The Secretary of State has demanded a full explanation from the Army as to how that was allowed to happen and how those personnel were not told first in person by their commanding officers. Immediate measures have been put in place to ensure that that cannot happen again.

The noble Lord asked about the SDSR. It was difficult and was completed under challenging timescales. It was carried out in full consultation with service chiefs, and provided the appropriate vision for defence to 2020. We would prefer not to be making reductions in our Armed Forces, but the economic position we find ourselves in unfortunately requires that. As for the overall reductions, the SDSR announced 17,000 service reductions and 25,000 civilian reductions, managed through natural wastage and redundancies. As for the redundancy plan, a full plan is in place for the military redundancy programme, with full information available to all service personnel to make decisions for themselves and their families as soon as it is available. There will be an initial voluntary early release scheme for MoD civilians in the coming financial year. That is under different terms from the Armed Forces programme.

Finally, the noble Lord mentioned the very important issue of morale. There is little doubt that the uncontrolled and inaccurate release of information through the press, bypassing the normal chain of command, does very little to improve morale.

17:34

[Lord West of Spithead]

My Lords, my question relates to lessons learnt. I was in charge of naval manning in the early part of the 1990s, just after a major redundancy package. All the training pipelines had been shut down, cut or curtailed, and all recruiting had been stopped. All of these things were being done to reduce manpower levels as a result of the then Government’s peace dividend, as it was called. I found it was very hard to kick-start recruiting programmes and training pipelines, and the growth of the economy in the late 1990s led to a net outflow from the service. It was so difficult. My noble friend touched on this, but can the Minister assure the House that we have learnt the lessons—I know they were written down by all three services—and that we are not discarding our seed corn? From what one has seen so far of the pilot thing, it seems that we are discarding seed corn, and I hope it will not happen more generally because, if we are, we are standing into danger of making the same mistakes again.

[Lord Astor of Hever]

My Lords, I can assure the noble Lord that of course lessons have been learnt, particularly by the unfortunate person who sent the e-mail. As far as recruiting is concerned, the Armed Forces depend upon high-quality young men and women wanting to join for a rewarding and exciting career. The level of recruiting will be reduced, but I can assure the noble Lord that it will continue.

[Lord Selkirk of Douglas]

Can my noble friend say whether his Statement applies to senior officers and the Gurkhas?

[Lord Astor of Hever]

My Lords, the redundancy programme will apply to all Armed Forces personnel at one-star rank—that is Army Brigadier-equivalent—and below. Senior officers have different terms of service, being employed on a posting-by-posting basis and will therefore leave under different terms outside the redundancy programme, including termination of service without additional compensation.

Gurkhas are employed on exactly the same conditions of service as all other personnel and will be considered equally alongside their peers if there is a requirement to reduce personnel.

[Lord Davies of Stamford]

Irrespective of the incompetence and insensitivity with which these redundancies have been handled, for which the Government have quite rightly and properly apologised, the redundancies of uniform personnel are surely disgraceful and quite irresponsible in relation to the country’s future defence capability and needs, and quite shameful in the way that so many individuals have been treated. Will the Minister assure the House that at least those who have served, are serving or will serve in Afghanistan will not subsequently be subject to this redundancy programme? Surely, even this Government recognise that it would be monstrous if people were asked to risk their lives in Afghanistan and were unceremoniously sacked when they came home.

[Lord Astor of Hever]

My Lords, I can assure the noble Lord that personnel on, or preparing for, operations in Afghanistan will not be made redundant unless they wish to be.

[Lord Lee of Trafford]

My Lords, I join these Benches in the earlier tribute and acknowledge the very fulsome apology that my noble friend made in regard to these two very unfortunate incidents. I have considerable sympathy with my noble friend and Ministers given the black hole that they inherited, the financial reductions that are, unfortunately, having to take place and the effect they are having within MoD and on our services. It is quite obvious that there are a lot more negative announcements to come. I appeal to my noble friend to look ahead with Ministers and block together some of these negative announcements. There is nothing worse than having a daily drip, drip of negative announcements, which will clearly have a very deleterious effect on morale and recruitment, let alone the effect on any potential enemies that this country might have. Overall, are we now not looking to the Prime Minister to give a much clearer and firmer commitment to an increase in defence expenditure from 2015? Otherwise, it is almost impossible for the MoD to plan properly.

[Lord Astor of Hever]

My Lords, on the point about the drip-drip, my noble friend’s suggestion is excellent and I will take it back to the department. On the extra money post-2015, the Prime Minister is on record as saying that he understands that we will need substantial sums post-2015 to make Vision 2020 work.

[Lord Touhig]

My Lords, I think that the Minister has understood the mood of the House perfectly well, and I congratulate him on reminding us before he repeated the Statement of the sacrifices that are being made by British servicemen in defence of our freedom. On our Armed Forces, I have always taken the view that our most valuable assets are not pieces of kit and platforms but our service men and women. The Minister said that the Secretary of State had ordered an inquiry into this debacle. Can he tell the House that there will be a further Statement following the completion of that inquiry?

[Lord Astor of Hever]

My Lords, unfortunately I cannot give the noble Lord that assurance. One of these matters is for the Army and one is for the Royal Air Force. They are conducting internal inquiries, and we will make a decision depending on what they come up with. The investigation into the Army leak will report very quickly—within a maximum of two weeks, and, I hope, within a matter of days.

[Lord Ashdown of Norton-sub-Hamdon]

My Lords, it is not necessary to agree with the noble Lord, Lord Tunnicliffe, that somehow or another the armed services could have been excused from the cuts that unfortunately the Government had to tackle with urgency as a result of the economic situation that we were in. Nevertheless, it can be accepted, as I hope the Minister will, that there is something in what the noble Lord said: that this was symptomatic of a deeper problem. Is not that deeper problem, frankly, that the MoD is no longer fit for purpose? It is not fit for purpose because the previous Government failed simply, consistently and over many years to deal with deep dysfunctionalities in that organisation. Does that not place on this Government the urgent need substantially to review the whole Ministry of Defence in order to solve what is basically a broken organisation?

[Lord Astor of Hever]

My Lords, I assure my noble friend that that is exactly what we are doing. I have sat through interminable meetings to try to get on top of this situation, and I assure him that the new PUS is determined to get on top of our financial problems as quickly as possible.

[Lord Stirrup]

My Lords, the Minister referred to the Prime Minister’s very welcome assurance of his personal commitment to a real-terms increase in defence spending over the period of the next spending review. Will the Minister tell us precisely what financial assumptions the Ministry of Defence is now making in its forward planning for that period? On what sums is it basing its calculations?

[Lord Astor of Hever]

I think that I will write to the noble and gallant Lord about that. I am sure that I have those figures in my briefing, but it would take a bit of time to find them and I do not want to test the patience of the House.

[Lord Elton]

My Lords, there are practical consequences in the short and medium terms. Will my noble friend assure the House that the impact of the redundancies that are now being revealed will not be an increase in the already ferocious number of combat flying hours of personnel in Afghanistan?

[Lord Astor of Hever]

My Lords, I can give my noble friend that assurance. The SDSR was designed specifically not to affect operations in Afghanistan.

[Lord McFall of Alcluith]

My Lords, a bald e-mail that states, “Start applying for your retirement”, is indeed indicative of a dysfunctional system in the MoD. The Secretary of State in the other place earlier today failed to take ministerial responsibility for this, which we regret. Instead of barbs with puerile comments, would it not be correct for the Secretary of State to take that ministerial responsibility and report back to this House so that we could say that this military covenant will not turn into a shambles?

[Lord Astor of Hever]

My Lords, with the greatest respect, this was one very unfortunate error by one individual in the Army—the noble Lord mentioned the e-mail today. In the Ministry of Defence, we go to enormous lengths to make sure that redundancies are carried out correctly, and this happens in almost every case.

[Viscount Slim]

My Lords, if one goes a little deeper, the noble Lord will recall that when he was in opposition, during the time of the previous Administration, the position of a commanding officer was gone into in considerable detail in your Lordships’ House and in Committee. The purpose was that most of us were very put out by the fact that the authority of a commanding officer was being denuded. The noble Lord might agree that this incident, as I understand it, of bypassing a commanding officer and directly talking to a warrant officer will have a very adverse effect on commanding officers in battle on operations. In the examination that the noble Lord has said is going on, I hope that the position of the commanding officer of a unit—the key man in any operation—is not being denuded or his authority removed in any way whatever.

[Lord Burnett]

Hear, hear!

[Lord Astor of Hever]

My Lords, I share the noble Viscount’s views 100 per cent about the importance of commanding officers. I can give him the assurance that we do not intend to do anything to undermine that position. The investigations are matters for the Army and the Royal Air Force. It would be quite wrong for the Secretary of State or me from this Dispatch Box to make any promises or decisions and try to micromanage what the Army and the Royal Air Force do.

[Lord Gilbert]

Perhaps I may make it clear that I—and I am sure that I speak for most Members of this House—attribute absolutely no blame in this matter to the Minister. He is in a very unfortunate position at the Dispatch Box today and he is handling himself with great dignity. However, on the recruitment of fast jet pilots, given the number of years that it takes to train one of these brave young men to the height of the necessary skills, and given that this Government’s policies are supposed to come to fruition in roughly the same amount of time, how are we to have any confidence that the Government have confidence in their own economic measures when they are laying off those people? They will have investment and talents that will come to fruition at just the time that they claim their economic policies will succeed.

[Lord Astor of Hever]

My Lords, I share 100 per cent the noble Lord’s views on fast jet pilots. Last week, I was fortunate enough to go to RAF Coningsby to see the hugely impressive work of the Typhoons. But, due to the reduction of the RAF’s aircraft fleet, the number of student pilots in the flying training pipeline will unfortunately be reduced by about 170 personnel. We will endeavour to find alternative positions, where available, within our branches, such as personnel support, engineers or logistics. However, I must make clear that there will be the need for redundancies. As these pilots are under training, it will not impact on operations.

[Lord Brooke of Sutton Mandeville]

My Lords, in the context of morale, will my noble friend share with the House how he thinks that the silent majority, to which some in your Lordships’ House like me belong, can do more than is being done to help improve morale in the field?

[Lord Astor of Hever]

My Lords, that is a very interesting question. I cannot think of an instant bright answer, but I will cogitate on it and come back to my noble friend.

Pensions Bill [HL]

Tuesday 15th February 2011 Lords Chamber

Second Reading (Continued)

17:49

[Lord Woolf]

My Lords, I shall speak about Part 4. I do so with some hesitation after hearing the very interesting and informative speech of my noble friend Lord Brooke, who indicated that, as his brother was a distinguished judge, it might not be right for him to take part, albeit that the judge had retired. I am afraid that I am in exactly the same position as his brother, but, having looked at the Bill, I do not think that I need take that action, though the House may regret that I reached that decision and, equally, be pleased that the noble Lord, Lord Brooke, did not take the opposite view. Having heard his speech, I am quite satisfied that what he had to say was much more entertaining than what I shall say. However, what I have to say is very important in relation to the administration of justice in this country, though I emphasise that the views that I am expressing are entirely my own and not those of any section or number of the judiciary.

The matter that causes me to rise is partly the fact that it is not until a judge such as myself has made pension contributions for 20 years that he will have the protection which the Bill provides. I rise also because one of my former judicial colleagues who is a Member of the House, the noble and learned Baroness, Lady Butler-Sloss, drew my attention to the assumptions made for Part 4. Those assumptions fairly draw attention to the risks involved in what is proposed. They do so in the following terms:

“Key assumptions are … that this measure will result in no behavioural response by the judiciary (e.g. no negative impacts on judicial recruitment, retention or performance)”.

That is a statement that I wholly accept in relation to performance, but I am concerned about its claim that the measure will have no impact on judicial recruitment or retention. The impact assessment continues:

“Key Risks are: … that the actual impacts of this measure are as yet unknown, as are the cumulative effects of existing and future policy decisions about judges’ pay and pensions – such as the current pay freeze for judges … that the assumed behavioural response might not apply and the measures may lead to negative impacts on judicial recruitment, retention and performance”.

The assumption, if it were right, would be very reassuring, but, on the basis of my experience as Lord Chief Justice only a few years ago, I sincerely question the assumption about retention and recruitment. That is the matter on which I want to focus.

The noble Lord, Lord Freud, was absolutely right to stress the importance of fairness. There is an aspect of what is proposed which has a real degree of unfairness about it because of the particular situation of the judiciary. Perhaps I should preface what I am about to say by stressing just how important is the quality of our judiciary to the administration of justice in this country.

The quality of our judiciary puts this country in a very enviable position. I know that the noble Baroness, Lady Noakes, raised questions as to what I might say, but I shall say it notwithstanding her comments. We have a judiciary which is admired around the globe; its standard is such that this country is looked to to give a lead in judicial administration in many parts of the world. I referred earlier to Lord Justice Brooke, my former colleague and the noble Lord’s kinsman. He, for example, spends a great deal of his time in retirement helping the judiciary of many countries in the new democracies which find it difficult to adapt to the changed circumstances which now exist. In addition, in other jurisdictions, so valued is the judiciary of this country that it is invited to create courts. I was such a beneficiary and created a court in Qatar. This is a singular compliment to the judiciary of this jurisdiction.

It is very important—this cannot be stressed too strongly—that we do not unintentionally affect the standards of our judiciary. One of its unique qualities is that the senior judges on the High Court Bench—who are an important part of our system—are recruited from those who have been at the practising Bar. When they take an appointment they make a great financial sacrifice to do so, and there will come a stage when they cannot be satisfied that the sacrifice involved will be a safe one so far as their families are concerned. So far, any change in their conditions would not apply retrospectively, which is why the 20-year provision is mentioned in the Bill.

However, that is of no assistance to judges once they have taken an appointment. As the Minister will be aware, in this country, those taking judicial appointments are unable to go back to their former profession as barristers. That means that if the terms are changed after they have taken an appointment, they will not be able to regain the former high earnings that they admittedly had before they became a judge. I realise that members of the judiciary cannot expect sympathy for their position, but the judges are entitled to be treated fairly and to have confidence that, once they have taken an appointment, the rules of the game will not change adversely towards them.

The Government must give the greatest attention to this because, in parts of the jurisdiction, there are difficulties today in recruiting High Court judges which did not exist in the past. From my experience as Chief Justice, I can tell the House that the attraction of the Bench to certain sections of the Bar is nothing like it used to be. I am relieved that, so far, that has not affected the quality of those recruited to the Bench. I accept that our judges today are as good, if not better, than they have ever been during my legal career. It is important that we do not do anything that puts that situation at risk. If we continue to chip away at the position of the judiciary, there will come a tipping point—although it is very difficult to identify when it will arrive—so the Government should think very carefully whether it is wise not to take some appropriate and fair steps to protect the position of the judiciary.

As it happens, I read in the Times today of events in a celebrated case in Moscow, where there has been some question as to the propriety of what happened. The judge in the case was summoned to the senior court in Moscow, where a contributor quoted in the article reports her impression that he was going to get his orders for the conduct of a trial that was yet to take place. I am happy to say that no judge in this jurisdiction would respond to such an invitation, were they to get one. One of the difficulties if you are Lord Chief Justice is that you can give no orders to any judge as to what they do or how they do it in any individual case. The independence of the judiciary is absolutely critical—and it works because of the calibre of person who is recruited.

For those reasons, I urge the Government to look very carefully at what they are proposing to do and make sure that they are not taking a risk with our very fortunate position of being able to regard the judiciary as one that displays the proper degree of independence and of excellence.

18:02

[Lord Falconer of Thoroton]

My Lords, it is a privilege to follow the noble and learned Lord, Lord Woolf. I hope that your Lordships will listen to what he says. When I became Lord Chancellor, and he was Lord Chief Justice, I found that things went badly for me when I did not listen to him and that they went a lot better for me when I did. Like many noble Lords, I congratulate the noble Lord, Lord Freud, on the clarity and strength of his explanation. I also congratulate my noble friend Lady Drake. We are very lucky to have such an incredibly powerful team dealing with a Bill of this importance.

I should also like to express my profound regret that the noble Lord, Lord Brooke, who participated in our debates on a Bill which we debated over the past 450 years—namely, the Parliamentary Voting System and Constituencies Bill—did not deliver at approximately 3 am on one of those days when we were sitting late the same speech as he delivered about an hour ago. We would have enjoyed it immensely on that occasion.

Perhaps I may make two preliminary points. First, I declare an interest: I might have close relatives in the future who will become judges and be affected by the Bill. I was also Lord Chancellor and the Bill theoretically could affect entitlements that I have. But I do not think that it does, for the reasons which the noble and learned Lord, Lord Woolf, outlined. Secondly, the Bill has an effect on sitting judges. My remarks are entirely my own. They have not been suggested to me by sitting judges.

The issues that I want to talk about are judicial independence and the effect of Part 4—issues not touched upon by the noble Lord, Lord Freud, although they were touched upon by the noble Baroness, Lady Noakes, who said that she hoped the Government would not cave in as they did previously. I take pride in the fact that I was the caver-in on the previous occasion, and I believe that my caving in protected judicial independence and quality considerably.

The constitutional points at stake here are very significant. The Bill represents an identifiable departure from the stance that the state has previously taken. Our constitutional structure is based on democracy and the rule of law, which ensures that individual freedom is protected, in particular against oppression by the majority, and depends on there being an independent judiciary, free from any interference, including and in particular from the Executive in the making of judicial decisions. Part of that freedom involves the Executive not having the power directly or indirectly to influence a judge individually, or the judges collectively, as a whole, whether by pressure before a decision or extracting a price after a decision has been made by the courts. The protection of judges from both direct and indirect interference by the Executive has been reflected in a series of statutory and non-statutory steps taken by the legislature and the Executive over the past 30 years to enshrine those protections.

The obvious pressure point on the judiciary is judges’ salary. Although the Senior Salaries Review Body looks at their pay and makes recommendations, their salary is set by the Government. Section 12 of the Supreme Court Act 1981 specifies that judges' salaries shall be set by the Lord Chancellor in conjunction with the Minister for the Civil Service. Section 12(3) specifies that:

“Any salary payable under this section may be increased, but not reduced, by a determination … under this section”.

The purpose of the section is to avoid a Minister having the power to reduce the salary of the judges either because, in reality, the Government are annoyed with a decision that a judge or judges make or to give such an appearance.

It is plain from Section 12 of the 1981 Act that the same protection does not apply to judicial pensions. Depending on whether the individual judge was appointed before or after 1 April 1995, a judicial pension is payable under either the 1981 Act or the Judicial Pensions and Retirement Act 1993. Neither Act contains an express prohibition on alteration or reduction in the terms of the pension. The current position, which applies broadly to all judges, is that they each have a non-contributory pension for themselves and a scheme to which they have to contribute for their dependants' benefits.

The effect of Part 4 of the Bill is that the appropriate Minister can, by regulations made with the concurrence of the Treasury, require existing judges to make contributions to their own pensions. Crucially, as the noble Lord, Lord Freud, said, that allows for the imposition of contributions for the first time in respect of the judges’ personal pensions and, equally crucially, allows for their increase in those pensions from time to time. The effect of this, as the noble and learned Lord, Lord Woolf, said, is that judges who were employed and took up their office on the basis that they had to make no contributions for their own pension, on the basis of what the noble Lord, Lord Freud, said, will have to face some unspecified contribution. This is an obvious deterioration in their terms and conditions, made the more problematic for the individual judge for the reason given by the noble and learned Lord, Lord Woolf—namely, that while the Executive can change their position, the judge cannot change his or her position by returning to the profession that he or she left in order to become a judge. I should add that it is compulsory for a judge to be a member of the relevant judicial pension scheme, while the Bill specifies—under subsection (2)(c) of proposed new Clause 9A, which would be inserted into the Judicial Pensions and Retirement Act—that any contributions have to be made in,

“the form of deductions from the salary payable”,

to the judge.

The consequence of the Bill and the introduction of contributions from the judge to his or her personal pension is that there has to be a further deduction from the judge’s salary, meaning that there will be a reduced salary paid to the judge without any commensurate increase in the benefits obtained. On the face of it, this is at the very least a breach of the spirit of Section 12(3) of the Supreme Court Act 1981, which prohibits any reduction in salary. There will be such a reduction because, as the noble and learned Lord, Lord Woolf, has pointed out, there is at the moment a freeze in judicial pay. Even if that is not a breach of that spirit, it is certainly a breach of the basic principle that it should not be open to the Executive significantly to reduce a judge’s main remuneration.

From my own experience as Lord Chancellor, I believe that this is a matter that most emphatically should be dealt with by the legislature, not by the Executive. I believe that the Executive instinctively understands that they must not interfere with the decision in an individual case. In my experience, when I was among them, no member of the Executive—official or Minister—ever sought to interfere with an individual decision. However, throughout the period when I was Lord Chancellor I was aware that the Executive were occasionally irritated with decisions that were made. It never led to anything, but individual officials and Ministers occasionally expressed the view that the judges did not understand particular positions or were not sufficiently understanding of the Executive’s problems.

The potential for tension between judges and the Executive has inevitably increased over the past 30 years, for two reasons. First, there is a great increase in judicial review, which means that the judges are more frequently challenging, and sometimes striking down, decisions made by the Executive. Secondly, the effect of the Human Rights Act is that there are more direct challenges to the state by the courts—not by challenging their decisions but by having to make decisions in relation to them. That change can be seen from the fact that in the early 1970s the final Court of Appeal, which then sat in the House of Lords, dealt primarily with commercial and tax cases. If you look at the daily diet of the Supreme Court across the road now, you will see that it is made up of many more constitutional cases involving challenges to the Executive. The separation of the Executive from the legislature, and their different roles, has therefore become more important.

I say in parenthesis, picking up on a point made by the noble and learned Lord—and referring not to Russia but to the United Kingdom—that I read an article in the Daily Mail last week which said that Ministers were furious with the courts because of their striking down the cancellation of some or all of the Building Schools for the Future programme. I have no idea whether Ministers were furious, but, as I say, I know from my own experience that Ministers and officials sometimes could be upset, and I also know that this upset with the courts was always misplaced. In the context of future decisions by the courts that are unfavourable to the Government, it might be possible to say that a decision to exercise the power proposed in Clause 24 had been taken in response to that set of decisions. That would erode confidence in the Executive’s inability to interfere in judicial independence.

What is the solution to this problem? In my view, the solution is to put a provision into proposed new Section 9A of the Judicial Pensions and Retirement Act 1993 that says that nothing in this Bill will allow an existing judge’s pension entitlement to be reduced in any way, including by a right to impose or increase contributions where none are paid at the moment. The consequence of such a provision would be that existing judges’ entitlement would not be affected. It would mean, however, that the Government would be entitled to introduce a contract for new judges that had a provision for contributions. In relation to new judges who are subject to a provision for contributions, it would not be open to the Executive thereafter to increase the level of contributions. The position would be that no judge sitting at the moment could have his pension entitlement changed. In the future, it would be possible for a new judge to have contributions introduced, but those contributions would be fixed. They could be reduced but not increased.

That approach would exactly reflect the approach that the legislature has hitherto taken to salaries. It would take away from the state the ability to respond in any way to decisions that it did not like. I make it clear that I am not suggesting that this Government, or any future Government whom one can envisage, would do that. However, to give a Government that power in the future is to give them a classic tool with which to interfere with judicial independence. I agree with every word that the noble and learned Lord, Lord Woolf, said about the importance for our standing in the world not only of having judges of the high calibre that we have but of having judges who—not uniquely, but unusually—are regarded as completely free from influence by the Executive. For the state now to introduce a provision such as this, which we would deprecate if another country introduced it, would be a great mistake.

18:18

[Lord Boswell of Aynho]

My Lords, the House has just heard, with great interest and respect, two most distinguished contributions by well known lawyers on the role of the judiciary and the Bill’s impact on it. We will shortly hear from a third distinguished lawyer on the matter. I am sure noble Lords will be relieved if I say that I have neither the competence nor the temerity to engage in this argument. We have also heard from my noble friend Lord Brooke of Sutton Mandeville, who was kind enough to support me on my introduction to this House last year. He lightened the tone in the most splendid manner. It made me think that in an effort to build consensus across the coalition, if not across the House, on what is essentially a rather consensual Bill, I should declare a past interest in that my father did know Lloyd George, although they were never of the same party.

Having said that, I was reviewing, as one should, my declarations of interests. The primary one, which I do not think I have heard from anyone else, is that I am a state pensioner. This means that my wife, who is in a similar position, and I are now immune to most of the measures in the Bill. We have passed the gateway. But perhaps more materially, I am also a trustee of the Conservative and Unionist Agents’ Superannuation Fund.

Beyond that, it might be of interest to the House if I throw in the fact that at one stage in another place I handled the Front Bench brief in relation to the initial pension credit legislation. However, I find it sobering—this is germane to the case—that with the complexity of the system which we now face, even given that measure of experience, when it came to the fine points of my own state retirement pension statement I was completely unable to interpret what it actually meant. I knew something about graduated contributions but it was only this week in connection with a new statement of my entitlement for next year, and with reference to Clause 2 of the Bill, that I discovered that I had a PUCODI that I never realised I had. I am delighted to say—it is a matter of a few pence—that it will continue in the future.

I welcome the Bill—strategically, if not in every respect—in that it addresses three needs. First, it addresses the need to control the deficit, although, significantly, it will not do so initially, and not even within the period of the commitment in the coalition agreement to control it. However, it will build up to effect very significant budget savings of the order of £30 billion directly, plus tax and national insurance contributions of a further £8.5 billion over a decade. Those savings are some way away but are very significant indeed. Secondly, it begins to respond to the inexorable demographic process of an ageing but increasingly viable population with a rapid increase in life expectancy which has shaken every actuarial calculation. Remarkably, at the beginning of my political career, there were about 8 million pensioners but we are starting to talk in terms of having 14 million or 15 million within the lifetime of many of us in this House. Thirdly—this is rather qualified praise—the Bill effects some simplification in what I have already indicated is an overcomplex and unintelligible system for the lay person.

As judicial pensions have just been touched on, I shall say no more about them. I do not intend to say a great deal about the arrangements for auto-enrolment although I am pleased that they have been widely welcomed. However, although we are nearly there, some aspects of the technical alignment of this—for example, some submissions I have seen from the British Chambers of Commerce—are entirely proper matters for discussion in Committee. Another area that concerns me—although I am not saying that we should reverse this into one of the functions of NEST, which has a great deal to do—is the whole question of small pots—which I find very vexing—which have been left behind for individuals, particularly but not exclusively for women. I am aware of one in my family worth £20 of pension per annum and another worth about £35 of pension per annum. They cannot be removed on the ground of triviality as that is being claimed somewhere else but they are very untidy and the administrative costs are unconscionable. We must hope that we will return to that issue in the future. What we are doing with NEST—though it will not always be easy and will introduce a burden for employers, including some smaller employers—is broadly sensible in view of the objectives of securing greater savings and availability which the Bill sets out.

I remember from my early days in the pension credit world, to which I have referred, the moral hazard of encouraging people of modest means to save when any benefit from their deferred gratification may be matched, or even overcome, by the opportunities available—these are not related to their own saving—through means-tested pension credit. That destroys the moral basis for their contribution and may give rise to legal challenge later on. That is why I am attracted by the ideas that have been touched on in the debate, particularly by the noble Lord, Lord German, and have certainly been sketched in the press, that something should be done to consolidate the state pension at a higher actual level. Moving to a higher minimum level would provide a platform on which people’s full NEST-directed or other-directed savings could build, rather than being subverted by a means-testing system.

However, the meat of the Bill in financial and policy terms lies in Part 1 on the state pension. We know that life expectancy is increasing even faster than the assumptions of the timetable of the 2007 Act. Even allowing for a completed move to 66 for everyone, within 20 years there may be another 2.5 million pensioners. Any Government would have to address this, even if the budgetary situation were better than it is today. I therefore support the principle of bringing forward changes to the state pension age. On fairness, we need to recognise the interests of those in the active labour market—taxpayers who have to fund these pensions when they are paid—and the overall gender balance effect. These issues have been touched on.

That is not to say that there are not concerns—I share those concerns—about problems, particularly for a number of women in this transitional phase. It is simply unrealistic to pretend that any move to accelerate the system could be painless. However, we need to recognise—many of us across parties have campaigned on this for years—that the position of women in the pension system has generally been difficult. In fact, we have only just achieved 30-year entitlement. One or two cases of particular stress have been referred to—for example, women who have attained the age of 60, or will have done, who then discover that their pension is moving from them, rather like the fruit in the old parable whereby you never quite get there. I hope that in Committee we can look at some of the most direct effects, particularly on people who are seriously ill, to see whether something can appropriately be done about them. I recognise that cost is a real constraint. Trying to say that we have a problem that we will meet in full would nullify the Bill.

Another constraint which has not much been touched on in the debate is the jurisdiction of the European Court in relation to potential discrimination. Although I would not wish it to do so, the court will look seriously at the issue of not aggravating a gender imbalance. However, I should like Ministers to consider whether they could meet at least part of the cost by transferring the balance from the female gender to the male gender and making an earlier start on moving the male pension age up towards 66 before 2018. In order not to destroy the principle in Europe, this could be done by ensuring that there was a progressive reduction in the differential between the male and female pension ages—that is, the female rate of withdrawal or of moving the contribution qualifying age would always be faster than that of males. That would be a reasonable package to put to the Europeans, saying, “We have a problem. It is an historic one. We also have an overall financial problem. Can we consider doing something slowly about the male approximation to 66, to which we know, as part of our programme, the female age would approximate in due course?”. Such a proposal would be reasonable if it helped to provide some resources for the burden sharing.

The overall message from this debate is that pension legislation is complex and potentially expensive and savings are not easy to get and have to be thought about well in advance. Somewhere along the way—although, as I have indicated, I am no lawyer—the words “reasonable expectations” chime in on this. However, I congratulate the Government on the concept behind their Bill and I look forward, because the devil is in the detail, to its detailed, objective and, on the whole, broadly consensual consideration.

18:30

[Baroness Bakewell]

My Lords, I want to contribute to this debate about the Pensions Bill from an entirely different angle. I have listened with fascination to, and taken note of, the forensic analysis of its clauses. I declare an interest; for almost two years, I was the government-appointed voice of older people. In that time I received hundreds of letters, and it is those voices that I bring with me to the Chamber. I regret to say that I did not have many letters of complaint from the judiciary.

The terrible news this morning from Health Service Ombudsman, Ann Abraham, which detailed the shocking treatment of old people in some national health hospitals, indicates the need for a total rethink of how we regard the old. We all know that populations are ageing. We should celebrate that fact as it is a major achievement in human development. Advances in medicine and hygiene, and the triumph of lifestyle changes such as the decline in smoking, have converged to make a major change in my life expectancy and that of everyone else. The human race is living longer. By 2050 the number of people around the planet over 65 will have doubled. This change is on a par with climate change, and will interact with climate change to shape the future of life on this planet.

Rather than see the phenomenon as a wretched burden on society, we should welcome the old as a major new resource: an extra generation fit enough to work longer and contribute to the economy that supports them, as well as a major market for new technologies and services that promote well-being, independence and social interaction. That is the good news.

The bad news, which today's report on old people's health endorses, is that we are far from seeing the old as valuable, often capable and willing to work, planning carefully for what they expect their retirement to bring, and deserving of the same dignity and respect as the rest of society. From now on, issues concerning the old—their employment, housing, social care and transport—will come for consideration before your Lordships again and again. The planning of pension provision is merely a very important and leading adjustment that all of us will have to make to these sensational changes.

It is important that we get the emphasis and the attitude right from the start. The default retirement age is already on the way out. If older people wish—and many do—they may stay in work for as long as they are able and needed. They will be needed. The economy cannot support a population most of whom spend one-third of their lives in state-supported retirement. Planning must be overarching. Let us consider the numbers. In May last year, nearly 12.5 million people were claiming state pensions. The UK spends 5 per cent of its GDP on pension benefits, which is less than most other countries in Europe.

The names of Lloyd George and Beveridge have bounced around the Chamber today. William Beveridge advised Lloyd George on the first old-age pensions. Your Lordships will remember that when later he advised on national insurance in 1942, he listed the then five great evils: want, disease, ignorance, squalor and idleness. Times have changed. If Beveridge were to come back and address issues facing the old, he might well suggest five new giant evils. I believe that they are poverty, isolation, discrimination, injustice and neglect. Three of those considerations converge in the provisions of this Bill: discrimination, poverty and injustice. We would do well to consider them closely, for they will occur again as we struggle to deal with the unprecedented social change that is upon us.

On discrimination, 25 years after the Equal Pay Act, whose intentions we now know have not been fully realised, I little thought to find women confronting a brand new form of discrimination. I thought that the public will had moved on and that the very suggestion that such a new discrimination could happen would be howled out of court. Yet such discrimination exists in accelerating the extended pension age to 66 by 2018 in the interests of righting another discrimination, which we acknowledge existed when women were allowed to retire at 60 and men had to wait until 65. That was discrimination and we are pleased to see it go, but not when another discrimination is brought in to make it possible.

We know why this arises, and it is very understandable. It arises because the trajectory of a woman’s life differs from that of a man’s. It almost cannot be otherwise. For the best of all possible reasons—reasons applauded by society—women who are now in their fifties took a break from their working/earning lives to bring up their children. Society applauds such a move. It required their making financial sacrifices at the time, but those sacrifices were made willingly and within their own capacity to plan and anticipate their family finances. The Bill penalises them for doing that. It confronts them with having to wait longer than they thought before they get their pension and with little time or resource to do so. It is not just women who recognise that as discriminatory.

The next great evil facing the old is poverty on a very wide scale. A higher proportion of women in the workforce have low-earning jobs. Pensioners from black and ethnic groups are more likely to be in poverty than white pensioners. Forty-nine per cent of Pakistani and Bangladeshi pensioners already live in poverty. Many women, as we have heard, struggle to do several jobs over the same schedule in order to provide for their families: their existing earnings are at a stretch. They may well be caring for both a younger generation—their own children—and an older one, their ageing parents. They are caught in a generational bind. Yet some of them—33,000, according to the Minister’s own figures—face the sudden prospect of needing to fund up to a two-year delay in their entitlement to a state pension. They must wonder how they are to do that and how that situation arose. There is no scope, no space, no time and no opportunity to earn a little more or to set even a little aside each week to ease that transition. They face the gentle but implacable squeeze of poverty. Up to 2.6 million women will be affected by the additional time they have to wait for their state pension.

The third evil is injustice. Many of the old are already seized by a fear of what lies ahead. They sense that they are getting a raw deal. I receive letters all the time in which the same phrases are used: “I have worked hard all my life. I have paid my taxes. I have cared for my family. I have taken hardly any holidays. And yet now I am to be hit by this pensions ruling. It just isn’t fair!”. There is widespread bitterness among many old people that the young have no idea and simply cannot imagine how anxious and distressed old people are at not being treated justly. There is alarm among them that many younger people think that the old have never had it so good and have lived lives of comfort and ease, while they struggle with changing financial pressures. But there are millions of older people who have led steady, responsible lives, caring for their families, honouring their communities, and they expect to be treated justly as society adjusts to the changing demographics.

As I said when I began, the old are increasing in number and they are alert, active, thoughtful and outspoken. They are looking to this Bill to help society to adjust to the changing demographics. They feel that they are in a van of social change and yet they are the victims of it. When making changes to the Bill, I ask the Minister to consider those injustices and discriminations against women and the poor.

18:39

[Lord Mackay of Clashfern]

My Lords, I have listened to many fine speeches on the Bill. I congratulate my noble friend on the way in which he opened for the Government and the noble Baroness, Lady Drake, on the way in which she opened for the Opposition—very clearly and very plainly. If anything is plain it is that this Bill faces huge difficulties. Some of these have been highlighted very clearly this evening. It is very good for us to have the opportunity of hearing these problems because the problems that confront the Government in this area are extremely great and very difficult to cope with. A suggestion, which occurs to me as attractive, is the one which would join a substantial increase in the state pension with these changes. That may or may not be easy. I must declare an interest in the Bill as a former Lord Chancellor, a former Lord of Appeal in Ordinary, a former judge of the Supreme Court of Scotland and a current state pensioner. As I understand the Bill, it does not affect me financially in any way whatever.

It is about 18 years since I introduced the Judicial Pensions and Retirement Bill to this House. The days between its introduction and its enactment were not the happiest of my life. The principle that a serving judge shall not have his terms of service adversely affected without his consent during his term of service is a fundamental principle, part of the rule of law and internationally recognised. It has been followed by Governments in this country, so far as I know, as far back as I can tell. When I came to introduce the Bill to which I have just referred, I made it plain that it did not affect serving judges. Those who were already serving judges were not affected by the Bill, which was introduced in 1992 and passed in 1993, except that they were given an option to enter the new scheme if they wished, and some did so.

However, serving judges were not affected in any way. The reason for that was not because the Government did not want to change things quickly—I remember one of my colleagues saying that we would have to wait a long time before the pension provisions in the Bill took effect. The Government wanted to see change immediately—there is a certain aspect of that in politics which perhaps we should try to resist—but the Bill did not affect any of the serving judges, many of whom were not old; it affected only those who were appointed after it became law. That is fundamental and requires to be observed in this Bill.

The truth is that the newly appointed judiciary has quite a high turnover. It does not take all that long—although longer than my colleague would have liked—for the new regime to come completely into effect. There are some, but very few, existing judges who are under the 1981 system.

The noble and learned Lord, Lord Falconer of Thoroton, referred to aspects of this provision which are enacted. I think that he referred to the Supreme Court Act. He himself changed the title of that Act to the Senior Courts Act, but the statutory reference is perfectly plain, because when we had a new Supreme Court we had, needless to say, to change the title of the old one.

As I said, that was the provision that we made, and I believe that it is the right one. The question about what happens to new judiciary is of course not trammelled in any way by that. The noble and learned Lords, Lord Woolf and Lord Falconer, referred to the considerations that apply to that. I cannot get into that, because that is the area where I suffered a lot in 1993, when I was told that if the new regime of 20 years instead of 15 was introduced, we would not get any judges at all, or the ones that we would get would be people who were not worth having. That is perhaps a slight exaggeration of the way it was put, but it was put very strongly, I can tell you, and lasted for quite a while. The fact is that it did not adversely affect recruitment—at least, not as much as was suggested; I think not at all, but that is my view of the matter.

If that fundamental principle is to be observed, as the noble and learned Lord, Lord Falconer of Thoroton, said, it is necessary to restrict the operation of Clause 24, which makes an insertion after Section 9 of the Act, to those who are appointed after the Bill comes into effect.

The second point made by the noble and learned Lord, Lord Falconer of Thoroton, was about the contributions to be required of the more recently appointed judges. I do not think that it would be right to allow the Executive to increase them by order, but we could well have a formula set out in the statute which increased them—for example, in relation to the indices presently in question which concern how pensions are uprated. Some such statutory formula would be open. As I said, there would be a question about the effect on recruitment, but that is an open question on which people could have very different views.

That is all I want to say; it is a very simple point and the only one I really want to make. I think that it is a sound point that the law—the constitution of our country—requires that, once a judge has become a serving judge, his terms of service cannot be altered adversely to him without his consent. To give effect to that in the Bill would require a minor amendment—a small amendment in its scope—but an important one.

My attention has been drawn to some other problems about additional voluntary contributions and so on, but those are very subsidiary. I want to stick on the principle, which I think is an extremely sound one. My noble friend Lady Noakes says that I should not listen to the lobbying of the judiciary and must not cave in to it. I am not listening to the lobbying of the judiciary; I am applying a principle which we applied when we put our Bill in place and which I believe should be respected today.

18:49

[Baroness Donaghy]

My Lords, we are reaching the end of the debate; I am conscious of the time and the ground covered. I will confine myself to one part of the Bill. In doing so, I associate myself with all the remarks made by my noble friend Lady Drake and congratulate her on her contribution.

I want to deal with the proposal to raise the salary level at which someone is automatically enrolled to £7,475 a year, with a future possibility of increasing that threshold. For 30 years, I represented low-paid workers. I was a member of the first Low Pay Commission and, as one of the European social partners, I was part of the team that led to the adoption of the part-time workers directive in the 1990s, so I want to focus on the threshold because of its impact on the low paid. Too often, we spend time here talking about people with careers; I want to talk about people with jobs.

I appreciate that the proposal is a result of a recommendation by the independent review which was published in October last year. The review team also considered whether the smallest employer or the older worker should be excluded, whether any changes to the proposed regulations, such as a three-month waiting period, would help, and whether simplification of the scheme, such as self-certification, would be advisable. My guess is that there was some negotiation within the review group on these areas and the lowest paid and casual workers lost out. I appreciate that the threshold of £15,000 was rejected by the review group, and I am grateful for that, but the proposed threshold of £7,475 this year, possibly rising to £10,000, might exclude those who have a series of jobs, some seasonal, some multi-site jobs with different employers. It might be neat and tidy, as some noble Lords have said, to fix on the income tax threshold, but that threshold is a political decision, not one based on need.

The CIPD, of which I am a fellow, conducted a survey last week indicating that 65 per cent of staff in the private sector are not saving in a company pension. This shows all too graphically the scale of the problem in future and surely argues for fewer exclusions, not more. Anything that is linked to an income tax threshold will mean that an individual’s pension future will be tied to the varying political whims of successive Governments. We need a plan that will last for 40, not four, years. If the threshold increases to £10,000, 1 million to 1.5 million people, mainly women, will be excluded.

When I first started work at the University of London in 1968, I was excluded from the occupational pension scheme, along with all my immediate workmates. In my case, it was because of a two-year eligibility requirement. In other cases, it was because they were part-time and, for the rest, it was because they were not earning sufficient to qualify for entry at that time. I was the lucky one because at least I got in eventually. Those who stayed and retired in the past few years did so on a reduced pension because of the obstacles placed in their way a lifetime ago. I sometimes feel as if this is where I came in.

We should not assume that low-paid people are stupid and do not want to plan for the future or make short-term sacrifices for long-term benefit. The lowest-paid men and women will be excluded from automatic enrolment not just for administrative convenience but because, I still believe, there is not sufficient appreciation in the UK of the impact of low pay on millions of people. When we talk about poverty, it is too often focused on benefits, tax credits and other forms of support. We should also be focusing on lower-paid workers and enabling them to plan for the future. I urge the Minister to reconsider his proposal to raise the threshold for eligibility and to put people on the right road to help themselves to secure their own future.

18:55

[Lord Flight]

My Lords, it is clear that much of this Bill is about tidying up so the Bill should command cross-party support. I will make three points that have not been fully brought out in this debate.

The first point is the need for a national savings policy. For many of the rising generation, pension saving has become almost a dirty word. It might be no bad thing if they are saving for their retirement in other ways; as has been commented, ISA savings have increased dramatically in relation to personal pension saving. It is fine to clean up the legislation that we have, but there needs to be a framework so I hope that the Government will come forward with a national savings strategy in due course. Following on from that, the Government should not be surprised to find that both employers and employees have pretty strong motivations for opting out of auto-enrolment to the extent that that will be possible.

Another big point, which has been made in different ways by many others, is that the Bill merges retirement ages but does nothing about the planned date of 2046 when the retirement age will rise to 68. Many would share my view that the projected longevity argues for the retirement age to rise much in advance of that and, possibly, to rise to the age of 70. I have campaigned for some time for the neat quid pro quo of a much more generous state pension at 70 that would merge the two different main and secondary pensions that are now available but would be well above the minimum income support level of pension credit. That would be a fair way of balancing the two. I also feel that pension credit has demotivated pension savers. You could get rid of all forms of the obligation to buy an annuity as well if the state pension at 70 was adequate.

A third territory, which my noble friend Lord Boswell mentioned, is that the Bill tackles the obscure territory of GMPs and PUCODIs. I regret that I am not yet entitled to either. Apart from this being something like the Schleswig-Holstein question, there is quite an important point to be made about GMPs. I have a GMP and I know what it is and where it sits, but I have yet to find anyone who has one who even knows that they have one. As Members of the House will know, in essence a GMP is an entitlement when an individual ceases to be a member usually of a DB scheme that has contracted out. As far as I can see, pension schemes often do not keep up with the addresses of members who are entitled to GMPs and do not to write to people about them. I do not know precisely what legal requirements might be missing, but this is a practical issue and there ought to be, if there is not already, a clear legal obligation to keep people advised.

I congratulate my noble friend Lord Freud on his very clear presentation of a difficult Bill. The Bill should command support, and I think that we will have other issues to deal with when the Finance Bill comes before the House.

18:58

[Lord McKenzie of Luton]

My Lords, this has been a powerful and exceptionally well informed debate that was enlightened yet further by the great sweep of history from the noble Lord, Lord Brooke of Sutton Mandeville, with his insights into actuarial practice in the EU. I, too, congratulate the noble Lord, Lord Freud, on the manner in which he introduced the Bill and the very clear way in which he set out its contents. He reminded us about the golden years under a Labour Government in 2006. I am especially pleased to have heard from the noble Lord, Lord Boswell, because he actually has a PUCODI. I have been seeking someone who has one for a long time, and what I thought was going to be a fairly sterile and short debate in Committee will, I think, be much more extensive, as I am sure the Minister will attest. Like many others, I also congratulate my noble friend Lady Drake not only on a very impressive first appearance at the Dispatch Box but on her incisive analysis of why we have concerns with this Bill.

The Bill seeks to address the right issues—increasing longevity and undersaving—but in a way which we cannot fully support. Fundamentally, we consider accelerating the equalisation of the state pension age for men and women to be unfair. Of course, we recognise that life expectancy has increased beyond the 2004 projection, as spelt out by the Minister, and we adhere to the Turner commission proposition that intergenerational fairness argues for the proportion of adult life spent in receipt of state pension to be broadly constant. That would be catered for as much by the approach we support as by the Government.

It is our view that the existing timetable for equalisation of the state pension age to 65 should be left unchanged and that the increase to 66 for men and women should take place between 2020 and 2022. We accept that it would also be necessary to review the subsequent timetable for increasing the state pension age to 67 and beyond. Perhaps we could make common cause on that with the noble Baroness, Lady Noakes, and the noble Lord, Lord Flight, although whether we would end up in the same position is another matter. The noble Lord, Lord Boswell, opposed the suggestion about accelerating the state pension age to 66 for men but not for women, but there are issues within the EU about that.

It is to our disappointment that we could not have consensus on this Bill. Had the coalition Government stuck to their commitment that the date at which the state pension age for women would not start sooner than 2020, we could be at one—a point pressed by the noble Baroness, Lady Greengross. Now, as we have heard, some 300,000 women will have to wait for between 18 months and two years longer to receive their state pension. This means that they will lose up to £10,000 in pension income, and more if they are eligible for pension credit.

The timeframe within which these changes are to take place will make it very difficult for women to mitigate their loss. Women are less likely than men to be in private pension saving and have fewer financial assets to bridge the gap. Some have caring responsibilities and will have left the labour market having anticipated their state pension at a certain date. Those women are now faced with the dilemma of seeking to rejoin the market when employment prospects are particularly weak. My noble friend Lady Bakewell referred to these issues as issues of discrimination, poverty and injustice.

However, dealing with these matters in terms of percentages, aggregates or cohorts belies the fact of the change on individual lives. We have heard the stories from my noble friend Lady Hayter about how individual women will be affected and we have heard powerful reasons why the Government should stick to the legislative timetable for equalisation. The noble Lord, Lord German, offered us some mitigation if the Government are not to change their position around pension credits and in addressing those who are seriously ill. Perhaps we can seek common cause in Committee on that, but that does not address the fundamental unfairness in the Bill.

None of this unfairness can be claimed to be in the cause of eliminating the deficit by 2015, as the savings from the Bill would not begin to accrue until 2016-17. We accept that holding to the existing equalisation timetable would reduce the savings, but fairness has implications. That would mean that more would be borne by the working age population, but it would still give rise to savings of some £20 billion, including additional tax receipts of about £8 billion.

We have heard from the Minister about the triple lock and the relinking of the basic state pension with earnings in 2011, which is earlier than required by legislation. However, on the basis of Treasury forecasts—a point made by my noble friend Lady Turner—it looks likely to be 2013 before earnings become the highest of the three components of the lock. With the switch to CPI, it is possible that pensioners will be no better off and that some may be worse off under the lock than they would have been had there been continuance of uprating in line with the RPI.

As many noble Lords have said—everyone who has spoken, I think—we strongly support the coalition Government’s decision to proceed with auto-enrolment and with NEST. Indeed, why would we not? The proposals were created on our watch: my noble friend Lady Drake was a member of the Turner commission and was later chair of PADA; my noble friend Lady Hayter served as a trustee of NEST; and my noble friend Lord Myners was chair of PADA. We are, as it were, up to our necks in it. The prospect of between 5 million and 8 million people newly saving, or saving more into a workplace pension, is a profound change that will allow millions of workers, who never had the chance previously, to build up their own pension and give them an opportunity to save.

Of course, auto-enrolment will not transform matters overnight, but it is part of a broader pensions settlement, grounded in the intellectual rigour of the Turner commission. That settlement proposed improvements to the basic state pension, especially improved access for women, accelerated the flat-rating and simplification of S2P and proposed the imperative to redress market failure through the creation of a national low-cost saving scheme, which is now NEST.

The Turner commission’s analysis holds good and is not fundamentally disturbed by the Bill. The noble Lord, Lord Stoneham, made that point. The practical ramifications of that analysis have been subject to compromise—for example, the cap on contributions, the contribution levels, the staging and phasing and the restrictions on transfer—and not everyone has been happy with the outcome. We may have a difference of view with the noble Baroness, Lady Noakes, for instance. However, the Bill disturbs that compromise and tilts the balance in favour of employers and against participation of the lower paid. The Government deserve our support for resisting the clamour to remove micro businesses from its scope and to exclude older workers. However, setting the trigger, as we have heard, at the personal allowance threshold for income tax denies 600,000 people—nearly half a million women—the opportunity of auto-enrolment. More worrying is the concern expressed by my noble friends Lady Drake, Lady Donaghy and others about the start of an upward movement of the personal allowance, which will be tracked by this trigger. Should the trigger reach £10,000, 1.4 million people will miss out on auto-enrolment. Linking the entry point for auto-enrolment to the primary threshold for national insurance is more appropriate.

Our further concern, voiced by several noble Lords, is the introduction of an optional waiting period of up to three months before employees are auto-enrolled. While we see the benefit of not having to enrol individuals who up and leave quickly and opt out of pension savings, there is another side of the coin: seasonal short-term working may be the pattern of somebody’s working life and they could miss out completely. Even if not, as we have heard, the number of job changes routinely undertaken during a lifetime will mean a significant period when an employee will have to opt in to gain continuity of saving.

We will explore these matters further in Committee and seek reassurance from the Minister that the application of the easement will be monitored. It is claimed that one of the benefits of a waiting period is fewer small pots, an issue which my noble friend Lady Hollis has rightly continued to pursue. To a certain extent, this is solved by the use of NEST, where employees automatically collect their pension pots from a range of different employers. However, that solution does not cater for circumstances where the providers chosen are other than NEST. We support my noble friend in her exploration of whether small pots might be collected together in NEST at the point of retirement, a matter pressed also by the noble Baroness, Lady Greengross. My noble friend rightly revisited the opportunities to amalgamate earnings from mini-jobs for the purposes of national insurance credits, qualifying earnings and, now, the trigger.

What is the Government’s position on changes to the rules on NEST which would allow transfers into the scheme? What is their position on removal of the cap on contributions into NEST? On a more general point, how will the rules which allow pension contributions to be deducted in computing tax credits be carried forward to the universal credit?

The issues around self-certification have proved intractable in the past. The challenge has been to facilitate sensible mechanisms to encourage employers to stay with existing good provision provided that it has delivered at least the equivalent of 8 per cent on qualifying earnings without employees who should be auto-enrolled dropping through the net in large numbers or systematically. Consultation on how this might work is being undertaken, but we are unfortunately unlikely to see it brought to a conclusion by the time that we have finished our deliberations. Unless these matters are clear, there are those who would seek to use the rules to circumvent the auto-enrolment requirement. Evidence, if it were needed, can be found in attempts to exploit the differences in trust-base and contract-base refund rules, although we are pleased to see that the Government are on this particular case.

On judicial pensions, a matter spoken to by the noble and learned Lords, Lord Woolf and Lord Mackay of Clashfern, and my noble and learned friend Lord Falconer of Thoroton, I am aware that there is sensitivity and history surrounding this issue. If I were not, I was woken up to it pretty quickly. When I raised the issue with a couple of colleagues and said that judicial pensions were on the agenda in the Bill, there was a sharp intake of breath and I was told, “You’re on your own”. We all agree that we are incredibly well served by the judiciary, although I cannot speak from personal experience on the matter. The issue of public service pensions has been most recently addressed by the noble Lord, Lord Hutton of Furness. His interim report was issued in October and we await his final report. The interim reports recited that the best way to make savings would be to increase member contributions but to protect those on lower earnings. Can the Minister let us know how the Government’s acceptance of the recommendation is to be implemented and within what time frame?

Clause 24 is an enabling measure and, in principle, has our support. It cannot be right to exempt judicial pensions from the financial discipline which is to be applied to other public service schemes. However, changes must, as for all public service schemes, respect accrued rights. It is important also, as the noble and learned Lords contend, that these matters proceed in a manner that does not impair the independence of the judiciary.

Time does not permit a review of all the other essentially technical changes in the Bill—we will pick up on these in Committee—but perhaps the Minister can help us on one point raised by several noble Lords. Paragraph 3 of Schedule 3 seeks to introduce some flexibility into the arrangements for consolidation of S2P. There seems to be nothing in the Bill to address the much heralded consolidation of the basic state pension and S2P on the way to a £140 basic pension. That was referred to by the noble Baroness, Lady Greengross, my noble friend Lady Hollis, and the noble Lord, Lord Stoneham, who said that he has had some engagement on this with the Pensions Minister. Can the Minister update us on this and say when we can expect firm proposals?

A further issue of significance, which the Bill addresses in part, is the consequences of the switch from RPI to CPI in determining the general level of prices for revaluation and indexation purposes. The major impact of this on occupational pensions will, as the Minister said, be delivered by order and not by the Bill. From the Government’s point of view, this seems to be yet another item of work in progress as their consultation is not due to close until the beginning of March. Can the Minister let us know when the responses will be shared with us? The impact assessment has also become a bit of a moveable feast by some £20 billion in the space of a few days.

We have generally signalled our acceptance of the switch to CPI for uprating benefits, not necessarily as a permanent change but for a period while the deficit is being addressed. We will continue to examine the appropriateness of CPI as currently configured as a suitable measure for inflation compensation purposes.

We have much to discuss in Committee but our efforts will be focused on seeking a reversal of the unfairness at the heart of the Bill. That unfairness goes against the grain of recent pension legislation, which has been to redress the historic discrimination that women have faced in the pension system. However, the Government will have our support—if not uncritical —in taking forward the auto-enrolment proposals.

19:14

[Lord Freud]

: My Lords, I am not surprised that this has been a fascinating and very well-informed debate. I particularly congratulate the noble Baroness, Lady Drake, on her speech. The noble Baroness, Lady Hollis, said she was looking forward to seeing her noble friend on the Front Bench, and I have to say that that speech left us with the same view. The noble Baroness is very welcome over here—in fact she could do some of this for me. A huge number of points were raised and, to be honest, I have no chance of dealing with all of them in the time available to me. However, I know that we will be dealing with them in great depth in Committee.

Let me go back to the core issue around the acceleration in the pension age. We have been left with a record structural deficit and we need a sustainable system that works fairly for current and future pensioners. The argument comes down to simple financial discipline. Spending on state pensions in 10 years’ time will be nearly £26 billion higher if we leave the timetable unchanged. That reflects a mounting financial pressure on the working population. We cannot spend money we do not have. Just as we have been clear on our intention to restore the public finances in the short term, we are also determined to do so in the medium term. In 10 years’ time there will be nearly a quarter more individuals over the age of 65—what will we do for them then? “Sorry, there’s no money”, is not an option when it comes to dealing with people’s security in retirement.

As I said in opening, people are living longer, and rapidly. We are trying to deal with the bubble that my noble friend Lord German talked about—the beneficial bubble of living much longer. The new pension age will reduce pressure on public finances by around £30 billion between 2016 and 2026. Automatic enrolment will result in £9 billion a year in additional workplace pension savings by individuals. These are significant numbers and they represent real cash value for the individuals of this country.

Let me deal with the issue raised by a large number of noble Lords. The noble Baronesses, Lady Drake, Lady Greengross, Lady Hollis and Lady Bakewell, and my noble friends Lord German, Lady Noakes, Lord Stoneham and Lord Boswell, talked about women in their 50s facing longer in the workplace. The fundamental argument runs along these lines: those people who have enjoyed this dramatic increase in longevity should help to fund their pensions. As the Minister for Pensions said in another place yesterday, if we wait until 2020, when the current equalisation timetable is completed, overall savings will be reduced by £10 billion. That represents an extra £10 billion that the working-age population will have to find.

We have heard some figures relating to the women affected—300,000 facing another 18 months or more and 33,000, right at the edge, facing two years more before they get their state pension than they might have excepted. However, 70 per cent of these women are currently working and this measure encourages them to continue working. Some of them have retired early and have a pension enabling them to do so. Some of them have independent means. Clearly, some of them will need to be supported by the working-age benefit system, which is not as generous as a pension but nevertheless represents a support network. People are working beyond the age of 65. Some 900,000 people are doing, which is twice the number of a decade ago. Indeed, 60 per cent of people in their 50s say that they would like to continue working after the state pension age.

I come to what the noble Baroness, Lady Hollis, called Hamlet without the prince—what is happening with what has been called the single tier, which the noble Lord, Lord McKenzie, the noble Baroness, Lady Greengross, and my noble friend Lord Stoneham also raised. Last year, the Chancellor stated that the Treasury is working with the DWP on potential pension reform to simplify pensions and provide a boost for pensioners for many years to come. I am not in a position to update that statement, but it is still extant. I hope and expect that we will return to this topic in our debates, when I will be able to update noble Lords.

My noble friend Lady Noakes pressed me on further moves to raise the retirement age beyond 66 to 67 and 68. Once we have got the increase through to 66, we will start to consider further increases to state pension age to manage the ongoing challenge that we have, represented by increasing longevity. The idea of an automatic mechanism to raise it is attractive superficially but, in practice, some wider issues need to be looked at in this fiscal situation. With the level of healthy life expectancy, it is probably not the most obvious way to go.

A lot of issues have arisen on automatic enrolment. I deal first with the waiting periods, raised by my noble friend Lord German and the noble Baronesses, Lady Greengross and Lady Turner. The employer will be required to provide an individual notice to individual jobholders. It must inform the jobholder that the employer intends to use a waiting period, the jobholder’s new automatic enrolment date and, importantly, their right to opt in to the employer scheme during this waiting period. We are very conscious of the need to ensure that there is adequate information.

Many noble Lords raised the new threshold at £7,475, including the noble Baronesses, Lady Drake, Lady Hollis and Lady Hayter. We are setting that level after looking very closely at replacement rates, among other factors. We have not committed to chasing up the tax threshold figure with that rate. That is a decision that will be taken independently of that. Several noble Lords made the point about increasing exclusion if we were to raise that rate. Those are the issues that we will have to deal with when we take those decisions. We will discuss them in this forum, I suspect.

The noble Baroness, Lady Drake, raised a point on loopholes in certification. Simply put, we are not complacent about that. We will be watching it very closely and we will monitor the trends. If we see that certification is being abused, as the noble Baroness is concerned about, we will have the power to strengthen the requirements and ultimately to repeal the legislation.

Several noble Lords—I am thinking of my noble friend Lord German and the noble Baroness, Lady Hollis—raised concerns about small pots and orphaned assets. Clearly, those little bits of irritating money are a major issue when they are stuck all over the place and cost you more to get out than to enjoy. We are considering the long-term implications of automatic enrolment; that is one of the issues. The DWP is currently working with HM Treasury, HMRC, the FSA and TPR, as well as with pension providers, to identify what additional work may be needed to address small pension pots. Our call for evidence on regulatory differences, which we published at the end of last month, also seeks solutions to address that. It is a real issue.

The noble Baroness, Lady Hollis, raised a question about early access to pension funds when one has small amounts of savings. As she will be aware, the Treasury has been conducting a public call for evidence on this issue. I listened to her remarks on that area with interest. I am sure that my Treasury colleagues will, too. If they do not, I will pass on the issue.

Perhaps I might deal with the question that my noble friend Lord German asked about including housing costs in the CPI. There are actually some housing costs in the CPI. However, mortgage interest payments are not in that but in the RPI. That is the way that the RPI deals with housing costs. There is work going on currently to look at how and whether housing costs could be taken in a less distorting way into the CPI. It is likely that that work would come out to a movement in the actual price of houses going into that particular index. The ONS is looking at that; the work is still at a relatively early stage and we expect it to take about two years, but it is entirely possible that that criticism of the CPI—about it excluding too much on housing—could be eroded.

I tread with great trepidation on the matter of judicial pensions, seeing people with scars all around me here. I shudder to take some of the wounds that they must have suffered in the past but perhaps I might deal very neutrally with some of the issues raised. We do not believe that taking personal contributions from judges amounts to salary reduction. Gross levels of payment will remain unaffected. We accept the argument made by all three noble and learned Lords that the independence of the judiciary is at the heart of our constitutional arrangements. There are a number of ways in which this independence is maintained including, clearly, salary protection for judicial officeholders. Salary protection does not prevent the payment of income tax or contributions that judges already make to pensions for dependants’ benefit.

The point that the noble and learned Lord, Lord Woolf, raised about recruitment and retention is clearly one that we need to maintain a very sharp eye on. We will monitor the effects of this measure. I recognise the roles of the heads of the UK judiciary and the judicial appointments bodies in questions of morale and recruitment. However, there is a very basic point here. It is right that judges should face the same restraints as other public service pension scheme members. There is a clear reason for introducing member contributions—to ensure a fairer distribution of costs between taxpayers and members so that the schemes remain affordable.

The noble Baroness, Lady Drake, asked when regulations will be available. We recognise the need to provide certainty as soon as possible. We will formally consult on the regulations immediately following Royal Assent. We will also consult informally on draft regulations in late April and early May.

The noble Baroness, Lady Hollis, asked about mini-jobs. She made a very valuable suggestion when we had a conversation about whether we can use the universal credit in relation to smaller, part-time jobs that add up to earnings above the threshold. That is a very interesting idea. It applies only to around 50,000 people at the moment, mainly women. However, our universal credit plans will increase the number of part-time workers by around 250,000, so that figure could be raised by a lot.

I am hurrying because there is so much that I would like to deal with. I will deal with a couple of points raised by the noble Lord, Lord McKenzie. I am not enamoured of him at the moment because he raised the issue of PUCODIs. I had begged him to keep quiet about them because I do not want to have to understand them, although I will if he insists. The latest position on the NEST contribution cap is that while we welcome the recommendations of the review, it is not the right time to legislate or carry out a review of the annual contribution limit for NEST. We will look at that review, as the noble Lord knows, in 2017. Similarly, it is much more sensible to wait until 2017 to look at the position on transfers into NEST. Those two issues will be dealt with once NEST is working. It is, after all, the largest experiment in asymmetric paternalism that the world has ever seen. We can afford to find out what it is doing and make adjustments at that stage.

As previously mentioned, this is a Bill of many parts, some of which may not seem to fit naturally together. In a way, that is not surprising. Pensions span a person’s lifetime, from saving on entering the job market, through planning and preparing in middle age, to enjoying retirement in later life. All those are factors across the piece. There is no one place that pension provision does, or should, solely sit. Therefore, the Bill recognises that the pension system needs to reflect this. As the demography of the UK has shifted, we have had to reassess our current structure and amend existing legislation accordingly. This Bill puts sustainability and fiscal responsibility at the heart of its measures. I commend the Bill to the House.

Bill read a second time and committed to a Grand Committee.

House adjourned at 7.35 pm.