House of Commons

Thursday 17th February 2011 Commons Chamber

Thursday 17 February 2011

The House met at half-past Ten o’clock

Prayers

Thursday 17th February 2011 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Thursday 17th February 2011 Commons Chamber

The Secretary of State was asked—

[Alok Sharma (Reading West) (Con)]

1. How many apprenticeship starts there have been in the academic year 2010-11 to date.

[Mary Macleod (Brentford and Isleworth) (Con)]

6. How many apprenticeship starts there have been in the academic year 2010-11 to date.

[Stephen Mosley (City of Chester) (Con)]

8. How many apprenticeship starts there have been in the academic year 2010-11 to date.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

11. How many apprenticeship starts there have been in the academic year 2010-11 to date.

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

12. How many apprenticeship starts there have been in the academic year 2010-11 to date.

[Stephen Lloyd (Eastbourne) (LD)]

17. How many apprenticeship starts there have been in the academic year 2010-11 to date.

[The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)]

All our Christmases have come together.

Provisional data show that there were 119,800 apprenticeship starts in the first quarter of the 2010-11 academic year. That good news confirms that employers are recognising the value of apprenticeships to building growth and competitiveness. The Government are committed to increasing the budget for apprenticeships to over £1.4 billion in the 2011-12 financial year.

[Alok Sharma]

As part of the recent apprenticeships week, the National Apprenticeship Service launched a 100-day campaign in Reading. By the end of the first day alone, 28 pledges of places and a further 19 expressions of interest had been received from local employers. Will the Minister join me in congratulating Reading’s employers, Reading borough council, the Reading Post and other local organisations on supporting that excellent initiative and demonstrating what can be achieved when business and Government work together?

[Mr Hayes]

I do indeed congratulate them, and I congratulate my hon. Friend on drawing the matter to the House’s attention. I did a little research: the event was attended by 51 employers and resulted in 29 apprenticeship pledges just on the day. My goodness, we are reminded of Virgil: “They can because they think they can.”

[Mary Macleod]

I recently visited Brentford football club community sports trust as part of apprenticeship week and have also written to more than 600 businesses to encourage them to take up apprenticeship places and take on more apprentices. What other advice would my hon. Friend give businesses to encourage them to provide more apprenticeships?

[Mr Hayes]

Businesses need to know that they will recoup their investment rapidly, with even the most expensive apprenticeships paying back in less than three years. Apprenticeships have a real link to productivity and to competitiveness. May I just say that Brentford football club had a very good result on Saturday, when they drew with Milton Keynes Dons?

[Stephen Mosley]

Chester FC was also successful last Saturday, winning 5-0; I was fortunate enough to be there. It is a community-run and owned football club, which recently launched an apprenticeship scheme employing 21 16-year-olds on sports management courses. What is the Minister doing to encourage other big society organisations to get involved with apprenticeships?

[Mr Hayes]

We are involved in an unprecedented campaign to promote the value of apprenticeships. Last week—apprenticeship week—450 events were held throughout the country. I met learners, employers and providers. Apprenticeships are top of the agenda for all those groups.

[Mr Evennett]

Last Friday, I visited the Just Learning day nursery in my constituency to see at first hand the benefits of apprenticeships for young people and employers. I was pleased to meet apprentice Jade Vale and manager Tracey Tomlinson, who were very positive about the apprenticeship scheme. What steps are the Government taking to ensure that people can progress to the higher level of apprenticeships to meet the needs of employers?

[Mr Hayes]

My hon. Friend is right. The previous Government’s Leitch report made it absolutely clear that we need to boost intermediate and higher level skills as our economy becomes more advanced. I am working with the sector skills councils and the UK Commission for Employment and Skills to develop more high-level frameworks. The numbers doubled in the past year, but we must do more. Apprenticeships are critical to the nation’s growth and prosperity.

[Rehman Chishti]

I recently visited Medway youth club, a local charity in my constituency that helps young people get into work and into apprenticeships, and it very much welcomes the Government’s apprenticeship scheme. However, it would like to see more assistance being given to small businesses, and guidance for setting up apprenticeships.

[Mr Hayes]

It is a little known fact, but none the less one that I want to draw to the House’s attention, that 78% of apprentices are employed in small businesses, which are the backbone of our economy. I started in a small business, which got bigger as a result, and small businesses are essential if we are to make apprenticeships sing.

[Stephen Lloyd]

Last Friday, I spoke to several employers in Eastbourne, and their view was that a grant to the providers of apprenticeships would act as a huge incentive and make a huge difference to take-up and completion. Although I appreciate that tough current fiscal conditions mean that any money has be found elsewhere, does the Minister agree that, for small employers in my constituency and throughout the country, a small cash incentive for small and medium-sized enterprises will lead to a dramatic rise in the take-up of apprenticeships?

[Mr Hayes]

We are committing substantial funds to apprenticeships and, indeed, those funds will be targeted at the firms that most need support to take on apprentices and build their skills. My hon. Friend is right to say that these are tough times, but we are always open to proposals made by this House and representative bodies of the kind that he describes.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I am sure that the House will welcome the emphasis on apprenticeships, which shows the Government carrying on the work that we did. However, does the Minister not think it is shocking that, in figures given to me this morning by his colleague the Secretary of State, the Government have confirmed the true picture that there will be 529,000 fewer adult learners being funded by the Government in two years’ time? Does not that show that the emphasis on apprenticeships is being paid for by cutting opportunity elsewhere? How does that prepare people for today’s labour market?

[Mr Hayes]

The right hon. Gentleman speaks of opportunity, but it was Baroness Thatcher who said that if your only opportunity is to be equal, you have no opportunity. What he and his colleagues left us with was a dull, egalitarian mediocrity. We are going to drive up standards and skills, and drive growth and prosperity.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

We just heard from the Minister that more needs to be done about apprenticeships. Indeed, he wrote to all hon. Members encouraging us to take on an apprentice in our offices. Why then are the Government removing the requirement for apprenticeship places on Government public investment programmes?

[Mr Hayes]

The work that we are doing on public sector apprenticeships, in this place and elsewhere, continues. Indeed, I met a shadow Minister—one of her parliamentary colleagues—to talk about apprenticeships and public procurement. The hon. Lady is right—we do need to drive public sector apprenticeships and we do need to lead by example.

[Fiona Mactaggart (Slough) (Lab)]

Last Friday, I saw a group of young people who were learning on the job in the cultural quarter programme, which is led by the Royal Opera House and participated in by the Victoria and Albert museum and other cultural organisations in London. Thirty-four young people are on that programme, but it is funded by the future jobs fund, so it is about to run out. I invited those young people to come to the House to tell Members of Parliament what they have learned from this programme and how they have encouraged other young people to start careers in the cultural industries. Will the Minister come and listen to what they have to say about the difference that the future jobs fund has made to them?

[Mr Hayes]

As you know, Mr Speaker, the future jobs fund is not within my ministerial purview—[Hon. Members: “Ah!”] Well, never pitch above your pay grade or outside your purview. I will of course meet the young people and the hon. Lady and listen to what they have to say.

[Geraint Davies (Swansea West) (Lab/Co-op)]

I have just returned from a fact-finding mission to Dusseldorf and Berlin with the Welsh Affairs Committee. Is the Minister aware that all German businesses are required to join a local chamber of commerce and the regional chamber of commerce, and that those organisations are required to provide comprehensive apprenticeships, tailored to the industrial needs of that region? Will he consider that approach so that we have apprenticeships that are comprehensive and grounded in the real business earth of this country?

[Mr Hayes]

We can learn a lot from the example of other countries. Germany is often held up as a shining example of apprenticeships, and France has also made immense progress with apprenticeships over the last quarter of a century. I hear what the hon. Gentleman says about the link to local businesses and chambers of commerce and, as ever, he makes a thoughtful contribution to our affairs. I will certainly take another look at the issue to see what can be done to borrow that kind of good practice.

[Mr John Denham (Southampton, Itchen) (Lab)]

Yesterday, I met a number of apprentices at the excellent Fosters bakery in Barnsley, and we welcome any moves to build on Labour’s record, which rescued apprenticeships from 65,000 starts in 1997 to 279,000 last year. Will the Minister confirm four simple facts? Will he confirm that, at a time of rising youth unemployment, this Government have dropped Labour’s guarantee of an apprenticeship for every young person who wants one? Will he confirm that, at a time of rising adult unemployment, this Government plan to cut the total number of adults who get publicly funded training by 500,000 a year? Will he confirm that his Government have dropped Labour’s policy of saying that those who get public money for social housing must provide construction apprenticeships? And will he confirm that he now plans to make adult apprentices pay between £5,000 and £9,000 for the right to do an apprenticeship?

[Mr Hayes]

Trying to deal with four questions is a bit like being at the Woolworth’s pick ’n mix. I will deal with the first one only. The apprenticeship offer that we are enshrining in law means very plainly that everyone who secures an apprenticeship place will be funded—not the permissive, meaningless offer that prevailed under the last Government. The right hon. Gentleman should know better.

[Mr Denham]

I am very sorry, but what the Minister has said is not true. If he says that every apprenticeship place will be funded, will he confirm that for adult apprenticeships—those aged over 24—they, not the Government, will have to pay the cost of their training? Is that not the truth about this world? On the one hand, those who have little money are asked to pay for the cost of their own training, while, as the Daily Mail put it, at the “black and white” party the Tory party—fundraisers, millionaire Tory supporters—paid £3,000 to buy internships at top finance companies. The Minister has one world for himself and his friends and for those families who can pay, and a completely different world for others.

[Mr Hayes]

On the night of the “black and white” party, I was at my desk working, actually, and then I had a half of mild at a working men’s club.

The truth is that, in a very tough spending round, we guaranteed funding for young people, boosted funding for 16 to 18-year-olds and boosted funding for adult apprenticeships, and we are seeing real growth. The right hon. Gentleman is right: people over 24 will borrow to invest in their future, but my goodness, the repayments are income-contingent, there are no up-front payments and, as he knows, it is real value for money.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

2. What recent progress he has made in establishing local enterprise partnerships.

[Fiona Bruce (Congleton) (Con)]

7. What recent progress he has made in establishing local enterprise partnerships.

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I am pleased to say that we are making good progress with regard to local enterprise partnerships. Indeed, I can announce today that we have cleared the London enterprise partnership. That brings us to a total of 31, covering 87% of England's population.

[Annette Brooke]

I thank the Minister for his answer. Naturally, I am rather disappointed that Dorset has not yet found a solution. May I have an update on progress towards the inclusion of Dorset within a local enterprise partnership? What timelines are the Government working to? If it is necessary for support to be given, will that be given?

[Mr Prisk]

As the hon. Lady knows and we have discussed, Dorset has the challenge that Poole and Bournemouth face eastwards economically but the rest of the county does not. So we have worked with local partners, and offered them an opportunity: once they have decided, they will come back to us and we will help to ensure that they progress with their enterprise partnership as quickly as possible.

[Fiona Bruce]

Can the Minister advise on the timings of the announcements of the agreement of new LEPs? How is he guaranteeing private sector leadership for LEPs?

[Mr Prisk]

My hon. Friend is absolutely right. With 87% covered in less than 22 weeks—unlike the progress that we often saw from Labour—there has been positive progress. On the private sector issue, LEPs are specifically business-led, and most encouragingly, in her local LEP, eight of the 14 participants—over 60%—are from the private sector. That is a very good example, which I know other enterprise partnerships intend to follow.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

In their response to the Select Committee report on LEPs, the Government have said that they will not impose performance management criteria on them. Will the Minister explain just how the performance of LEPs will be monitored and assessed?

[Mr Prisk]

The whole point about partnerships is that local priorities will lead, not central diktat. That is why we believe in ensuring that we enable partnerships to come forward and that they judge the issue on how they break down the local barriers to growth. We are committed to ensuring that the economy grows; these will be excellent vehicles to achieve that locally.

[Mr Gordon Marsden (Blackpool South) (Lab)]

Well, we are clear what LEPs and businesses are asking for, even if Ministers are not. We believe that assets and funding intended for local growth in our regions should stay there. We have put forward a detailed strategy on skills and access to European and regional development agency money—the tools that LEPs need to do their job. But the Secretary of State is not passing any assets on, and is twisting the arms of RDAs over it. Today’s Local Government Chronicle reveals the west midlands RDA disposal plan—more than half its assets up for sale. The north-east regional development plan that I have seen says the RDA has been told that it must help address the fiscal deficit. How can the Secretary of State now deny that he is flogging off our local family silver to keep the Treasury happy? Has he not left LEPs in the lurch?

[Mr Prisk]

We got there eventually, Mr Speaker.

The RDAs have brought forward assets plans, which the Government are looking at. In the growth plan, we set out clearly how we will deal with them. The idea that we will be selling off the silver is a nonsense. I am sorry that Labour Members have nothing positive or intelligent to say about the matter.

[Jason McCartney (Colne Valley) (Con)]

3. What steps he is taking to encourage entrepreneurship.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

The Government have actively encouraged enterprise, including doubling the amount of small business rate relief for one year, launching the new enterprise allowance, and initiating a new programme in universities, Enterprising Academics. With support and practical input from my entrepreneurs group, I am developing further measures to support entrepreneurship around employment regulation and start-ups.

[Jason McCartney]

I thank the Secretary of State for that answer. I welcome, as do my constituents, the new enterprise allowance—in fact, my constituents have been asking me about that for the long-term unemployed. A recent graduate from Slaithwaite also asked me whether we might extend the scheme to recent graduates, to take advantage of their skills, especially if they have studied business or engineering.

[Vince Cable]

That is an excellent suggestion, which we will pursue. As the hon. Gentleman knows, the new enterprise allowance is being trialled in Liverpool, and will give people who would otherwise face long periods of unemployment the opportunity to start their own businesses with financial support, mentoring and access to loans. It is a very good scheme, which I want to encourage and expand.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

How will the Secretary of State respond to the wonderful report on creative clusters in our country launched yesterday by the National Endowment for Science, Technology and the Arts? The report shows again that 6% of new businesses create 50% of new jobs, but that most of the clusters are in London and the south-east. As he is stripping the capacity to do anything about that in Yorkshire, which is performing at a low level, what will he do about it?

[Vince Cable]

As it happens, under the growth review that Ministers are conducting, yesterday we reviewed the creative industry sector to which the hon. Gentleman refers. The sector has serious problems of access to finance, because of a lack of tangible security, and issues around copyright protection. We are pursuing both those issues, and if we can crack them it will help creative industries across the country.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

4. What recent progress he has made in his discussions with representatives of the banking industry on increasing levels of lending to small and medium-sized enterprises.

[Mr Mark Spencer (Sherwood) (Con)]

16. What recent progress he has made in his discussions with representatives of the banking industry on increasing levels of lending to small and medium-sized enterprises.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

As announced last week in the House by the Chancellor, the UK’s five major banks have stated a capacity and willingness to lend £190 billion of new credit to business in 2011. That includes £76 billion of new lending to SMEs, which is a 15% increase on the amount lent in 2010. If demand exceeds that, the banks will lend more.

[Simon Hughes]

I warmly welcome my right hon. Friend’s work and the Government’s announcement. To have maximum transparency, will Ministers negotiate with the banks for the figures on lending to small and medium-sized businesses to be published by principal local authority area on a regular basis, so that we can see exactly what is happening throughout the country?

[Vince Cable]

The figures will be independently monitored by the Bank of England and published quarterly. My right hon. Friend makes a helpful suggestion, and I will examine whether the figures can be disaggregated in that way.

[Mr Mark Spencer (Sherwood) (Con)]

Will the Secretary of State assure me that he will take no lessons on the banking system from the shadow Chancellor, who designed the system that failed us so badly, and who did nothing to encourage transparency and control bonuses? Will he ensure that banks start to lend to small businesses?

[Vince Cable]

Indeed. In not only the agreement but our wider policy, we have advanced considerably on the position a year ago. We inherited a banking system that had collapsed, in part because of failures of regulation. We have introduced much more effective and higher levels of tax on the banks, because of the profits on their balance sheets. We have introduced greater transparency, which will add to legislation. Through the banking commission, we have set up a process of fundamental structural reform.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

On Government action to encourage lending, we see this week that, thanks to a lack of regulation, Dollar Financial intends to open another 800 money shops in this country this year alone. Will the Secretary of State clarify whether such legal loan sharking is the lending that he wants to encourage?

[Vince Cable]

There is a consultation process going on at the moment led by my colleague, the Under-Secretary, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), and we shall respond to it shortly. Clearly, it is essential that we have lending in deprived communities, with social enterprise and credit unions, and we are working to expand those areas.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

Last week, the man chosen by the Secretary of State to lead his business advisory group and to be his very own sounding board resigned because of the Government’s deal with the banks. Does he agree with his noble Friend Lord Oakeshott that the Government have gone soft on the banks, that the Merlin lending deal does not live up to the coalition agreement and that the Government negotiators were arrogant, incompetent and

“couldn’t negotiate their way out of a paper bag.”?

Does the right hon. Gentleman agree that Lord Oakeshott has taken over his former mantle as the Lib Dem voice of decency on the banks and, as The Independent says:

“Is Lord Oakeshott the new Vince Cable?”

[Vince Cable]

I do indeed agree with my friend Lord Oakeshott on many issues, including what he says about banking, but on this issue I think he is wrong. May I suggest that a more authoritative view comes from the business organisations whose members will benefit from lending? For example, the CBI—often quoted these days from the Opposition Benches:

“It’s good news that banks have agreed to lend more to businesses, and there will be more transparency in this area.”

The FSB says that

“we welcome the intention to lend more to small businesses.”

They are the people who are benefiting.

[Margaret Curran (Glasgow East) (Lab)]

5. What steps he is taking to encourage the manufacture of low-emission vehicles.

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

Our aim is to make the United Kingdom a leader in the research, development and manufacture of low and ultra-low carbon vehicles. To this end, we have a comprehensive plan supporting major investment by companies, funding for research and development, consumer incentives and investment in infrastructure.

[Margaret Curran]

I thank the Minister for that reply. Is he aware of the Glasgow company, Allied Vehicles, which is leading the way in the production of electric cars in Scotland? I am sure that he is aware of Nissan’s role in the field and its comments that the Labour Government’s grant for business investment had ensured the manufacture of the Leaf car in the UK, creating 100 jobs and producing 600 vehicles. Will he tell the House precisely how much investment the Government have set aside for the manufacture of electric cars throughout the United Kingdom?

[Mr Prisk]

We are putting in more than £300 million to make sure that hybrid and electric vehicles are progressing, both with Ford and with Nissan. That is important both as grant and as a form of finance guarantee. As the hon. Lady knows, Glasgow is a new beneficiary of our new investment in the plug-in places programme, which is important. I look forward to its progressing.

[Simon Wright (Norwich South) (LD)]

Lotus Cars, based just south of Norwich, has a worldwide reputation for innovation in low-emission vehicle technology. Lotus has submitted a bid to the regional growth fund, which if successful will enable the company significantly to increase its operations in the UK, providing hundreds of new jobs. Does the Minister share my enthusiasm for the ambition behind Lotus’s bid, which so clearly demonstrates how the regional growth fund is encouraging manufacturing companies to think boldly?

[Mr Prisk]

The hon. Gentleman is right. Lotus is one of several excellent premier brands in motor engineering in this country. I shall not comment on the specific bid, because there are several to hand at the moment, but the hon. Gentleman is right to say that we have real opportunities in the sector. The Government are an effective partner in making sure that the sector grows.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The Minister made mention of the need to invest in the sector and he is right; we need investment in all the greener technologies. That is why the establishment of the green investment bank is so important. It is almost a year since the election, so may I urge the Government to get a move on with the establishment of the green investment bank? Can the Minister give us an update on when he expects it to be operating and investing in those important technologies?

[Mr Prisk]

Clearly, the bank needs to work on a commercial basis. We are making very good progress with the proposals on it and we shall set them out in May.

[Chris Kelly (Dudley South) (Con)]

9. What criteria he used to determine appointments to the independent advisory panel for the regional growth fund.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

The selection of panel members was rooted in ensuring that the independent advisory panel is mixed, with a good spread of expertise from around the country, bringing together representatives from major businesses, small and medium-sized enterprises, entrepreneurs, academia and civil society. All members of the panel act in an individual capacity under the chairmanship of Lord Heseltine.

[Chris Kelly]

I thank the Secretary of State for that answer, but can he explain why a representative of the New Economics Foundation has been appointed to the panel? That organisation has attacked the merits of economic growth and argued that Burma, Saudi Arabia and Haiti show Sweden, the United States and the United Kingdom that achieving long, happy lives without overstretching the planet’s resources is possible. Might it not have been better to appoint someone to oversee the regional growth fund from an organisation that supports growth?

[Vince Cable]

The organisation is there to support growth. The suggestion that my hon. Friend mentions seems seriously dotty, but I have seen other work from the New Economics Foundation, focusing on local communities, which is very good. I can assure him that the advisory panel’s work will be overseen by Lord Heseltine and Sir Ian Wrigglesworth, neither of whom could be said to be shirking on matters of business and entrepreneurship.

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

Given that the Government have said that they will be the greenest Government ever, can the Secretary of State give an assurance that panel members will include people with expertise on sustainable development and environmental protection, so that there can be a balance with growth and environmental concerns?

[Vince Cable]

In a way, that is what the New Economics Foundation is there for.

[Karen Lumley (Redditch) (Con)]

10. What assessment his Department has made of the administrative burden on businesses of the process for issuing export licences.

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

Export licensing needs to be thorough, especially where there are sensitive locations or uses. However, it is important that the Government continue to focus on keeping the costs to business down and we intend to do that.

[Karen Lumley]

Small businesses in my constituency of Redditch wishing to export to China have been victims of excessive red tape and delays in securing an export licence. One company has been waiting for months in respect of an order from China that would generate revenue and employment for the west midlands. Will the Minister take steps to reduce administration burdens on small and medium-sized enterprises and meet me and the company affected?

[Mr Prisk]

I should be more than happy to meet my hon. Friend. As she knows, two thirds of all applications are dealt with within 20 working days, but as she will appreciate this is sensitive equipment to a sensitive location. We need to ensure that we license only legitimate exports in these circumstances. I am pleased to say, however, that in this instance the licence has been granted.

[Mr Rob Wilson (Reading East) (Con)]

13. What his policy is on widening access to higher education for students from disadvantaged backgrounds; and if he will make a statement.

[Gordon Birtwistle (Burnley) (LD)]

20. What his policy is on widening access to higher education for students from disadvantaged backgrounds; and if he will make a statement.

[The Minister for Universities and Science (Mr David Willetts)]

This Government are committed to social mobility. That is why our higher education reforms have no payments up-front, more generous maintenance support and the extension of loans to part-time students. Last week we gave updated guidance to the director of fair access about access agreements and outlined details of our £150 million national scholarship programme.

[Mr Wilson]

I thank my right hon. Friend for that answer and for the additional support to disadvantaged students. In a report, the Sutton Trust has described university entrance quotas as

“a punitive measure against talent and effort”

and argued that no child should be denied a university place because of their social or educational background. Does he agree with that view and will he clearly rule out any move towards the social engineering of university admissions?

[Mr Willetts]

We in the coalition Government do not believe in quotas, for the reasons that my hon. Friend rightly sets out. They would be not only undesirable but illegal because the autonomy of universities in running their own admissions arrangements has legal protection.

[Gordon Birtwistle]

Will my right hon. Friend congratulate Burnley college, which is operating in a disadvantaged area, on its event last Friday, when dozens of companies met scores of young people who wish to take up apprenticeships in engineering? Does he agree that that is the right way to go and that the coalition Government are repairing the damage following the destruction of manufacturing engineering by the previous Government?

[Mr Willetts]

As we heard so eloquently from the Minister for Further Education, Skills and Lifelong Learning, the coalition Government are absolutely committed to apprenticeships. It would be a mistake to hold the view that apprenticeships and places in higher education are in conflict. Indeed some apprentices may subsequently go on to university and benefit from a university course, too.

[Mr David Lammy (Tottenham) (Lab)]

Can the Minister give an estimate of the likely shortage of funded places at university in the next academic year? Can he square that estimate with his desire to get young people from deprived backgrounds into university?

[Mr Willetts]

We have committed to repeat the initiative this year with 10,000 extra places at university. Current indications are that applications are running perhaps about 5% higher than at a similar point last year, but we will have to see what the eventual figure is. As the right hon. Gentleman used to say when he was in government, application to university has always been a competitive process. No individual place can be guaranteed but we are committed to broadening access to university.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

In the last month, the Secretary of State’s Department has confirmed that another 10,000 student places are set to be axed. We now know that his national scholarship programme will help under 2% of students. The logic of his rhetoric on access would have us all believe that Oxford and Cambridge are to be the last universities in England allowed to charge the full £9,000, which nobody thinks is credible. In his mind, the Secretary of State may well still be “St Vince”, but with Corporal Jones from Havant and Private Pike from Southwark and Bermondsey by his side is he not really just Captain Mainwaring, bumbling along out of his depth with all his best moments long since past?

[Mr Willetts]

We’re not panicking; we’re not panicking. In fact, it is Labour Members who left us with a situation whereby access to our leading, most research-intensive universities for people from the poorest backgrounds was declining. That is the challenge that we are tackling. I do not recognise the hon. Gentleman’s figure of 10,000 fewer places, as there are extra places. That is perhaps why the National Union of Students, in a leaked e-mail this morning, apparently described our reforms as “relatively progressive”.

[Amber Rudd (Hastings and Rye) (Con)]

The university centre Hastings is doing some excellent work with children from poorer families who want to go on to higher education. It is very concerned about the future of higher education for them and asked me to inquire about the national scholarship fund and what more can be done to help children on free school meals when they leave school and might need some assistance.

[Mr Willetts]

Absolutely. When the national scholarship programme is mature, it will be worth £150 million a year. With match funding, which we expect the universities to provide, it could offer—contrary to the assertions of Labour Members—extra financial support to up to 100,000 students. It could work in various ways, providing help with accommodation costs, fee waivers and extra direct financial assistance, which we think is a very practical way of helping students from poorer backgrounds.

[Chris Evans (Islwyn) (Lab/Co-op)]

14. What assessment he has made of the likely effects on the construction sector of the outcome of the comprehensive spending review.

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

The comprehensive spending review set out our plans for £200 billion of investment over the next 10 years as part of the first national infrastructure plan. This was welcomed by many in the construction sector.

[Chris Evans]

Does the Minister agree with Steve Morgan of Redrow when he says that the new homes bonus scheme is unlikely to prompt councils to approve more homes?

[Mr Prisk]

A number of benefits are being put forward for home building and for construction as a whole. The key issue with the housing market is whether the demand is there. That is the challenge: we will do our bit, but the market will need to operate as well.

[Yasmin Qureshi (Bolton South East) (Lab)]

18. What assessment he has made of the potential effects on requirements for support from his Department by citizens advice bureaux of planned reductions in the provision of legal aid.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

My Department does not provide core funding for individual citizens advice bureaux; it provides it only for the national umbrella bodies of which they are all members. However, we are aware of the challenges facing bureaux from funding cuts at both the national and local level, including from the proposals on legal aid funding, and we are working closely with colleagues in the Ministry of Justice and other Departments across government that have an interest in the citizens advice service.

[Yasmin Qureshi]

As the Minister will be aware, citizens advice bureaux are suffering pressures not just from cuts to the legal aid budget but across Departments that are cutting services. How many citizens advice bureaux does he think will be cut as a result of the spending review?

[Mr Davey]

As I said in my initial response, funding for local citizens advice bureaux is up to local authorities. The Department for Communities and Local Government has made it clear that the voluntary sector, including citizens advice bureaux, should not be hit disproportionately. I hope the hon. Lady will welcome the fact that the national bodies Citizens Advice and Citizens Advice Scotland have had their funding for next year maintained at current levels. I hope she will also welcome the announcement this weekend by my right hon. Friend the Secretary of State that we will supply £27 million of funding for face-to-face debt advice next year.

[Nia Griffith (Llanelli) (Lab)]

The Secretary of State will be well aware of the devastating impact that the cuts to legal aid will have on citizens advice bureaux across the country, leaving many people without the advice they desperately need. As the Cabinet Minister responsible for the citizens advice service, what action has he taken to ensure a coherent strategy across government to safeguard the full range of funding that the service receives from different Government Departments? At the moment, he seems to be abandoning the service, like the hireling shepherd leading out the injured lamb to be torn apart limb by limb by its predators.

[Mr Davey]

I do not think I have been promoted. However, I can reassure the hon. Lady that we are taking a cross-Government approach to the funding of citizens advice bureaux. That is why the Department has been so strong in making sure that national funding for the National Association of Citizens Advice Bureaux, which supplies technology and IT for all local bureaux, has been maintained, and I would have thought that she welcomed the extra money—£27 million—announced by my right hon. Friend the Secretary of State at the weekend, for which she and others have been calling.

[Mr Philip Hollobone (Kettering) (Con)]

19. If he will take steps to require Royal Mail to ensure the retention of the (a) colour of and (b) royal monogram on post boxes.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

Royal Mail has publicly stated that it cherishes its distinctive and much-loved red post boxes and that it is absolutely committed to ensuring that they remain a distinctive part of our communities. The Government believe Royal Mail should continue to use the royal cypher on post boxes and we are in discussions with the palace about that.

[Mr Hollobone]

The red pillar box is one of the great symbols of our great nation, and it would be a national shame if pillar boxes were to disappear as a result of privatisation. Will the Minister require the Royal Mail to keep red pillar boxes, or ensure that some form of listed heritage status is applied to them so that we do not lose this great British symbol?

[Mr Davey]

I share my hon. Friend’s interest in red post boxes, so I visited the British postal museum and archive only last week, and I can tell him that Britain’s post boxes were originally green, but the public complained that they were too camouflaged, so chocolate brown was tried instead. That colour required too much paint, however, so we ended up with red, and we are on the fifth shade of red. I can also tell my hon. Friend that it would cost almost £1.7 million to repaint the nation’s 115,000 post boxes, and given that Royal Mail has 300 litres of red paint in stock I think he can sleep easily in his bed at night about the colour of our post boxes.

[Mr Speaker]

We have now learned more about post boxes and the Minister’s travel plans and personal interests, for which we are grateful.

[Mr David Ward (Bradford East) (LD)]

21. What his Department’s strategy for employment growth is for areas that have a high proportion of public sector employment.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

The Government’s overriding economic policy objective is to bring about strong, balanced and sustainable growth. The growth review will support private sector growth, providing jobs to people released from the public sector. The regional growth fund will focus on providing financial support to areas with weak private sectors, and we will announce the first allocation of funds shortly.

[Mr Ward]

I thank the Secretary of State for that answer. If the Department for Business, Innovation and Skills is the Department of growth, then the Department for Communities and Local Government must be the Department for cuts. If we treat communities—or individuals—who are unequal as equal, we reinforce inequality. I welcome many of the measures that have been announced, but they are national measures. Are any special measures in place for communities that suffered from the front-loading of the cuts as a result of the local government settlement?

[Vince Cable]

I know that my hon. Friend has worked extremely hard for the community he represents, which is a deprived area with relatively high unemployment. We would hope that specific tailored measures will come from the Leeds city region local enterprise partnership, which covers that area. The funding announcement on the regional growth fund is imminent, and it is often forgotten that, as a result of our negotiations with the banks, the business growth fund has an additional £2.5 billion, which will support private sector development across the country, including in my hon. Friend’s area.

[John Stevenson (Carlisle) (Con)]

23. How many apprenticeship starts there have been in the academic year 2010-11 to date.

[The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)]

I refer my hon. Friend to the answer I gave earlier.

[John Stevenson]

Carlisle has five major factories, as well as many small ones, and they all need a skilled work force. Does the Minister agree that the expansion of apprenticeships is vital to fill the gaps in our economy, and that apprenticeships must get the status they deserve?

[Mr Hayes]

Yes, we must drive up their status; we must elevate the practical. The aesthetic of apprenticeships matters, and I am determined to ensure that those who achieve vocational, practical and technical competence are as revered as—indeed, perhaps more revered than—we who pursued the academic route.

[Mark Pawsey (Rugby) (Con)]

24. What steps his Department is taking to make it easier for small businesses to recruit staff.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

The Government are reviewing employment laws to provide the flexibility that businesses need and support economic growth. As part of this, we recently launched a consultation on employment tribunal reform and the employer’s charter, both aimed at increasing business confidence to take on, and manage, staff.

[Mark Pawsey]

On Friday I met business leaders in my constituency, Rugby, who told me that the matter of greatest concern to them is that too many work force disputes, often without foundation, are taken to the employment tribunal. Fear of such action is acting as a deterrent to employment. Can the Minister update us on when the new proposals will come into effect?

[Mr Davey]

As the hon. Gentleman knows, we recently published the consultation, “Resolving workplace disputes”. I urge him to ask businesses in his constituency to respond to that consultation because we want to ensure that the current system, which I believe is bad for employers and employees, is reformed.

[Simon Kirby (Brighton, Kemptown) (Con)]

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

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

My Department has a key role in supporting business to deliver growth, rebalancing the economy, bringing enterprise, manufacturing, training, learning and research closer together, and in the process creating a stronger, fairer British economy.

[Simon Kirby]

Given its proximity to London and its highly skilled work force, does the Secretary of State agree that Brighton is a great place to do business? Will he consider relocating some of his staff and office use to this most excellent city?

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

My hon. Friend is right. Brighton has tremendous economic advantages. We will, of course, as a Government and as a Department, consider those for our own purposes.

[Mrs Mary Glindon (North Tyneside) (Lab)]

Workers at Longbenton Foods in North Tyneside have been locked out of their frozen food factory this week and have been asked to take enforced holiday by the owners. More than two years ago the Labour Government stepped in to help the factory with grants when a fire closed it, and thus saved the jobs for the work force. As we try to ascertain what the current problems are, can the Minister assure me that, like his Labour predecessors, he will make a commitment to give any support he can to all those concerned in trying to ensure that those crucial jobs are maintained in my constituency?

[Mr Prisk]

These are always difficult times for people in the situation the hon. Lady describes. Would she do me the courtesy of providing me with the information? My Department will look at it. She knows that money is tight, for reasons that we are all aware of, but I want to make sure that I understand the facts, then I will give her an answer.

[Nick de Bois (Enfield North) (Con)]

T2. Does my right hon. Friend agree that tackling vexatious employment claims and introducing more flexibility for employers will encourage the growth of jobs and a sustainable economy?

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

The response that the Under-Secretary of State, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), gave to the hon. Member for Rugby (Mark Pawsey) a few moments ago answers the question. The consultation process is under way. We want to deal with the problem that the hon. Member for Enfield North (Nick de Bois) raises, which is a big one, in two ways—first, by increasing the period of employment from one to two years before claims can be made, and, secondly, by insisting that all disputes that go to tribunals should go through a conciliation stage first.

[Naomi Long (Belfast East) (Alliance)]

As the Secretary of State is considering banking reform, may I ask him what discussions he has had both with the Northern Ireland Executive and with the Irish Government regarding the impact that the National Asset Management Agency is having on the banking sector in Northern Ireland?

[Vince Cable]

I have not had any specific discussions of the kind that the hon. Lady suggests, but it would probably be appropriate for the Chancellor to do so. Clearly, there is an important Irish dimension because of the way in which British banks are heavily exposed to Irish banks.

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

T3. What plans does the Secretary of State have to promote gender balance in business, and what is his view on imposed quotas?

[Vince Cable]

The Government are not in favour of imposed quotas, but the detailed proposals will shortly come forward. As the hon. Lady knows, a report is close to fruition and will be announced in a few days. It will advance the issue of greater women representation on boards, which has been shamefully low for many years.

[Paul Blomfield (Sheffield Central) (Lab)]

Two days ago, with colleagues, I met the business leaders who are board members of Sheffield city regional local enterprise partnership. They are enthusiastic about their task but bemused by the lack of clarity about the powers, responsibilities and resources they will have to undertake it. Will the Minister tell the House when that will be clarified?

[Mr Prisk]

We are setting out the proposals clearly. They are also in the local growth White Paper. We have written to the boards and we are having a summit of all the board leaders together. There are various things that Sheffield will want to do and Leeds will want to do, which are different in other areas. We want to make sure that we do not strangle that initiative.

[Andrew Selous (South West Bedfordshire) (Con)]

T4. The market for electric cars is estimated to be worth $2 trillion. Israel has resolved to make its road transport fossil fuel-free by 2020 and has the largest car dealership on earth in the north of Tel Aviv for electric cars. Can my hon. Friend reassure me that the UK will be at the front and centre of this new industrial revolution, and not lose out as we have done in other areas in the past?

[Mr Prisk]

My hon. Friend is absolutely right. That is why, unlike in other European countries, nine electric models will be available over the next year and why we are leading on electric manufacture. It is why we are investing in consumer incentives and infrastructure. It is a vital market. We are working on it.

[Toby Perkins (Chesterfield) (Lab)]

Auto Windscreens went into administration on Monday. If the administrators do not find a buyer quickly, 1,100 people will lose their jobs. The Minister has been too busy to intervene personally and now his Department has passed the matter over to the Department for Work and Pensions. Under Labour, the regional development agency would have taken on a role of cross-co-ordination. Has the failure of the cross-agency co-ordination approach not let down those 1,100 workers, and why has the Department washed its hands of the matter by turning it into a pensions and benefits issue?

[Mr Prisk]

I am sorry that the hon. Gentleman is being slightly churlish. He spoke to me only two days ago, when I made it clear that my Department would check the facts. We have done that. The Department for Work and Pensions is already in contact with the company. We are ensuring that we understand both the job issues and the company issues. We are very happy to work with all Members, so I am sorry that he has chosen to be somewhat churlish on this occasion.

[Margot James (Stourbridge) (Con)]

T5. The UK dairy industry is in crisis, with farmers receiving from supermarkets 3p per litre less than the cost of production. This is leading to pressures to intensify dairy farming that are most concerning on grounds of animal welfare and the environment. Will the Minister update the House on plans to introduce a grocery code adjudicator, as announced in the coalition agreement?

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

I certainly will. We hope to publish the draft Bill before Easter.

[Helen Jones (Warrington North) (Lab)]

Does the Minister plan to switch higher education numbers to low-cost courses in further education colleges, as recently reported in the Financial Times, and, if so, what modelling has his Department done on the effect on student choice and possible increased social segregation?

[The Minister for Universities and Science (Mr David Willetts)]

There are further education colleges across the country that are keen to deliver more higher education, and the coalition Government believe that that is an opportunity that they should be able to take up, provided they meet the necessary standards.

[Mr Christopher Chope (Christchurch) (Con)]

T6. Do the Government agree that universities should be free to admit students on the basis of academic merit without interference from the Government, and, if so, why are they intent on more regulation and meddling in the freedom of university admissions?

[Mr Willetts]

As I explained earlier, universities are of course free to control their own admissions and must have that freedom. Universities have always assessed students not only by what they have already achieved, but by their potential to achieve in future. They have often made that judgment informally and we support them in continuing to do so.

[Mr Mike Weir (Angus) (SNP)]

In answer to an earlier question, the Minister talked about the development of electric vehicles. Is the Department looking at encouraging the development and take-up of a hybrid version with a petrol back-up, rather than a traditional hybrid, to deal with the problem of range in rural areas?

[Mr Prisk]

The hon. Gentleman is absolutely right. That is why, although electric vehicles are crucial, we are not focusing simply on one technology. Hybrid and plug-in hybrid vehicles are a crucial part of that, which is why we are ensuring that the office for low-emission vehicles is looking at all technologies, especially in the rural context.

[Martin Vickers (Cleethorpes) (Con)]

T7. Ministers will be aware of the great potential of the Humber region for expanding the renewable energy sector, as was confirmed by the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry) in a Westminster Hall debate yesterday. It is essential that small and medium-sized enterprises are given every support and opportunity to benefit fully from such major developments. What additional measures are Ministers considering for achieving that?

[Mr Prisk]

We are seeing growth in that area, not least because of the Government’s leadership in ensuring that investment is forthcoming. My hon. Friend is absolutely right about small businesses, and the key is supply chains. We are working with the industry to ensure that the major primes work with the smaller businesses so that everyone can participate, in the Humber and elsewhere.

[Julie Hilling (Bolton West) (Lab)]

Does the Minister agree that volunteering is a good way for young people to gain skills, build confidence and gain qualifications and contacts to assist them in finding work? Does he share my concern that funding for youth volunteering projects has been cut completely and that v projects will close in March?

[The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)]

Volunteering is an important way of giving people a taster, which can then lead to employment or to further learning. I agree that we need to do more work on the matter, and I am very happy to discuss it further. As a result of the hon. Lady’s question, I shall ask my officials to come back to me, and then I shall return to the issue, through her, and to the House.

[Caroline Dinenage (Gosport) (Con)]

T8. What efforts is the Minister’s Department making to support and to promote the marine industry in the UK?

[Mr Prisk]

We are working hard to ensure that the sector, which is a £10 billion industry by sales, is able to grow. That is why I am co-chairing the Marine Industries Leadership Council, and we held a reception in Parliament for all Members to understand its impact. We have a number of important studies on exports and on trade, making sure that investment is forthcoming, and we are determined to ensure an effective partnership between industry and Government so that there is growth.

[Chris Ruane (Vale of Clwyd) (Lab)]

What is the Minister’s definition of the big society, and what role is his Department playing in it?

[Mr Davey]

I believe that the whole point of the big society is to give people the permission and the support to engage in their local community and to show responsibility. I would have thought that the hon. Gentleman and other Opposition Members supported something that plays to the best traditions of our country.

[Graham Evans (Weaver Vale) (Con)]

T9. I have mentioned in the House before my constituency’s excellent Daresbury science and innovation campus, which really is a world-class centre for hi-tech entrepreneurship. Daresbury recently bid for a share of the £1.4 million regional growth fund. Can the Minister assure me that that bid will be looked upon favourably?

[Mr Willetts]

I am aware of the strengths of that excellent campus, and I am sorry that business in the House meant that I was not able to visit the other day, as I had hoped. I will visit very soon. Of course, there have been many bids for the regional growth fund, but in that way or in others I hope that we can continue to support my hon. Friend’s facility.

[Natascha Engel (North East Derbyshire) (Lab)]

Government Front Benchers have today stated their intention to extend from one year to two a worker’s right to claim unfair dismissal, but, in industries such as construction, where tens of thousands of workers who have worked for many years for the same employer do not even have a written contract, what is the Secretary of State doing to enforce such basic employment rights before he starts taking workers’ other rights away?

[Mr Davey]

We do not propose to take away all the rights to which the hon. Lady refers. We are approaching our employment law in terms of ensuring fairness for employees and that businesses have the freedom and flexibility to take on more people. I would have thought that she welcomed the fact that we want to reduce the dole queues by ensuring proper employment reform.

[Lorely Burt (Solihull) (LD)]

I greatly welcome this week’s news that the directors of Farepak and its parent company have been disqualified, and I am sure that the whole House, alongside all the families who lost money, will do, too. What can we do now to ensure that companies like that are not able to bleed their subsidiaries of savers’ and families’ money?

[Mr Davey]

Disqualification proceedings have been issued against the nine directors on the grounds that their conduct makes him or her unfit to be concerned in the management of a company, so I am afraid that my hon. Friend’s remarks are slightly premature.

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

Will the Minister explain how the Government can possibly hope to promote access by cutting the teaching budget for universities by 80%? As a result, universities will have to charge £7,500 simply to stand still. Rather than attacking the autonomy of universities with Whitehall over-interference, why do the Government not invest the requisite public resources in our great universities?

[Mr Willetts]

The hon. Gentleman cites a figure that even the NUS no longer accepts as viable. He seems to have failed to understand the fundamental feature of our reforms, which is that the money will continue to reach universities but via the choices of students. That is the right way in which to finance them.

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

Sixteen months ago, the Office of Fair Trading declined to investigate ferry services to the Isle of Wight. Many islanders feel that the ferry operators view the OFT’s decision as carte blanche to cut services and to change their pricing structure. Will the Minister agree to meet me and a small group of my constituents to discuss those matters?

[Mr Davey]

I am not aware of that OFT report from 16 months ago, but I will meet the hon. Gentleman to discuss it.

[Mr Ben Bradshaw (Exeter) (Lab)]

I thank the Secretary of State and his Ministers for what they have been trying to do in talking sense into Devon and Somerset over our local enterprise partnership, and suggest that perhaps west Dorset might like to come in with us as a solution to the problem mentioned by the hon. Member for Mid Dorset and North Poole (Annette Brooke). However, Exeter is still being completely excluded from this process. Will the Minister not sign off the draft LEP until Exeter is guaranteed either a business or a local authority seat on the partnership board?

[Mr Prisk]

We have made it very clear that all partners must be engaged in this process, and I am grateful to the right hon. Gentleman for participating in it. I am talking to the partners involved, and I have made it clear that they must ensure that this is a genuine, lasting partnership that will help our local economies to grow.

[Laura Sandys (South Thanet) (Con)]

I thank the Department and the Minister for all the work they are doing to secure jobs on the Pfizer site in Sandwich. What is his vision in securing those jobs and a future for the site in the science area?

[Mr Willetts]

I am grateful to my hon. Friend. This is a very serious challenge that we face, and we are doing our best to tackle it. Yesterday I met the leader of Kent county council and other members of his taskforce, and last week I visited and met members of the work force. We are absolutely committed to the future of that site and believe that it should be possible for a range of different research organisations to be active on it. The site should have a great future.

[Lilian Greenwood (Nottingham South) (Lab)]

I recently met representatives from the Union of Jewish Students at the university of Nottingham, who tell me that they are concerned about increasing incidents of anti-Semitism and racial incitement by guest speakers at university campuses. Will the Minister take steps to support the implementation of speaker policy guidelines in universities across the UK to help student unions and vice-chancellors to deal effectively with guest speaker invitations and prevent incidents of hate speech and intimidation?

[Mr Willetts]

I have discussed this with representatives of Jewish students. It is a challenge for universities, and the hon. Lady is right to raise it. We will continue to be absolutely emphatic on the rights of individual students to enjoy freedom without facing harassment and abuse, which, sadly, has been occurring.

[Duncan Hames (Chippenham) (LD)]

Perhaps, like me, Ministers can recall how it felt to be among one of the last to be picked for a team in a game of schoolyard football. The experience is very similar for some areas wishing to join local enterprise partnerships. Can the Minister reassure residual LEPs in smaller areas that they will still have fair access to regionally administered skills funding?

[Mr Prisk]

Last but not least. I assure the hon. Gentleman that the 13% figure is often driven by the need for local partners to get their arrangements right. We are standing ready. We know that these partnerships can help local growth right across England, right across London, and in his constituency as well.

[Mrs Jenny Chapman (Darlington) (Lab)]

We found out this morning that Wonga, the payday lender, has raised £73 million to expand its operations across the country into even more communities. When are this Government going to get a grip on these legal loan sharks?

[Mr Davey]

As my right hon. Friend the Secretary of State said earlier, we are waiting to respond to the consultation on consumer credit and personal insolvency, which will deal with all aspects of consumer credit. I am not aware of the particular point that the hon. Lady has made, but when we respond I hope that she will welcome our ideas.

[Richard Fuller (Bedford) (Con)]

In towns such as Bedford, there is a tremendous opportunity for small business men and women to support start-ups and entrepreneurs in their local communities with time, advice and money. Will the Minister consider ways in which he can support such community-led efforts to promote jobs and enterprise in local communities?

[Mr Prisk]

My hon. Friend exactly describes the great role of local enterprise partnerships, which provide the opportunity to forge together not only entrepreneurs but angel investors and local civic leaders. We are determined to grow the economy; the Opposition have nothing to offer. I am sorry that they are not prepared to listen and learn. They had 13 years in which we watched many parts of England and Wales fall behind. We are determined to ensure that that is not the case.

Funding for English for Speakers of other Languages Courses

Thursday 17th February 2011 Commons Chamber

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)

- Hansard - - Excerpts

I wish to present a petition on behalf of the tutors and students of English for speakers of other languages—ESOL—in Liverpool. The petitioners believe that the proposed changes will have a devastating effect on ESOL provision, ESOL teachers’ jobs and ESOL students, particularly those on low wages or on no wage at all.

I am grateful for the support of my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), who is unfortunately unable to be here owing to parliamentary business in Westminster Hall, but is also a supporter of the petition. There are 322 signatures.

The petition states:

The Petition of tutors and students of English for speakers of other languages (ESOL) in Liverpool,

Declares that the Petitioners oppose the proposed changes to the funding for English for speakers of other languages (ESOL) courses in the Government’s ‘Investing in Skills for Sustainable Growth’ document; notes that the Petitioners believe that the proposed changes will have a devastating effect on ESOL provision, ESOL teachers’ jobs and ESOL students, particularly those on low wages; and further notes that the Petitioners believe that in Liverpool many students will be left with little hope of improving their language skills and job prospects as a result of the changes.

The Petitioners therefore request that the House of Commons urges the Government not to cut funding for ESOL courses.

And the Petitioners remain, etc.

[P000889]

Protection of Kingswood Green Belt (South Gloucestershire)

Thursday 17th February 2011 Commons Chamber

Chris Skidmore (Kingswood) (Con)

- Hansard - - Excerpts

I wish to present the petition of the residents of Longwell Green, Hanham, Mangotsfield, Emersons Green, North Common, Oldland Common, Warmley, Siston, Bridgeyate, Bitton, Willsbridge, and Kingswood.

The petition states:

The Petition of residents of Longwell Green, Hanham, Mangotsfield, Emersons Green, North Common, Oldland Common, Warmley, Siston, Bridgeyate, Bitton, Willsbridge, and Kingswood,

Declares that the Petitioners are concerned by attempts to build inappropriate development on the Kingswood Green Belt; notes that Green Belt sites at Williams Close, Longwell Green, Cossham Street, Mangotsfield and Barry Road, Oldland Common have faced applications to build housing which has consistently been opposed by local residents, locally elected councillors and the Member of Parliament; notes that South Gloucestershire Council’s Core Strategy protects the Kingswood Green Belt; notes that Regional Spatial Strategies responsible for placing local Green Belts at risk will shortly be abolished; notes that the Planning Inspectorate must take the abolition of Regional Spatial Strategies into account as a material consideration when ruling on current appeals; and further welcomes that decisions over future development will be returned to democratically elected councillors.

The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to protect and preserve the Kingswood Green Belt for future generations to come.

And the Petitioners remain, etc.

[P000890]

Bahrain

Thursday 17th February 2011 Commons Chamber

11:34

[Mr Denis MacShane (Rotherham) (Lab)]

(Urgent Question): To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Bahrain.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

Last night at approximately 3.30 am local time, Bahraini police moved into the Pearl roundabout area of Bahrain’s capital city, Manama, to clear an encampment of protesters. The Bahraini Ministry of the Interior claims that the protesters were asked to move before force was used. Other reports say that the police moved in without warning, using tear gas and rubber bullets. Two people have been confirmed dead and there are reports of further casualties. The police and the Bahrain defence force have moved to secure key areas in Bahrain, particularly the Pearl roundabout in Manama and neighbouring districts.

This morning, there are further reports of sporadic clashes and unconfirmed reports of further deaths. There has also been a large gathering outside the hospital where the injured were taken. Traffic is severely disrupted in Manama and there are reports of stockpile shopping. There are no reports of other areas to the west and south of Bahrain being affected.

We are not aware of any UK nationals having been caught up in the violence so far. We are advising all British nationals to stay away from protests and to avoid all but essential travel around Bahrain. The airport in Manama continues to function normally, but we will of course keep the situation under review and ensure that British nationals in Bahrain receive full consular support.

We have conveyed our concern about these events and the level of violence to the Government of Bahrain. We are greatly concerned about the deaths that have occurred. This morning, I spoke to the Foreign Minister of Bahrain and last night our ambassador spoke to the Minister of the Interior. In both cases, we stressed the need for peaceful action to address the concerns of protesters, and the importance of respect for the rights to peaceful protest and freedom of expression. It is also essential that all those who are injured have immediate access to medical treatment. We urge all sides to avoid violence and for the police to exercise restraint. The Bahraini Government should move quickly to carry out their commitment to a transparent investigation into earlier deaths, and extend that to include today’s events and any alleged human rights abuses.

I also said to the Foreign Minister that this is a time to build bridges between the different religious communities in Bahrain. I said that we would strongly oppose any interference in the affairs of Bahrain by other nations or any action to inflame sectarian tensions between Bahrain’s Sunni and Shi’a communities. We recognise that Bahrain has made important political reforms alongside its growing economic success. We strongly welcome such steps within the context of the long friendship between Bahrain and the UK under successive Governments. I was assured in Bahrain last week and again this morning that the Bahraini Government intend to build on these reforms.

We will always encourage Bahrain and other countries to take further steps that meet legitimate aspirations for greater political and social freedoms. As I said in my statement on Monday, Britain will continue to send a constant message to Governments of the region about how important it is to move in the direction of more open and flexible political systems and sound economic development, while always respecting the different cultures, histories and traditions of each nation.

[Mr MacShane]

I am grateful to the Foreign Secretary for coming to answer this urgent question himself, and for bringing his ministerial team. Does he agree that a wind of change is blowing through the Arab world—first Egypt, Tunisia and Yemen, and now Libya, Algeria and the terrible news of deaths and hospitals filled with the wounded as the autocrats of Bahrain seek to crush their people’s hopes? [Interruption.] I hear sneers from the Government Benches. Momentous changes are under way as big as those of 90 years ago after Lawrence arrived in Aqaba.

Seven thousand British citizens live in Bahrain, and UK exports to Bahrain are worth £500 million. Last week, the Foreign Secretary visited Bahrain. Did he have contact with the pro-democracy opposition or was the purpose of his mission simply to be a latter-day Castlereagh, upholding conservative monarchs in the region? Why is there no statement on the Foreign and Commonwealth Office website with even the tiniest hint from the Foreign Secretary to the rulers of Bahrain that they must move with the times—or does he chastise only the Israeli Government? Does he agree that all political detainees must be released now?

Will the Foreign Secretary confirm that late last year his FCO ministerial colleagues signed off on exports to Bahrain of tear gas, irritant ammunition, riot control equipment and other matériel used to crush democracy? Will he tell the House that there will be no more exports of such matériel from Britain? Will he confirm that the Register of Members’ Financial Interests shows that Ministers, while in opposition, were on a regular gravy train to Bahrain, paid for by the rulers of the statelet? Does he agree that it would be better if the financial links between Bahrain and Members of this House were now suspended?

Finally, does the Foreign Secretary agree that almost a century of British policy, supported by Governments of all parties, based on turning a blind eye to the repression and corruption of the regimes in this region may be coming to an end? Will he therefore agree to a wide review of UK foreign policy in the region before it is too late, and reverse the cuts to the BBC and the British Council, so that Britain can be more and not less present, and on the side of democracy and decency in the region for the first time in generations?

[Mr Hague]

If I may respond to the substantive parts of the right hon. Gentleman’s question, Britain is of course on the side of decency and democracy everywhere in the world, including in the middle east and the Gulf states. The House gave strong support on Monday for the sentiments that I expressed in respect of our approach to the situation. The Opposition were also generally supportive of our continual call for more open and flexible political systems, and for the recognition of legitimate political aspirations, while respecting and understanding the fact that those countries are all different, that they all cope with different situations, and that they have had a different pace of reforms.

It is certainly important to express our gravest concerns in the manner in which I have this morning, but it is also important to recognise that important reforms have taken place in Bahrain and that the King of Bahrain pledged himself in the last week to further such reforms.

The right hon. Gentleman asked about the presence of Government statements on the Foreign and Commonwealth Office website. That website will of course be updated with all my statements, including this one and what I will say at the press conference that I will hold shortly with the Spanish Foreign Minister. However, I did speak about this matter in the House of Commons itself on Monday, and that is where Governments should give their definitive statements on such things.

Any exports will be looked at under the strict criteria that we always apply in this country. It is true that both in opposition and in government, many right hon. and hon. Members have been to Bahrain and held extensive discussions with its leaders. In fact, on every occasion when I went there in the last five years, Ministers of the previous Government were there at the same time. It is wholly right to have that dialogue with Bahrain and other Gulf states.

The right hon. Gentleman asked about my visit last week. I met a variety of opposition human rights organisations, including the Bahrain Human Rights Society, the Migrant Workers Protection Society and the Bahrain Women’s Union. I subsequently raised some of the issues that they brought up with Bahraini Ministers. We have a continuous discussion and dialogue on human rights with the Bahraini authorities, which again is absolutely the appropriate thing to do.

I am sure that the right position for this country, in the context of that long friendship with Bahrain of which I have spoken, is to press for legitimate aspirations to be met and for actions to be taken that bring different religious communities together, as well as to express our grave concern when such matters arise.

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

I am not sure that I can match the rhetoric of Rotherham, but I agree with the Foreign Secretary that it is clear that very substantial movements for change are sweeping through the middle east—an area with which we have a long history, including sometimes on colonial terms. He recognised the importance of the area by recently visiting it.

The Foreign Secretary has confirmed already that we will conduct ourselves according to our belief in the rule of law, democratic principles and the need for freedom of expression, but has he considered whether, in this period of potentially tumultuous change, there could be a role for the Arab League? Has he sought discussions with the Arab League ambassador here in the UK or with others elsewhere to determine whether the Arab League could help in what looks like a transformation in the region?

[Mr Hague]

I am grateful to my right hon. and learned Friend. There is indeed a movement for change in many parts of the Arab world, although we must understand that motivations and aspirations differ from one country to another. Bahrain has achieved much more economic development than Tunisia or Egypt, but it has a starker religious divide, despite the efforts of the Bahraini Government to say that everyone is a Bahraini. The circumstances are different in each country. A meeting of Gulf Co-operation Council Ministers is taking place in Bahrain this afternoon. They will discuss the situation together.

My right hon. and learned Friend asked specifically about the Arab League. In recent days, I have discussed the situation in the Arab world, and most specifically in Egypt, with the secretary-general of the Arab League, Mr Amr Moussa. We might be hoping for too much if we expect a consistent position on this by the Arab League, because the circumstances of each country differ so much, and because, of course, the Arab League includes nations such as Syria and Libya, which have a particularly severe approach to dissent and are not accommodating of any reform movements or demonstrations in their countries. I think, therefore, that it would be difficult to bring about a unified response from the Arab League, although it would be very good if it did happen. The British Government will continue to make our case in exactly the way he described.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I thank the right hon. Gentleman for his answer. Will he give more detail of the work being done to support British nationals in the country, and what contingency plans will go ahead in the event of these protests escalating? I fully support his comments urging restraint on all sides and expressing the British Government’s grave concerns about the policing of the protests on Pearl square, and his advocacy of the protection of human rights. Given the strength of our diplomatic relationship with Bahrain, will he tell the House what he and his officials plan on doing in the days ahead to ensure that the Bahraini Government are aware that the eyes of the whole world are on the behaviour of the police and security forces in the light of recent events? He is right, of course, to say that Bahrain has seen some progress on political reform since the introduction of the new constitution in 2002, and I welcome the fact that when he was in Bahrain last week, he raised the importance of continuing progress along that path. Will he therefore tell the House specifically what advice on such further reform he gave to the Bahraini Government last week, and what steps the British Government would now like to see in the days, weeks and months ahead?

[Mr Hague]

I am grateful to the right hon. Gentleman for his comments. On contingency plans, I have spoken to our ambassador in Bahrain this morning. Of course, we are watching the situation very carefully as it may affect British nationals, travel advice or the situation at the airport. If it becomes necessary, we will send additional resources to reinforce our diplomatic or consular presence. That does not seem to be necessary yet, but we will keep it under review night and day. After recent experiences in Egypt and Tunisia, we are used to sending a rapid deployment team when necessary, and to smoothly and calmly assisting British nationals if a crisis develops. I also thank him for his welcome for other things that the Government have said.

On the specific advice that we give to the Bahraini Government now and in the future, we always have to be careful, given that we do not believe in outside interference in the political affairs of other nations, about being so prescriptive that we think exactly what reforms should take place. However, we think that there are legitimate aspirations that should be satisfied, and that it is important that the Government in Bahrain continue to make it clear in their words and actions that political reforms will continue and that economic opportunities will be opened up across the whole of society. That is what we will emphasise. However, as another nation, we will not try to determine the exact detail of their policies.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

As my right hon. Friend will know very well, Iran has long had a claim over the sovereignty of Bahrain, which raises delicate international problems at the present time. However, it is something on which the British Government and the Arab League can march together in giving support to His Majesty the King of Bahrain in resisting any attempt by Iran to exploit the present situation.

[Mr Hague]

My hon. Friend is right. That is why I mentioned earlier, in response to the original question, that we would strongly oppose any outside interference in the affairs of Bahrain or any attempt to widen and exacerbate the sectarian difficulties that clearly exist there. He puts his finger on that. It is a message that should go out loudly and clearly from the western world, and now I think from the Arab world. I have no direct evidence of such interference taking place, but it is right for us to sound a strong warning about it.

[Mr Ben Bradshaw (Exeter) (Lab)]

Does the Foreign Secretary agree that events in Bahrain and throughout the Arab world demand a much more fundamental reassessment of British and western policy in the region, away from support for autocratic Governments, to unequivocal support for democracy, freedom and human rights?

[Mr Hague]

Our relationship is with nations rather than individuals, as I have stressed in the case of Egypt and Tunisia. However, it is important to be able to work with the leaderships of countries throughout the Gulf—a particularly strong example of that—in the interests of the security of the whole region as well as of the welfare of British nationals, and of the consistency and strength of our policies on the Iranian nuclear programme. Of course, we have good relations and have discussed foreign policy matters very closely—as often, though perhaps not often enough, happened under the previous Government—with all the leaders of the Gulf states. I do not think that events call for us to break our links with the leaders and monarchies of such states. That would be the height of folly. However, they call for us to repeat all the time the messages that I have mentioned today, and for Britain to assist in that wherever we can. Last week in Tunisia, I announced the Arab partnership fund to help the development of civil society and political parties throughout the Arab world. That is the right approach for Britain.

[Mr Edward Leigh (Gainsborough) (Con)]

Unlike Libya, where demonstrations are also taking place today, Bahrain is a loyal friend of the west. It has started political reforms and is very tolerant of western lifestyles. May I urge my right hon. Friend, before the Government make any criticism of Bahrain, to proceed with extreme caution and say, on behalf of the House of Commons, that the right hon. Member for Rotherham (Mr MacShane), with his one-sided views, does not speak for us?

[Mr Hague]

Thankfully, that is the case on all subjects, so it is hardly necessary to make that latter point. My hon. Friend is right—we have had a long friendship for the past 40 years with Bahrain, and it is felt strongly in that country. He is also right to point out that protests have been going on in Libya, where television cameras are not present, so they may not be so much in the news. However, we should remember those protests, too, and we call on the Government in Libya to recognise the right to peaceful protest and to avoid the excessive use of force. That message should also be conveyed clearly today.

[Paul Flynn (Newport West) (Lab)]

The great changes would not have happened without fresh information from the platforms of social networks and from the most reliable, trusted news organisation in the world. As the Government are in the mood for U-turns, should not they look again at their planned wasteful cuts to the BBC world services?

[Mr Hague]

The hon. Gentleman is right that social networking sites have played a strong role in recent events across the middle east. So has satellite television, which brings us to an important point. The BBC’s services must adapt to the changes in the world—the vast majority of people in the Arab world keep in touch with those events through watching satellite television channels. That is the way for the BBC to develop its services, including its online services, rather than thinking that every service that it now provides has to stay exactly the same. Medium-wave transmissions across much of the Arab world will be continued. Shortwave transmissions will continue into the Arabian peninsula and into Sudan, but the right way to go is to develop the BBC’s satellite television services. That is the sort of thing people are watching.

[Mr James Clappison (Hertsmere) (Con)]

My right hon. Friend has a good record on standing up for human rights in the region, but in the events that are now unfolding, will he take a close interest in the position of Christians and Christian communities throughout the region? They have already faced pressure and persecution both from some of the existing regimes and from certain political forces within them, although Bahrain is not one of the worst examples by any means.

[Mr Hague]

As my hon. Friend says, the important issue that he raises is thankfully not a factor in these particular disturbances, but the message of tolerance and acceptance of different religions should always go out clearly from this country. That is very important to underline in the middle east today, where there have been terrorist outrages against Christians, but also against other religious minorities across the region. Part of what we need in the middle east in the coming years is not only an acceptance of more open and flexible political systems, but real leadership from the countries concerned in accepting the presence of different religions.

[Keith Vaz (Leicester East) (Lab)]

May I welcome the tone and content of the Foreign Secretary’s statement? Bahrain has a long-standing relationship with our country, and it is seeking to reform in the context of its own philosophy. I do not blame the Foreign Secretary, but before his visit there were no protests in Bahrain. In the meetings that he held with those who wanted to accelerate the reform process, did he anticipate that they would happen? Will he continue not to lecture middle eastern countries, but to work with them to ensure that their reform process is brought to a logical conclusion?

[Mr Hague]

I am very grateful to the right hon. Gentleman for his question. That is the right way to frame those things—with a deeper understanding of what is happening in those societies. He might have a word with the right hon. Member for Rotherham (Mr MacShane) afterwards about some of those issues. It is true that outbreaks of disorder have occurred in several places that I visited last week, but I am confident that it is not cause and effect. In my tour of the middle east, we correctly anticipated some of the places, such as Yemen and Bahrain, where difficulties would arise. It is all the more important in those countries to stress the message of necessary and appropriate reform. Among the leadership in Bahrain, there is the appetite and determination to carry out those reforms. There is no doubt about the sincerity of the King of Bahrain and the leaders of the country about that. We will therefore continue to give our advice and to deplore situations where violence arises and lives are lost. Both elements are important.

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

I welcome the Foreign Secretary’s statement. Will he clarify the position to ascertain whether what is happening in Bahrain now is connected to incidents there four or five years ago, when disturbances were linked to the influence of Iran, which asserted that it was the custodian of Shi’ites and would even send its troops to defend them, or whether it is a genuine desire for reform by the people of Bahrain?

[Mr Hague]

As I said, I do not have any evidence of Iranian involvement in the protests, although, over the years, I think that some statements by Iran have been intended to exacerbate tensions in Bahrain. We should therefore remember that context. However, it is fair to say, without analysing or knowing the politics of every other country in the world, that there are legitimate aspirations for better economic opportunity and political rights in the countries concerned, including Bahrain. Undoubtedly, a mixture of factors is at work, and that underlines the need for the approach that I have described.

[Chris Williamson (Derby North) (Lab)]

On a point of order, Mr Speaker.

[Mr Speaker]

I point out to the hon. Gentleman that points of order follow statements, so we will deal with the business statement first.

Business of the House

Thursday 17th February 2011 Commons Chamber

11:58

[Hilary Benn (Leeds Central) (Lab)]

Will the Leader of the House give us the forthcoming business?

[The Leader of the House of Commons (Sir George Young)]

The business for the week commencing 28 February will be as follows:

Monday 28 February—Motion relating to the big society. The subject for this debate was nominated by the Backbench Business Committee.

Tuesday 1 March—Second Reading of the Protection of Freedoms Bill.

Wednesday 2 March—Estimates day (2nd allotted day). There will be debates on Sure Start children’s centres and Her Majesty’s Revenue and Customs, the details of which will be given in the Official Report, followed by a motion to approve the draft Prevention of Terrorism Act 2005 (Continuance in force of sections 1 to 9) Order 2011.

At 7 pm the House will be asked to agree all outstanding estimates.

[The details are as follows: Sure Start Children’s Centres: 5th Report from the Children Schools and Families Committee of session 2009-10, HC 130; Government response—4th Special report from the Education Committee of session 2010-11, HC 768; and HMRC: Oral evidence taken before the Treasury Sub-Committee on 8 February 2011, HC 731-ii, and 19 January 2011, HC731-i; oral evidence taken before the Treasury Committee on 15 September 2010, HC 479; 7th Report from the Treasury Committee of session 2009-10, Administration and Expenditure of the Chancellor's Departments 2008-09, HC 156, and Government response, Cm 7917; 8th Report from the Treasury Committee of session 2006-07, The Efficiency Programme in the Chancellor’s Departments, HC 483, and Government response, 1st Special report from the Treasury committee of session 2007-08, HC 62”.]

Thursday 3 March—Opposition day (12th allotted day) (half-day) (first part). There will be a half-day debate on a Democratic Unionist party motion, subject to be announced, followed by proceedings on the Consolidated Fund Bill.

Friday 4 March—Private Members’ Bills.

The provisional business for the week commencing 7 March will include:

Monday 7 March—Consideration in Committee of the Scotland Bill (day 1).

Tuesday 8 March—Remaining stages of the European Union Bill.

Wednesday 9 March—Second Reading of the Welfare Reform Bill.

Thursday 10 March—There will be a debate on a motion relating to UN women. This debate was nominated by the Backbench Business Committee, followed by a further debate on a subject to be nominated by that Committee.



I should also like to inform the House that the business in Westminster Hall for 17 March 2011 will be:

Thursday 17 March—A debate on articles 9 and 13 of the Bill of Rights and the role of Parliament in dealing with all grievances and the importance of freedom of communication between constituents and Members.

[Hilary Benn]

I am grateful to the Leader of the House for that reply. I thank him for his clarification this week on the Scotland Bill, although the publication of the Scotland Bill committee’s report at Holyrood is, of course, only part of the legislative consent motion process, as the Scottish Parliament then has to debate the report and the legislative consent motion and vote on them. Given that the Secretary of State for Scotland has described this as the biggest transfer of fiscal powers since the Act of Union, we should wait until the process has been completed in Holyrood before proceeding with Committee stage here.

In the light of the significant developments in the middle east, do the Government have plans for a debate?

On police numbers, will the Leader of the House ask the Home Secretary to come and explain why she is now three weeks late answering a named-day question tabled by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper)? Is it because the Home Secretary cannot think of a way to square her commitment not to cut officers from the front line with the 1,500 police officers and staff who will go in West Yorkshire, the 480 in Merseyside, the 1,500 in Kent and the more than 1,000 in Devon and Cornwall? When senior officers are describing these as the

“biggest budget cuts for a generation”,

I think that my right hon. Friend—and the public—deserve an answer to her question.

It has been another very bad week for the Government. Youth unemployment is now at its highest level since 1992—the last time we had the misfortune of a Tory Government. One in five young people are now without work, and we discover this week that the Tories’ latest scheme for helping the young unemployed is to flog off internships with top banks at £3,000 a time at a ball to raise funds for the Conservative party. That is not so much social mobility as upwardly mobile socialising.

May we have a debate on the quality of ministerial decision making and briefing, as it has also been a very bad week for Ministers? The Prime Minister claimed yesterday that the Government are running the biggest back-to-work scheme since the 1930s—funny that, because, as historians will point out, Britain did not have any Government employment schemes worthy of the name at the time. The Education Secretary was bang to rights in court for an “abuse of power”, the Defence Secretary had to apologise to front-line soldiers for sacking them by e-mail, and the Environment Secretary has been put in special measures by the Prime Minister over the forest sale fiasco.

I welcome the statement that we are about to hear following the Prime Minister’s decision yesterday to take an axe to his own policy. I did say to the Leader of the House that the Government would have to change their mind. I wonder whether coalition Members feel any sympathy for the Environment Secretary, given that she has been briefed against this morning by No. 10 for a crazy policy that I suspect was foisted on her by the Treasury. There she was two weeks ago, racing ahead doing what she thought was wanted, and then last week she got nervous and started to apply the brakes. Now the Prime Minister has grabbed the steering wheel, and the sound of crunching gears can be heard all over Whitehall as reverse is engaged. At least we will be spared a new regulatory body to deal with privatised forests: presumably, it was to be called Ofcut.

May we have a debate on the latest bank bonuses? Last week the Chancellor trumpeted his bonus deal and called for an end to banker bashing. A couple of days later, the Business Secretary contradicted him—not for the first time—when he railed against the

“extraordinarily large bonuses which most people cannot understand”

as being

“offensive”.

No wonder—this week we saw reports that the bonus pool at Barclays is going up. There we were thinking Project Merlin was named after a wizard: now we learn it was a bird. Presumably the Chancellor had an image of himself swooping down, talons extended, to seize offensive bonuses from the mouths of greedy bankers. Now we know that he was just dropping them off. When it comes to being tough on bankers, the Chancellor is not so much a bird of prey as a great bustard flush.

Finally, will the Communities and Local Government Secretary come and explain why he criticised local government for a 78% increase in chief executives’ pay when it now turns out that this figure was actually for pay rises for chief executives in FTSE 250 companies? If the Secretary of State cannot even get the simplest facts right in his vendetta against local government, is it any wonder that local government has completely lost confidence in him?

[Sir George Young]

I am grateful for the right hon. Gentleman’s response, although I hope that he managed to clear all his questions in advance with the Leader of the Opposition and the shadow Chancellor, as the latest leaked memo from Labour HQ has revealed is required of him and every other member of the Opposition Front-Bench team.

On the legislative consent motion, as the right hon. Gentleman said, I wrote to him and the hon. Member for Dundee East (Stewart Hosie) following our exchanges last week, and I placed a copy of the letter in the Library. It is our understanding that the Scotland Bill committee in the Scottish Parliament will publish its LCM in the week commencing 28 February. Today’s business statement has provisionally allocated 7 March for day one of the Scotland Bill.

On police numbers, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) is entitled to a reply to her named-day question. I remind the right hon. Gentleman that the former Home Secretary had said that he could give no guarantee that there would be no reduction in police numbers were Labour to be re-elected.

On youth unemployment, I remind the right hon. Gentleman that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) said in 1995:

“Our plan is nothing less than to abolish youth unemployment.”

They left government with youth unemployment 240,000 more than when they came in. So we will have no more of that.

On internships, I welcome the announcement by you, Mr Speaker, that—with support from the Commission—an internship scheme will be initiated in the House. I encourage all hon. Members to take part in it. It is right to encourage internships and to give access to internships to those from all income groups.

On bonuses, I remind the right hon. Gentleman that there was no bonus regime under his Government. Indeed, they signed a contract with one of the banks that obliged it to go on paying bonuses at market rates. It was this Government, not his, who introduced a regime and a deal with the banks. So we will have no more on that.

As the right hon. Gentleman anticipates, we will shortly have a statement on forests.

On the Secretary of State for Communities and Local Government, I understand that a press statement was put out by his Department on the matter.

It has been a challenging week for the Government, but it is the week in which we have established the big society bank, with several hundreds of millions of pounds to underpin charities. It is a week in which we have put a major constitutional reform Bill on the statute book. It is also a week in which we have published the Welfare Reform Bill, the biggest reform of the welfare state for 60 years. So the coalition Government are determined to make progress with our social, economic and constitutional reforms and we will not be deflected from that task.

[Nadine Dorries (Mid Bedfordshire) (Con)]

May we have a debate to discuss the relationship between the Royal College of Obstetricians and Gynaecologists and the Department of Health? I ask specifically for this because two members of staff from the Department are sitting on a working group looking into the emotive issue of the care of women during abortion, and if the findings of that group are to be credible, its manner of operations should be above reproach. It is not adhering to Government guidelines on consultation, and that is causing huge concern.

[Sir George Young]

I understand my hon. Friend’s deep concern on the subject, which she has made one of her special interests. My understanding is that the Royal College of Obstetricians and Gynaecologists is a professional body independent of Government, and it has set its own consultation periods. There is a consultation period of four weeks—as is standard for the college—and it ends tomorrow, although any responses received by 25 February will be accepted. However, I will, of course, pass on her comments to my right hon. Friend the Secretary of State for Health.

[Kevin Brennan (Cardiff West) (Lab)]

May we have a debate on ministerial responsibility? Following the education maintenance allowance debacle, the U-turn on school sports and the Building Schools for the Future debacle, we now learn that Building magazine is to publish an article calling into question figures that the Education Secretary used just this week in the House about his new pilot scheme. Would it not be appropriate for him to join the Environment Secretary in special measures as a failing Minister?

[Sir George Young]

Certainly not. On Building Schools for the Future, my right hon. Friend the Education Secretary made a statement to the House earlier this week, and on that issue the judge agreed that my right hon. Friend behaved rationally and that his decision was not open to legal challenge on that basis. So I reject the hon. Gentleman’s assertions of the criticism of my right hon. Friends in the Cabinet.

[Stephen Williams (Bristol West) (LD)]

The Government’s tobacco control strategy is at an advanced stage of preparedness and I understand that it will be published shortly. Given that smoking is still the biggest killer and cause of preventable early death, will the Government ensure such an important debate, in their time, on public health and in particular tobacco control?

[Sir George Young]

I commend my hon. Friend’s work as chair of the all-party group on smoking and health—a group of which I used to be an active member. He is right to draw attention to the importance of making further progress on smoking, which causes some 100,000 premature deaths each year. It is right at the heart of our public health strategy. I cannot promise a debate in Government time, but there may be an opportunity at some point in the passage of the Health and Social Care Bill to debate that important aspect of public health.

[Natascha Engel (North East Derbyshire) (Lab)]

This week, the Deputy Prime Minister published a written ministerial statement on public reading stages during Bill Committees. As the Leader of the House knows, my commitment to public engagement in the legislative process is absolute, but not at the expense of a Back Bencher’s ability to scrutinise legislation and hold the Government to account. What is the evidence base for this policy? What assessment has been made of its impact on a Back Bencher’s ability to scrutinise legislation? Just between these four walls, can he say what consultation the Government had with him? They certainly had no consultation with Back Benchers.

[Sir George Young]

I welcome the hon. Lady’s commitment to the House getting more engaged in the legislative programme. It is our intention to publish more Bills in draft. We will publish more in this Session and even more in the Session that follows. The hon. Lady was a member of the Wright Committee, one of whose recommendations was that there should be more engagement between the public and the House on the legislative programme. The Deputy Prime Minister’s written ministerial statement was a further step down that road towards a public reading stage. We have invited their with comments on the Protection of Freedoms Bill to log their comments on the Government website, which will then be moderated and made available to the Public Bill Committee. I hope that that will enrich and inform those who participate in Committee.

I want to engage with the hon. Lady, the Procedure Committee and the Liaison Committee before we move to the fulfilment of what is in the coalition agreement—a commitment to a proper public reading stage. I hope that at that stage the House will take ownership of the process, rather than its being led exclusively by the Government.

[Andrew Stephenson (Pendle) (Con)]

May we have a debate on the tailored support needed to get people back into work? It is clear that only with tailored support built on individual needs, as envisaged by the Government, will we start to see people returning to work in the numbers that we all want.

[Sir George Young]

My hon. Friend is absolutely right. We need tailored individual support to get people back into work. Under the Work programme, to be introduced later in the year, we will have payment by results. Providers, whether from the independent sector or the private sector, will be remunerated when people are in sustainable, long-term employment, rather than as with previous programmes, where payment was simply to get someone off the register for six months. Sadly, over half of those people were back on benefits by the seventh month. I hope that the structure of our Work programme will have the results that my hon. Friend wants.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

The Secretary of State for Communities and Local Government was asked on the BBC “Today” programme about having debates on senior pay in council chambers, which he is insisting on, but not on senior pay in Whitehall in this Chamber. He said:

“I don’t see any reason why we shouldn’t have this kind of debate in the House of Commons.”

We have heard that the Secretary of State gets confused about which sector he is talking about, so can the Leader of the House tell us whether he has any plans for a debate in Government time on senior pay, and will he extend it to low pay, which Opposition Members think is just as important?

[Sir George Young]

Of course low pay is important, but the hon. Lady’s question focused on what my right hon. Friend the Secretary of State for Communities and Local Government said. As far as civil servants are concerned, Select Committees have adequate opportunity, particularly when they look at the accounts of individual Departments, to hold the Minister to account on the salaries that are paid in the Department, and it is always open to have debates on the Floor of the House about the structure of salaries in the civil service. Of course, there is a defined salary structure in the civil service, whereas there is slightly less clarity in relation to local government and the chief executives, so I do not think it is an exact parallel.

[Mr William Cash (Stone) (Con)]

Having given reasonable time for the Committee stage of the European Union Bill, will the Leader of the House be good enough to ensure in programme motions or whatever that we have adequate time to discuss the Bill properly on Report and Third Reading in the light of any amendments that may be tabled? Perhaps he would be kind enough to have a word with me about it, too.

[Sir George Young]

As my hon. Friend knows, I am always ready to have a word with him. I have announced that we shall be having the final day of—I think—seven days on the European Bill. We actually added an extra day in the light of representations, and we have allocated a whole day for the final stages. I very much hope that that will be adequate.

[Stewart Hosie (Dundee East) (SNP)]

I thank the Leader of the House for confirming in the Chamber today that the first day of the Scotland Bill Committee will not now be until 7 March, and I thank him for his letter yesterday. However, will he confirm that, given the other provisional business that he has laid out, the second day of Committee cannot be until 13 March at the earliest; that the programme agreed on 27 January still applies; and that the debates on the borrowing and fiscal powers can also therefore not commence until the second day, on 13 March at the earliest?

[Sir George Young]

I have announced the provisional business for the second week back. I have not got as far as the business for following weeks in March, but I will certainly take the hon. Gentleman’s points on board. Of course it is a very important Bill for the Scottish Parliament, but we published the Bill in November, on St Andrew’s day, and we are not dealing with the Committee stage until March—a larger than usual gap between publication and Committee. I hope that that will give the Scottish Parliament an opportunity to consider the necessary legislative consent motion. I can confirm that we are adhering to the principle that the House will have an opportunity to amend the Bill if the legislative consent motion requires any amendment.

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

As I cannot without massive inconvenience to others be present for the upcoming statement on forests, may I unreservedly welcome the Prime Minister’s sensible and timely initiative on that matter? Given that the Government are responding so well to the views of the public on that issue, may we have a statement from the Minister for Housing and Local Government on fluoridation in the Southampton area? A court has held that the soon-to-be-abolished strategic health authority has the legal right to proceed with fluoridation despite the opposition of three quarters of the population; nevertheless, if we are down for localism, surely the matter should be for elected local government to decide.

[Sir George Young]

My hon. Friend is right that the High Court rejected an application for judicial review of the decision by the South Central strategic health authority to apply fluoride to the water for his constituents, and indeed many others. It is now considering what next to do. I have some—hopefully—encouraging news for my hon. Friend. Under the reforms envisaged in the Health and Social Care Bill, the South Central strategic health authority will be abolished, and its public health responsibilities will be passed to local authorities, which will give my hon. Friend the control that he seeks. The Government are now, in the light of that court decision, working out how best to apply the regulations to take the fluoridation policy forward.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

Unconfirmed reports suggest that the Gangmasters Licensing Authority will be abolished or merged with another department. Either option would be deeply regrettable, given the good work that the authority does to protect migrant workers from exploitation and ensure that they are here legally and paying taxes and insurance. Will the Leader of the House explore the future of the Gangmasters Licensing Authority and identify the good work that it does?

[Sir George Young]

It does indeed do good work, and I can confirm that the Government have no plans to abolish that body.

[Tessa Munt (Wells) (LD)]

Will the Leader of the House update us on what has happened on moving private Members’ Bills away from Friday? I have written to him on the subject, especially in light of the Sustainable Livestock Bill, which received great support from members of the public, environment groups and 172 MPs, but received fewer than 100 votes on the day that it was considered in the House. It seems a shame that MPs, particularly those outside London, should have to choose between voting on legislation that is important to their constituents and constituency commitments.

[Sir George Young]

I am grateful to my hon. Friend for raising the matter, and I think I have written to her on the subject. The Procedure Committee will shortly start an inquiry into the parliamentary calendar, including the problem that she outlines of private Members’ Bills taking place on a Friday, and it will consider other options. We have tried to give the House certainty by agreeing, early in the Session, the dates of the 13 sitting days up to June this year. If a private Member’s Bill has a lot of support, it is still possible to get it through on a Friday.

[Graeme Morrice (Livingston) (Lab)]

May I press the Leader of the House further on the Scotland Bill? Will he confirm that its Committee stage will not commence until after the Scottish Parliament has agreed the legislative consent motion? Does he accept that, in order to scrutinise the Bill properly, it is appropriate that the express views of the Scottish Parliament are known?

[Sir George Young]

I understand the hon. Gentleman’s interest in the Bill. As I have said, it will be perfectly possible for the Committee stage of the Bill to consider amendments in the light of the LCM. It has never been the policy of the House to put a Bill on hold while the LCM is addressed. I can, however, commit myself to giving the House the opportunity to amend the Bill in Committee after the LCM has been processed.

[Mr Lee Scott (Ilford North) (Con)]

Will the Leader of the House ask the Minister with responsibility for the Olympic games to make a statement to the House regarding the number of contracts and subcontracts awarded to local or, indeed, British companies against foreign companies?

[Sir George Young]

I understand my hon. Friend’s interest in the multiplier effect of work on the Olympic games. My understanding is that 12,000 workers currently work on the Olympic park and village, and that 21% of the Olympic park work force live in the five host boroughs. In addition, 330 apprentices are on site, and a large number of previously unemployed people have been placed in work through the brokerage of the Olympic Delivery Authority. I hope that my hon. Friend welcomes such an impact in his constituency and is convinced that there is local benefit.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

Has the Leader of the House yet had time to read the National Audit Office report, which raises a series of concerns about progress on the Olympics, especially around the regeneration of east London and the economic, social and sporting legacies of the Olympic games? Will he consider the possibility of a debate in Government time about how we can get those promises back on track, so that we can deliver the full potential of the Olympic games in those key areas?

[Sir George Young]

The short answer is no, I have not had time to look at the NAO report. In due course, that report will go to the Public Accounts Committee, which will produce its report, which would then be eligible for a debate in the House. In any event, the Government would want to respond to any PAC recommendations. That is the right way to address the important issues to which the hon. Gentleman refers.

[Mr Edward Leigh (Gainsborough) (Con)]

With regard to the upcoming debate on the importance of MPs communicating with their constituents, has my right hon. Friend noted the remarks made last week by the chair of the Committee on Standards in Public Life, that the extreme complexity of the present MPs’ expenses system was militating against family life and making it hard for MPs to do their job properly? Does he understand the increasing consensus in the House that we need to move towards a much flatter, less bureaucratic system to enable MPs to get on with their lives and support their constituents?

[Sir George Young]

I am grateful to my hon. Friend, not least for the work that he is doing on the liaison committee that has recently been set up. I did read Sir Christopher Kelly’s submission, which reinforced points that you, Mr Speaker, I and the shadow Leader of the House had made. I hope that the Independent Parliamentary Standards Authority reflects on the strong views expressed during the review and makes proposals that are acceptable to the House.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Given that we have not had a statement from the Minister responsible, despite revelations of further serious security breaches at Ford open prison, may we have a debate on security in Her Majesty’s prisons, or is it now the policy of the Government to equip prisoners with a freedom pass as well as a ballot paper?

[Sir George Young]

The short answer is that the Government have no plans to provide such a debate, but if the hon. Gentleman presents himself on a Tuesday morning to the Backbench Business Committee, he might find that he is successful in securing a debate in Back-Bench time on the important issue of security in our prisons.

[Gavin Barwell (Croydon Central) (Con)]

On the issue of police numbers raised by the shadow Leader of the House, the Mayor of London’s draft budget proposals increase investment in front-line policing, allowing the Met to recruit again, with the result that London will have more police officers in 2012 than were inherited from the previous Mayor. May we have a debate on how to deliver protection for front-line services while reducing spending?

[Sir George Young]

I hope that the rest of local government will note what the Mayor of London has been able to do. At a time of fiscal stringency, he has put more resources into front-line policing, and if that can be done in London, it can be done elsewhere.

[Phil Wilson (Sedgefield) (Lab)]

May we have a debate on the inability of Ministers to make decisions? The north-east of England has been waiting since July last year for a decision on the intercity express programme, which, if it goes ahead, will create 800 jobs in my constituency and 1,000 jobs in the supply chain. In November, the Secretary of State for Transport stated that we would have a decision in the new year. When the House returns, it will be the beginning of March. When can we expect a decision?

[Sir George Young]

There will be an opportunity on 10 March for the hon. Gentleman to put that question to my right hon. Friend the Secretary of State for Transport. In the meantime, I will raise the issue with him, and see whether we can get an answer before that.

[Brandon Lewis (Great Yarmouth) (Con)]

May we have a debate on the Government’s Work programme, so that everyone in the House can better understand why the 5 million-odd people who have been trapped on benefits for the best part of a decade will be better off under this Government’s approach than under Labour’s approach, which simply did not work?

[Sir George Young]

Under Labour, roughly 1.5 million people spent most of the last decade on out-of-work benefits, and that benefit system cost every working family some £3,000. The Work programme will focus on encouraging people to get into work and reforming the welfare system, and it will have much better results than the programmes that preceded it.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Earlier this week, Dave Morgan, a 75-year-old man, was seriously injured in my constituency after heroically dragging an out-of-control illegal dog away from an eight-year-old boy it was attempting to savage. Yesterday, a young person had a dog set on him in Picton, also in my constituency, in front of his youth workers. The Department for Environment, Food and Rural Affairs’ consultation on dangerous dogs ended eight months ago, and the Government have so far done nothing. May we please have an urgent debate on the performance of the Secretary of State for Environment, Food and Rural Affairs, and the complacent attitude of her Ministers on this matter?

[Sir George Young]

I was sorry to hear of the incident in the hon. Lady’s constituency. I will contact my right hon. Friend the Secretary of State and see when she plans to respond to the consultation exercise. Of course, I understand the urgency of making progress.

[Greg Mulholland (Leeds North West) (LD)]

The recently published ombudsman’s report, which revealed a worryingly unacceptable level of neglect of older people in the NHS in 2009-10, shows that such problems continue. May we have a statement from a Department of Health Minister on what the Government are doing to tackle this serious issue?

[Sir George Young]

The whole House would have been dismayed by the 10 incidents, to which the health ombudsman referred in her recent report, showing neglect of elderly people. It would be wrong to generalise, because high-quality care is provided in much of the NHS, but the instances of poor discharge policy, poor end-of-life policy and poor nutrition policy were deeply worrying. I hope that some of the reforms in the Health and Social Care Bill will improve the position, not least through the creation of local healthwatch organisations to give patients more power to ensure that there is feedback, that complaints are heard and that local services are held properly to account.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Will the Leader of the House grant an urgent debate on Liverpool’s local government settlement from central Government, given the misleading statistics about funding levels used—inadvertently I am sure—by both the Prime Minister and the Minister for Housing in recent weeks?

[Sir George Young]

We have debated the local government settlement within the last fortnight, and that would have been the opportunity for the hon. Gentleman to raise the grievance to which he refers. I am afraid he will have to wait another year before that opportunity comes round again.

[Kris Hopkins (Keighley) (Con)]

The Leader of the House will be aware of a Channel 4 programme that went out last Monday evening, showing several children from my constituency being kicked and beaten in a mosque. Will he ask the relevant Secretary of State to make a statement on how we can protect children who attend mosques and madrassahs, and how we can support members of the community who are afraid to complain to the police about what has happened?

[Sir George Young]

I understand the concern arising from the “Dispatches” programme, which included such comments as men should be trusted only if they had substantial tufts of hair on their face. It would be appropriate for my hon. Friend to refer to the police any allegations of abuse or harm to children. All school inspections are carried out by trained and qualified inspectors, and he might like to raise the incidents in his constituency with the appropriate inspectors.

[Paul Flynn (Newport West) (Lab)]

May we debate the extraordinary and anachronistic Advisory Committee on Business Appointments? It is made up of five lords and two knights, almost all of whom have business appointments themselves. It cannot be a watchdog because it never follows up its recommendations. Is it not about time we reformed this establishment pussy-cat that just looks after the establishment?

[Sir George Young]

I understand that the hon. Gentleman is referring to the body that gives advice to ex-Ministers as to whether it is appropriate for them to take on employment. It is important that that job is done. I have no particular view on why it cannot be done appropriately by five lords or two knights; the important thing is to have the right people to do the job. It may be that the right people to do that job have the adornments to their names that the hon. Gentleman has just mentioned.

[Bob Blackman (Harrow East) (Con)]

As a coalition Government, we are committed to making sure that money is spent in the national health service on the front line. Two weeks ago I mentioned two trusts that were consulting about merging; I now understand that that will take three years and cost £1.5 million. Now I highlight what is going on with the Care Quality Commission and dentists throughout the country, who are required to print and display 75 individual policies in their surgeries, totally unnecessarily.

[Sir George Young]

Dentists in my own constituency are complaining about the approach of the Care Quality Commission. If my hon. Friend would like to approach the Backbench Business Committee, it might feel it appropriate to arrange a debate. I shall raise the issue of the mergers of NHS trusts in my hon. Friend’s constituency with my right hon. Friend the Secretary of State for Health.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Given the doubts expressed today by health experts about the Government’s minimum alcohol pricing policy, may we have a debate on what the policy will actually mean, and whether it is anything other than a fig leaf for big commercial interests?

[Sir George Young]

We have not announced the details of that policy, but this is the first time that a Government will have a policy on minimum alcohol pricing, linked to the related policy for a special tax on high-strength drinks. The Budget may be the appropriate time for a debate on those issues.

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

May we have a debate about spending so that we can contrast the coalition Government’s policies and plans for the economy with those of the shadow Chancellor, who asserts that we should be spending a lot more money that we do not have? The policy of spend, spend, spend is what got us into this mess in the first place.

[Sir George Young]

My hon. Friend is right. The spending reductions that we are planning for next year, of some £16 billion, are only £2 billion more than the figure pencilled in by the outgoing Chancellor of the Exchequer.

[Geraint Davies (Swansea West) (Lab/Co-op)]

There is growing concern about the future of Remploy factories, which provide supported jobs for people with disabilities. Will the Leader of the House consider an urgent debate on ensuring that all public bodies include Remploy in their procurement policies for office furniture and other products, to support workers with disabilities and provide a level playing field for trade?

[Sir George Young]

I understand the hon. Gentleman’s concern. The matter was raised at business questions last week, and I wrote to one of his hon. Friends about Remploy. I should like to send him the same letter. The Government have maintained support of some £555 million to Remploy to help it through the five-year modernisation programme, but I should like to write to the hon. Gentleman about the particular issue that he raised concerning public sector procurement.

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

Tomorrow is Go Orange day on the Isle of Wight—a celebration of three independent lifeboats and the fundraising efforts to keep them afloat. Each service costs more than £25,000 a year. Will the Leader of the House join me in thanking the brave men and women who man the service, and in sending them good wishes for the success of Go Orange day?

[Sir George Young]

I welcome my hon. Friend’s initiative at business questions in giving the service the publicity to which it is entitled. The whole House will endorse the good wishes that he has just mentioned.

[Julie Hilling (Bolton West) (Lab)]

This week Oxfordshire joined the growing list of local authorities that are closing their youth services completely. In view of the gravity of the situation, and as there is a statutory duty to provide youth work, may we have an urgent debate in the Chamber on the issue?

[Sir George Young]

Again, I say to the hon. Lady that there was an opportunity to debate the situation two weeks ago when we discussed the revenue support grant. Those decisions have now been taken. I will draw her concern to the attention of my right hon. Friend the Secretary of State for Communities and Local Government and ask him to write to her.

[Chris White (Warwick and Leamington) (Con)]

In my constituency the video games industry is a major employer, but recently there have been reports about potential job losses. That is a particularly worrying development given the importance of the creative industries to our economic recovery. Will the Leader of the House provide Government time for a debate on how we can best support our creative industries, such as video games, to boost exports and create new jobs?

[Sir George Young]

My hon. Friend is right; we need a stake in the digital and creative industries, and we have many market leaders in this country. I cannot promise a debate, but I will draw his remarks to the attention of both the Chancellor of the Exchequer as he prepares his Budget, and my right hon. Friend the Secretary of State for Business, Innovation and Skills.

Forestry (England)

Thursday 17th February 2011 Commons Chamber

12:37

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

I would first like to say that I take full responsibility for the situation that brings me to the House today. Let me make it clear that we have always placed the highest priority on preserving access and protecting our forests, but the forestry clauses in the Public Bodies Bill, published well before we launched the consultation, gave the wrong impression of the Government’s intentions. That is why I am today announcing three steps that will allow for more measured and rational debate about the future direction of forestry policy.

First, I have taken a decision to end the consultation on the future of the public forest estate, and I take full responsibility for that. I am doing so because it is clear from the early responses to the consultation that the public, and many hon. Members, are not happy with the proposals that we set out. Secondly, the Government will support the removal of the forestry clauses from the Public Bodies Bill, which is in Committee in the other place.

Thirdly, I would like to announce to the House that I am establishing an independent panel to consider forestry policy in England. It will report to me with its findings in the autumn. The panel will advise me on the future direction of forestry and woodland policy in England, and on the role of the Forestry Commission and the public forest estate. The panel will include representatives of key environmental and access organisations, alongside representatives of the forestry industry. I will shortly publish its membership and terms of reference.

If there is one clear message from this experience, it is that people cherish their forests and woodlands and the benefits that they bring. My first priority throughout this period of debate has been securing a sustainable future for our woodlands and forests. On many occasions in the House last autumn, Ministers gave assurances that our aim in all of this has been to do more to maintain and enhance the public benefits delivered by forestry—from recreational access to wildlife protection, and from tackling climate change to sustaining a wide range of small businesses. That is why my ambition to provide a better future for our forests is undiminished.

We have already heard positive suggestions about how we can do that for heritage forests and all other woodlands. We have spoken to the Royal Society for the Protection of Birds, the National Trust, the Woodland Trust, the wildlife trusts, the Ramblers Association and other groups. The Forestry Commission has itself acknowledged that change is needed, and will be fully engaged in the process, as I know that it has many ideas to contribute. We have also been listening to hon. Members on both sides of the House, many of whom have set up their own initiatives and local groups. We want to support them in that.

Finally, I am sorry, we got this one wrong—but we have listened to people's concerns. I thank colleagues for their support through what has been a very difficult issue. I now want to move forward in step with the public. I hope that the measures that I have announced today, signalling a fresh approach, demonstrate my intention to do the right thing for our forests and our woodlands.

[Mary Creagh (Wakefield) (Lab)]

I welcome the Secretary of State’s full and frank apology to the House and to the nation for getting this so very wrong. I am sure that the past 48 hours have not been easy for her.

Last night the Government announced that they would withdraw the forestry clauses from the Public Bodies Bill, which is now in the other place, and scrap the consultation on the sell-off of England's forests. Again, MPs heard about a major Government U-turn on the television, rather than hearing it here first. [Hon. Members: “No!”] It came through on BBC News and Sky at 10.20. Can the Secretary of State tell the House when she was informed of the decision that she is now announcing, as her statement is mysteriously absent from the Order Paper today? Only yesterday the Prime Minister told the House that the consultation on the forests, set to run until April, would continue. When was the decision made, and who made it?

Today the air is filled with the sound of chickens coming home to roost. The Secretary of State has discovered that her first priority—delivering the 30% cut that she inflicted on her Department—has a hefty political price attached. Half a million people have marched, mountain-biked and petitioned against her sale of the century. They objected to the once-in-a-lifetime offer to buy something that they already collectively own. Under the cloak of reducing the deficit, she came up with a policy that her own Department admitted would cost more than it delivered in benefits, and which would have fragmented the environmental stewardship of England's forests. I congratulate all hon. Members who defied their party Whips a couple of weeks ago to vote against the sell-off, and I remind those who did not that the public may well extract a hefty price from them at the next election.

Today is not a victory for politics as usual: it is a victory for Liz Searle of the Friends of Chopwell Wood, whom I met in Gateshead two weeks ago, for the Save Cannock Chase campaigners, and for the Friends of Dalby Forest, members of which I met in York last weekend. It is a victory for the Save Our Woods campaign, for Alan Robertson from the Hands Off Our Forest campaign in the Forest of Dean, and for thousands of others. I hope that Government Members are listening to those names and will contact those campaigners. They signed the Save Our Forests petition and the Save England's Forests petition, and supported the silent majority in speaking up and telling the Government, “This land is our land”.

Last Friday the Secretary of State announced that her sale of 15% of England's forest permitted under the law as it stands would be put on hold until the consultation ended. The consultation ended last night—we assume by prime ministerial decree. Will the sale of those 40,000 hectares, or 100,000 acres—10 times more than the Labour Government sold during their entire 13 years, and we then reinvested the money—now go ahead, or will that sale await the outcome of the panel’s deliberations? How many consultation responses has she received, and will the panel consider those responses?

I am delighted that the Secretary of State has finally spoken to the environmental charities and listened to them on the matter. How will the freshly dreamed-up independent panel on the forests be selected? Why are representatives of the forestry industry—the lone voice in favour of her proposals—included in the panel, and why will it meet in secret? Should it not tour the country listening to what people want from their forests and showing a little humility on the subject? Can she reassure the public that foresters themselves, the custodians of forests, will be represented on the panel? How will the campaigners and the members of the public who have spoken up on the issue be represented? What is the status of DEFRA’s forestry regulation—or should I say deregulation—taskforce, which was quietly announced by her colleague in January? Surely we should not have two separate advisory panels, running in tandem, on the future of the forests? Can she tell the House how the Forestry Commission can possibly deliver better access and more biodiversity when it is set to lose a quarter of its staff in the next three months?

This U-turn highlights a wider problem about how this Government work. We have the Prime Minister, a self-styled non-executive chairman, now setting up a unit to monitor Ministers, but he is barking up the wrong tree. It is not individual Departments he should be putting into special measures, but the whole Government, who are out of touch with what people care about, whether that is the opportunity to walk in the forests or to ensure that babies get milk and books, or that our children have the chance to go to university.

I congratulate the Environment Secretary on one thing: she is probably the only Cabinet Minister in living memory to unite the Socialist Workers party and the National Trust in opposition to her plans. Will she learn the lessons of this debacle? She cannot ride roughshod over the people on a policy for which she has no mandate. By offering her 30% cut across DEFRA she has set herself on a collision course with anybody who loves the countryside—and if she will not stand up for the countryside, we on the Labour Benches most certainly will.

[Mrs Spelman]

As I am sure you, Mr Speaker, and the House are aware, I volunteered to make an oral statement, and an oral statement does not appear on the Order Paper.

I made the decision with the Prime Minister. We have spoken about the matter, as the hon. Lady would expect, on a number of occasions. We spoke face to face about the options open to us, and we made the decision together.

The hon. Lady talks about the savings that I have had to make in my Department without a trace of acknowledgement that the reason Government Departments are having to make savings is the mess that her Government left this country in. I do not accept her argument that the proposals outlined in the consultation would have impacted adversely on the stewardship of our woodlands and forests. Since we are on the subject of stewardship, I remind her that, notwithstanding the savings that we have had to make in our Department, we have protected the expenditure on stewardship, precisely because we know that it is so important.

The many friends of forests that the hon. Lady listed will in many cases have written to hon. Members on both sides of the House to express their concern about their understanding of the forestry clauses in the Public Bodies Bill. In their minds, those clauses gave rise to a concern that their particular dearly loved forest might in some way be under threat. It is clear from my statement that, with the withdrawal of the forestry clauses, there can be no question about the protection of their forests in future.

The hon. Lady asked me about the planned sales. They have been suspended, and we await the outcome from the panel. She asked how many responses we had received. The Forestry Commission has received approximately 7,000 direct responses and 2,500 e-mails, and it has sent out 400 hard copies of the consultation document.

With regard to the composition of the panel, it will represent the broad range of views of all those who share with all of us a love and cherishing of the forests, and want to see them protected. It will be broad. Let me help the hon. Lady with her understanding of the deregulation taskforce, which fulfils a completely different function from that of the panel. We have invited Mr Richard Macdonald to advise Ministers on the simplification of regulation, particularly the regulation of agriculture. The consultation is complete: we have received the responses and we await Mr Macdonald’s report. As I said, this is a completely different function from that of the panel that I have announced today.

I found it quite hard to take the hon. Lady’s comments about the support that the previous Labour Government had given to the countryside—and the reaction of Members to those comments was enough to reinforce that point. Finally, as regards humility—perhaps, ultimately, that is the difference between her and me. I am prepared to come here and show genuine humility. If we heard some acknowledgement from the hon. Lady that her Government sold off forests with inadequate protection, we might begin to take what she had to say more seriously.

[Andrew George (St Ives) (LD)]

The Secretary of State is, of course, right in the reassurances that she gave about the Public Bodies Bill, and I certainly welcome the statement she made last week about the 40,000 hectares, as previously announced in the comprehensive spending review. Will she reassure us that the well-constructed questions posed in the consultation will not simply be lost, or submerged by what has been announced today?

[Mrs Spelman]

Yes, I can give that assurance. Those were perfectly reasonable questions to ask, and I would expect members of the independent panel to look at all the questions raised in the consultation document—and, indeed, at some additional wider questions that members of the public asked to be considered.

[Several hon. Members]

rose—

[Mr Speaker]

Order. May I gently remind the House that Members who came into the Chamber after the Secretary of State had started to deliver her statement should not expect to be called?

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

If there is any personal sympathy for the Secretary of State today, it is because she has been publicly humiliated by the Prime Minister and the Chancellor. Can she bring herself to congratulate the many people up and down the country, certainly including my constituents, who fought and campaigned so hard against the selling off of one of our most precious national assets?

[Mrs Spelman]

As I have said, I have no difficulty in life in being frank when I have got something wrong; I have come to the House and said as much. As regards the many people up and down the country whose love for their forests is quite apparent from the responses I received, I would like to reassure them that it was never the Government’s intention to sell off the forests to the highest bidder—[Interruption.] That was never in our minds.

[Mr Roger Gale (North Thanet) (Con)]

The statutory protection of right of access for walkers and riders, the statutory protection of the environment and the national habitat and the long-term securing of our natural woodlands were all contained in my right hon. Friend’s proposals, but none of them was put forward either by Her Majesty’s Opposition or—dare one say it?—by the push-button campaigners. Those protections need to be hung on to. My right hon. Friend was not wrong; she was right. Will she make certain that this Government protect our forests for the future, as the Opposition, when they were in government, never did?

[Mrs Spelman]

Of course, I am happy to give that undertaking. It is important to remember that a number of statutory protections—governing access, rights of way, wildlife protection, planning, the care of our woodlands and felling—are already in place. In addition to all that, we Ministers have made it clear on a number of occasions that we want to increase protection for access and other public benefits, because it is apparent from the sales made by the previous Administration that parts of that are not adequate.

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

I welcome the decision to pulp this policy. The Secretary of State’s attitude towards the House today seems to be that nanny has been misunderstood, and that if people had understood Government policy better they might have embraced it. Let me tell her, on the basis of experience in my constituency, that that is not the case. How will the right hon. Lady ensure that the millions of people who wrote to their MPs and marched against the policy will have their voices heard on the independent panel?

[Mrs Spelman]

I thought that I made it perfectly clear, and said quite straightforwardly to the House, that in this case we got it wrong; we listened, and we are going to take a fresh approach.

[Neil Parish (Tiverton and Honiton) (Con)]

I very much welcome the Secretary of State’s response, because I think we can now be very positive about this, and think about how we manage the forests, how the Forestry Commission can help the smaller forests and how we can get greater public access and biodiversity in them.

[Mrs Spelman]

I thank my hon. Friend for that observation. It is encouraging that the Forestry Commission agrees that reform is needed, and that we together should have the ambition to do better for our forests and woodlands and to enhance and protect their biodiversity.

[Mr Ben Bradshaw (Exeter) (Lab)]

Did the Prime Minister offer to come and give the Secretary of State his support in executing this humiliating U-turn? As my hon. Friend the Member for Wakefield (Mary Creagh) said, the real problem is that we have a Prime Minister who almost prides himself in not knowing what is going on in Government Departments, and likes to float above everything as a non-executive chairman. It is he who needs to get a grip, not just the Secretary of State.

[Mrs Spelman]

Well, that might have been the right hon. Gentleman’s experience of the previous Prime Minister, but I have spoken to the Prime Minister on a number of occasions over the last few weeks, as it was quite apparent that we were having difficulty with the consultation. I have been very grateful for his support.

[Bob Russell (Colchester) (LD)]

I thank the Secretary of State for her pragmatic approach. I seek her assurance that there will be an attempt to achieve not only political consensus but a consensus across the country, in the hope that we can go forward with a better scheme—in sharp contrast, it has to be said, with the sales by stealth made by the Labour Government, whose financial policy appears to be that money grows on trees.

[Mrs Spelman]

I thank the hon. Gentleman for his observation, and his wonderful turn of phrase. He is, of course, absolutely right that this is a difficult issue, as previous Administrations have found. I am encouraged to think that the amount of interest generated in constituencies will encourage Members on both sides of the House to participate in this fresh approach to finding the best future for our woodlands and forests.

[Caroline Lucas (Brighton, Pavilion) (Green)]

On behalf of the many hundreds of constituents in Brighton, Pavilion who wrote to me in opposition to the forest sell-off, I warmly welcome this U-turn. May I press the Secretary of State on the question of the independent panel? How, precisely, will it include the voices of those inspirational grass-roots movements that led the campaign against the forest sell-off? Will she guarantee that its meetings will be held in public?

[Mrs Spelman]

I hope that the hon. Lady will have heard in my statement what I said about the helpful contributions of the large grass-roots campaigning organisations to debate on this subject. I am quite sure that they will be part of the wide group that we will draw in on our independent panel.

[Mr Desmond Swayne (New Forest West) (Con)]

I welcome the statement, and I do so also on behalf of my hon. Friend the Member for New Forest East (Dr Lewis), who as you know, Mr Speaker, is detained elsewhere. [Interruption.] On the business of the House, Mr Speaker!

[Mr Speaker]

I am greatly reassured by what the hon. Gentleman has just said.

[Mr Swayne]

Does my right hon. Friend agree that the course she has set is much more likely to ensure that some of the opportunities inherent in her proposals for the New Forest will be brought forward and implemented than would have been the case under the previous means of consulting the House? May I also say to you, Mr Speaker, that I am surprised and shocked by the singular lack of grace shown by some hon. Members?

[Mrs Spelman]

I would certainly like to give my hon. Friend that assurance, and the vehicle of an independent panel representing a wide range of views to advise Ministers is, as he suggests, likely to produce a better outcome.

[Barry Gardiner (Brent North) (Lab)]

I welcome the Secretary of State’s apology to the House for this debacle, and the spirit in which it was given. Will she explain the situation in respect of the receipts that were anticipated from the sale of up to 15% of the land? Will she also reassure the House that in considering how to proceed with the English forest estate, she will pay particular attention to the green infrastructure of land around cities and the climate change connectivity necessary to extend forests into such areas so that the effects of climate change are mitigated?

[Mrs Spelman]

There are quite a few dimensions to that question. As the permanent secretary said when she and I were interviewed by the Environment, Food and Rural Affairs Committee in the autumn, she would have regarded any revenue from the planned sale of 15% of the land as a bonus, because she could not be sure about that. Now that those sales have been suspended, the situation depends on the outcome from the panel, but our Department’s spending plans are not affected by the change.

It is clear that extra woodland cover in proximity to urban areas has a greatly beneficial effect, and the Government have an ambition to plant 1 million trees, which I hope will also enhance biodiversity.

[Nick Boles (Grantham and Stamford) (Con)]

The Secretary of State has had the honesty and guts to come here to say that she presented ideas to the British public, but the British public did not much like them, so she said sorry and came up with a new approach. Is it not instructive that that is in such amazing contrast to the behaviour of that lot on the Opposition Benches who, no matter how many acres of woodland they sold and no matter how much gold they sold and at what price, nevertheless ran our economy into the ditch, from which we are trying to dig it out?

[Mrs Spelman]

My hon. Friend is absolutely right. As part of restoring trust in politics, it is important that the electorate see that the Government will listen. It is also very important in our new politics to be transparent, and I agree that had the previous Government consulted and been transparent about the terms and conditions of the sale of the public forest estate, it might have greatly helped the understanding of this issue.

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

Is not this humiliating climbdown—[Hon. Members: “Oh!”] Oh yes, you all voted for it; every one of you. Is not this humiliating climbdown a tribute to the anger of huge numbers of people, including large numbers of my own constituents, who said they would not have this? Is it not deplorable that the right hon. Lady has been made to stand in the corner with a dunce’s cap on her head by a Cabinet that two weeks ago drummed the whole lot of them on the Government Benches—Liberal Democrats and Tories—to vote for the opposite of what she is saying now?

[Mrs Spelman]

It is only humiliating if we are afraid to say sorry, and one of the things we teach our children is to be honest. It is not a question of humiliation; it is my choice.

[Karen Bradley (Staffordshire Moorlands) (Con)]

When the Labour party was in office, were any consultations held in which the views of the public were actually listened to?

[Mrs Spelman]

The one that comes to mind is the Post Office consultation, which we all remember really was a sham.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

A huge number of my constituents have written to me in the strongest possible terms on this important issue. Will the Secretary of State set out clearly and fully how they can make their views known in public directly to the panel?

[Mrs Spelman]

I think the hon. Lady will know from the e-mails she has received that the fears of many of our constituents were raised by their understanding of the forestry clauses in the Public Bodies Bill, and one of the things she can do is write to her constituents to explain that those clauses have now been removed. The Department always responds to all correspondence directed to it, and the hon. Lady has more than one vehicle to suggest by which the public can engage with us on the way forward in forestry and woodland policy in this country.

[Andrew Percy (Brigg and Goole) (Con)]

I welcome the statement, and its tone certainly contrasted with the somewhat ungracious response from the Opposition Front Bench; we got no apology for the 25,000 acres they flogged off. The concern in my constituency generally relates to private forests and the public protections we need to ensure we continue to have a benefit. Will the independent panel and the review continue to look at the protections for private forests as well as the public estate?

[Mrs Spelman]

I can give my hon. Friend that assurance. The public forest estate accounts for 18% of woodland cover in this country, so the vast majority of forest and woodland is in private ownership, and part of the point of moving to a fresh approach with an independent panel and widening the range of questions under consideration is to look at forestry policy and woodland policy in general.

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

I welcome the Secretary of State’s climbdown on behalf of the constituents who have expressed anger and disbelief to me about what is happening, but given both that the Government have said this is meant to be the greenest Government ever and that they have got rid of the Sustainable Development Commission, is it not about time that what has happened to this policy does not happen in all the other areas of biodiversity? Is it not time that the Government set out how they are going to embed sustainable development in all future policy in both urban and rural areas?

[Mrs Spelman]

The hon. Lady is Chairman of the Environmental Audit Committee and I respect that, but I encourage her to look at the Government’s first nine months in the round. In that period, my Department has had the success of concluding a multilateral agreement on biodiversity, as well as making sure we have a ban in place on commercial whaling, and protecting and enhancing biodiversity through maintaining the environmental stewardship scheme, to name but three measures to put in the balance. Later this spring, a natural environment White Paper will be published as well, of course.

[Sir Peter Bottomley (Worthing West) (Con)]

I gave a ministerial answer once saying, “I’m sorry, I made a mistake.” That was not duplicated once during the 13 years of the Labour Government. Will the Secretary of State consult Felix Dennis and the Tree Council about voluntary planting, and will she also allow me to say that many of the messages on this got caught in spam filters, so many of the 500,000 people who sent e-mails may not have received a reply?

[Mrs Spelman]

My hon. Friend is living proof that it is perfectly possible to say sorry and continue to provide a very valuable service in this House. The point he makes shows why humility is a good quality in a politician.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I thank the Secretary of State for changing her mind; it is a relief she has done so. May I also ask her to seize the opportunity, because what she tried to do has brought to light a passion for our woodlands and forests that many of us did not realise was so great? As chairman of the John Clare Trust, I appeal to her to use it. Forests are wonderful, and natural forests are even better, but we have got to get children and families to visit forests. The likelihood of a child visiting any green space has halved in a generation, so will she also consider how we can expand forests and get people to use them?

[Mrs Spelman]

That is a constructive suggestion, which I am sure the panel will take forward. Many non-governmental organisations and green groups have spoken to us about the opportunity such a panel presents to deal with some of the issues that beset our forests and woodlands, and to address their own aspirations to do better by them.

[Robert Halfon (Harlow) (Con)]

Will my right hon. Friend confirm that we definitely will not be pursuing the policies of the previous Government, such as selling 25,000 hectares of forest without any access granted? Will she also confirm that the thrust of Government policy will be to transfer forests to communities so that they can own them via co-operatives or other community bodies?

[Mrs Spelman]

Ministers have on numerous occasions given reassurances to the House that we would not proceed with those planned sales without better protection being in place. I am sure the independent panel will look at the genuine interest from community and local groups in being more involved in the management and ownership of their local forests. There are many examples of communities that have successfully provided a safe future for the woodlands and forests near where they live.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Will the right hon. Lady please explain to my constituents why she has wasted so much of her time scurrying between TV and radio stations, desperately trying to defend selling off our forests before having to make an embarrassing U-turn today, when she could have been taking action to tackle urgent issues such as dangerous dogs?

[Mrs Spelman]

I have not been anywhere near a TV or radio station all day because I understand the primacy of Parliament. It is important to come here first and make a statement. Naturally, as a Minister, in addition to dealing with the issue of forests, I have a large number of matters with which the Department is dealing. We always ensure that they are not compromised or affected by anything that we may be dealing with at one point in time.

[Tessa Munt (Wells) (LD)]

I welcome the Secretary of State’s announcement today, and I regret the lack of clarity on access for the public and on the protection for biodiversity and landscape. I do not understand why we are cancelling a consultation when the new panel will need to hear and make its decision by autumn. It might be more logical to continue with the consultation for the remaining ten and a half weeks so that the public can continue to add their views to the current process.

[Mrs Spelman]

It is clear from the early responses that members of the public are responding in many cases to what they have read in the press or what they have heard, rather than necessarily understanding the policy. Many of the responses were received before the publication of the policy on 27 January. Looking at those early responses, it is difficult for Ministers to proceed with the consultation as it is. None the less, all those responses and the questions contained in the consultation will be part of the work that the independent panel will review.

[Paul Blomfield (Sheffield Central) (Lab)]

Will the Secretary of State clarify what the impact of this welcome U-turn will be on the Forestry Commission’s plans to cut 400 jobs across the country?

[Mrs Spelman]

I can explain to the hon. Gentleman that the Forestry Commission’s plans to make savings in line with the savings that my Department and other Government Departments must make have no connection at all to the consultation or the setting up of an independent panel. Savings are necessary because we have to fill a hole in the nation’s finances that was left behind by the Government of whose party he is a member.

[Mr Mark Spencer (Sherwood) (Con)]

May I put on record my thanks to the Secretary of State for listening to me and my constituents over the past month, and may I encourage her not to listen to the Opposition, who sold off woodland greater in area than the city of Nottingham during their term in office? I wonder whether this is an opportunity to increase the biodiversity of woodlands such as Sherwood in Nottinghamshire, by increasing the number of broadleaf trees and oaks rather than the coniferous woodland that exists at present.

[Mrs Spelman]

Yes, I can give my hon. Friend that assurance. I thank him for his positive approach. There certainly is an opportunity to improve and enhance biodiversity. Non-governmental organisations such as the Woodland Trust have expressed a desire to increase the rate of restoring plantations on ancient woodland sites, and the Royal Society for the Protection of Birds is keen to look at the restoration of heathlands. That is precisely the opportunity that this fresh approach affords.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I am not sure that it is ever wrong to terminate a failed policy, but given the sudden and abrupt end to the right hon. Lady’s plans, will she tell us how much public money has been wasted on this fiasco so far?

[Mrs Spelman]

The advantage of modern technology is that documents such as consultation documents are now largely viewable online, so in the figures that I gave about the number of responses that we had received and the number of hard copies dispatched, the hon. Gentleman will be able to see that the public expenditure is minimal.

[Caroline Nokes (Romsey and Southampton North) (Con)]

I thank and commend the Secretary of State for her bravery and honesty on this subject. What has emerged from the woodwork is not just thousands of constituent e-mails, but a significant number of eminent academics and professors with knowledge of the subject. How can they feed in their views to the expert panel?

[Mrs Spelman]

I can assure my hon. Friend that honesty is always the best policy. That is what I always try to teach my children. The interest in the subject has produced very good suggestions from scientists and academics about ways in which we can improve biodiversity and the protection that currently exists for woodlands and forests. They, too, will have the opportunity to feed in to the panel through the Department or directly to the representatives on the panel.

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

Will the Secretary of State take the opportunity to dissociate herself from the disgraceful comments from the hon. Member for North Thanet (Mr Gale), who is no longer in his place, that the many thousands of people who were roused to anger by the proposals were push-button campaigners?

[Mrs Spelman]

I am unaware of those remarks and not in a position to comment. The hon. Gentleman has heard from me that I entirely respect the passion that people in our country have for their woodlands and forests—a passion that I share and applaud. I want to make sure that it is responded to by creating the best possible future for our forests and woodlands.

[Roger Williams (Brecon and Radnorshire) (LD)]

I am a member of a partnership that is in receipt of farm woodland grants to promote public goods such as access and biodiversity—but in Wales, not in England, which is the subject of the statement? I am very pleased that the Secretary of State has broadened the consultation to cover private forestry and woodland, which, when well managed, can deliver both commercially and in terms of public goods. How does she intend to recruit people to represent this part of the industry, or is she looking for volunteers?

[Mrs Spelman]

I am always interested in volunteers. We are looking particularly for those who have a good understanding of the issues involved in the management of forests and woodland. I have named before the House a number of green groups that have a long heritage of protection of our environment, but it is important that we have representatives of the private forest estates, so if the hon. Gentleman has suggestions he should let me have them.

[Mr David Anderson (Blaydon) (Lab)]

I am sorry that the Chancellor has gone, because I wanted to thank him as well as the Secretary of State for the great boost they have given to Blaydon Labour party over the past few weeks during this fiasco. I thank my hon. Friend the Member for Wakefield (Mary Creagh) for mentioning the great work that is being done by the people fighting to save Chopwell woods. My message to them is, “Don’t stop fighting.” What has happened today is not the end of the story. I want to ask the Secretary of State one specific question. Will there be a representative of the work force on the independent panel? They know what is going on.

[Mrs Spelman]

As I said clearly, the representation on the independent panel will be broad, with as wide a range of views as possible of those who have an interest in our forests and woodlands.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

My right hon. Friend is aware that I have three forests in my constituency—Rendlesham, Dunwich and Tunstall—and I held a public meeting last Friday. People there will welcome the announcement that she has made today, particularly those who are concerned about access. I am encouraging those people to join bodies such as the Suffolk Wildlife Trust and Friends of Sandlings Forest, but a particular point came up about access. Horse riders, carriage drivers and cyclists are slightly concerned that some of the organisations that my right hon. Friend mentions are closing access now, supposedly to protect biodiversity, wildlife and so on. Will she bring that to the attention of the panel when it meets?

[Mrs Spelman]

I would be delighted to bring those concerns to the panel. I know that my hon. Friend has met large numbers of people in her constituency and approached the whole issue with great diligence. I think she would therefore acknowledge that there are some important questions to resolve, and tensions between different access groups. This is precisely one of the aspects that I will ask the independent panel to look at.

[Kevin Brennan (Cardiff West) (Lab)]

I congratulate the Secretary of State on at least resolving a centuries-old philosophical problem—namely, if a tree falls in the forest and one takes one’s eye off it, it does make a noise. It makes a noise sufficiently loud to be heard right across the country and to expose the lack of grip that the Prime Minister has on his Government’s policies.

[Mrs Spelman]

I do not think that there was a question at the heart of that. The whole point of my statement was to make it abundantly clear that we are a Government who listen and, having listened, are prepared to take the right action.

[Greg Mulholland (Leeds North West) (LD)]

I take it that the shadow Secretary of State has a commitment to recycling, given the way she shamelessly plagiarised the joke by my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron), the president of the Liberal Democrats. I praise the Secretary of State for her honesty and courage, which the public want to see more of in our politicians. I am proud to be part of a Government who listen to people, unlike the previous Government. I ask that, as we go forward, we do not lose some of the positive proposals, particularly those on real, long-term protection for our important heritage forests.

[Mrs Spelman]

I can give the hon. Gentleman that assurance. In the normal sequence of events, the independent panel would give advice to Ministers, and if Ministers judged it to be correct we would then proceed with a consultation White Paper, which might give rise to legislation if changes in the law were required to provide the extra protection.

[Sheila Gilmore (Edinburgh East) (Lab)]

I genuinely welcome the Government’s response. One of the plagues of politics is that it can sometimes be very difficult to back down and admit that something was wrong. I urge the Secretary of State, having reprieved vulnerable trees, to urge some of her colleagues to reprieve vulnerable people who will be subject to benefit cuts.

[Mrs Spelman]

I thank the hon. Lady for the good spirit with which she received my statement to the House, but I am sure that she will understand that the protection of vulnerable people in other regards is outwith my Department’s responsibilities.

[David Morris (Morecambe and Lunesdale) (Con)]

I congratulate the Secretary of State on this decision and thank her on behalf of the 1,000 constituents who e-mailed me requesting a review. May I also make her aware of the fact that the Opposition, when in government, sold off forest land three times the size of Blackpool before this policy was even put before Members?

[Mrs Spelman]

My hon. Friend makes a clear point, which we would have liked to have seen acknowledged by the Opposition, but let us try to be more generous-spirited and learn from their previous mistakes. If it was wrong to sell off the public forest estate with inadequate protection, we as a new Government can do better.

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

I congratulate the Secretary of State on her statement and the manner in which she delivered it. More than 300 constituents have written to me on the subject and will be reassured to have a Government who are prepared to listen to them and act on their concerns. I urge her to resist any temptation to take any lessons from the Opposition, whose consultations in general, and on woodlands in particular, were either lamentable or non-existent.

[Mrs Spelman]

I thank my hon. Friend for that observation. It is right that I should acknowledge fully before the House that we have all received much correspondence as constituency MPs, whether electronic or in hard copy. This is an important opportunity for us as parliamentarians to demonstrate that we do debate in Parliament, that we are able to communicate with our constituents and that we listen and are prepared to respond to them. I hope that hon. Members will be able to use today’s statement to communicate with the many people from whom they have received correspondence.

[Heather Wheeler (South Derbyshire) (Con)]

Like all Government Members, I congratulate the Secretary of State on this extremely important statement. May I put on the record the number of people in South Derbyshire who support the national forest and who were very concerned, but whose fears I am now able to allay? The national forest is such a good product that I hope we will be to make it larger once the independent panel has been set up.

[Mrs Spelman]

I can certainly give my hon. Friend that assurance. We should have the ambition to try to increase woodland cover, and the national forest is a good example of an amenity that reaches out to a wide cross-section of society, providing the opportunity for enhanced biodiversity and public access. It is the Government’s aspiration to plant more trees, and the national forest is a good example of how that can be done well.

[John Glen (Salisbury) (Con)]

I welcome the statement and applaud the fundamental decency, integrity, transparency and humility that the Secretary of State has shown. Given the hundreds of e-mails that we have all received, I suggest that there is an opportunity to harness the great interest in a sustainable woodland for the benefit of the country. Perhaps she would set out ways in which those many people can contribute to that future that they seek.

[Mrs Spelman]

I thank my hon. Friend for his kind remarks. This has been a difficult issue, as I have said, but it has also provided an opportunity to encourage all those people who corresponded with us to be more involved in the protection and enhancement of our woodlands by volunteering. Engaging with our constituents in the opportunities to plant more trees and protect our woodlands is a good outcome for all of us who love our woods and forests.

[Mr Aidan Burley (Cannock Chase) (Con)]

Under the policy of the previous Labour Government, Cannock chase could have been sold off without any protection for access whatsoever. That would have been completely reversed by the granting of heritage status under the Secretary of State’s previous proposals. The people of Cannock chase will rightly feel that today’s decision leaves their forest as exposed as it was under Labour, so what reassurances can she give that the granting of heritage status will remain an option for the independent panel and that there are no plans, and never were, to sell off Cannock chase?

[Mrs Spelman]

I can give my hon. Friend an absolute assurance that, as Ministers have said many times, we wish to protect access and other public benefits for all woodlands and forests. I will certainly encourage the independent panel to look at the issue of heritage forests. He has done an admirable job of speaking up for Cannock chase and made a strong case for it being considered a heritage forest, and I am sure that his constituents will thank him all the more for that.

[David Rutley (Macclesfield) (Con)]

The residents of Macclesfield enjoy the wonderful benefits of access to Macclesfield forest, which is owned by United Utilities. As my hon. Friend the Member for Suffolk Coastal (Dr Coffey) has said, access for horse riding groups, climbers and walkers will be important and needs to be considered in future. Will the Secretary of State confirm that access will be at the heart of the terms of reference that will be crafted for the new independent panel?

[Mrs Spelman]

I can give my hon. Friend that assurance. It is important that the panel looks at all forms of access, including access for walkers, riders and cyclists, because sometimes their needs are not completely compatible. As has been explained to me, if a horse ruts a path, it is not easy for a cyclist to go along that same path. A good way forward for the panel is to look at those different forms of access. We want to expand access to our forests and woodlands because it is in everyone’s interests that we do so.

[Matthew Hancock (West Suffolk) (Con)]

The Secretary of State will be aware that the third largest forest in England, Thetford forest, is largely in my constituency, and I received an awful lot of correspondence on the subject. I will be sending all correspondents a copy of this exchange, because I think that the dignified way in which she has carried herself has been exemplary and they will be reassured by everything she has said. The overwhelming point they made to me was that the most important things for the future of the forests are access rights, the protection of biodiversity and not using the matter as a political football, as some have sought to do.

[Mrs Spelman]

My hon. Friend’s constituents are absolutely right: forests and woodlands are precious to this country and we should be seeking to protect them and enhance their biodiversity. The aspiration of the Woodland Trust to accelerate the rate of restoration and plantation on ancient woodland sites is a good example of how we can provide an even better future for our forests.

[Kris Hopkins (Keighley) (Con)]

I welcome the Secretary of State’s statement and thank her for listening to the robust challenges from myself and other Government Members. It takes a lot to put your hand up, say you got it wrong and say sorry in a place like this, but I believe that, in doing so, the Secretary of State and the Government will have earned a great deal of respect from the country.

[Mrs Spelman]

I thank my hon. Friend for that. I do remember his robust advice to me, and I hope he feels reassured to know that I have heeded it. We can all learn throughout life from all the decisions that we take, and I am certainly part of the wide body of mankind that will do so.

[Guy Opperman (Hexham) (Con)]

I thank the Secretary of State for having the common sense to change her mind and to preserve Kielder, which is larger than Thetford, for sure.

[Mr Burley]

But not as nice as Cannock chase.

[Guy Opperman]

And even better than Cannock chase.

In reality, the Opposition’s criticism is wrong, because many of us got into this business and ran for Parliament because we thought that the way the countryside was being treated was manifestly wrong. Over the years, they rode roughshod over us, and that was totally wrong.

[Mrs Spelman]

It is more than my life is worth to get drawn into a competition over who has the best forest, as we all have candidates, but my hon. Friend is right, and he can be reassured that the Government, drawn from two parties with a large number of rural constituencies, have taken rural issues and the needs of the countryside very close to their heart indeed.

[Stephen Williams (Bristol West) (LD)]

I, too, commend the Secretary of State for the very gracious way in which she made her statement, which in itself executes a welcome policy re-think, showing that this Government, at least, listen to the views of constituents. In that regard, will she help me to reassure the 1,250 people who wrote to me in Bristol West about the issue—the biggest postbag I have ever had on any issue in my six years’ membership of the House—that the primary focus of the independent panel will be to enhance public access to woodlands, whether they are under Forestry Commission management or not?

[Mrs Spelman]

I am not going to get drawn into who had the largest postbag, either, but I absolutely can give the hon. Gentleman that assurance. Our absolute priority, as I said, is to protect and to enhance access to, and other public benefits of, our forests and woodlands, so I hope that he can reassure some of the 1,250 people with whom he corresponded that that is the case.

[Christopher Pincher (Tamworth) (Con)]

I, too, thank my right hon. Friend for listening to public concern, but when she sets up her independent panel, will she ensure that it supports small-scale independent nature reserves such as my local Hodge lane nature reserve in Tamworth, where every week volunteers come together to do important work, including coppicing, planting and clearing? The work that they do for their environment needs to be supported, too.

[Mrs Spelman]

I can give my hon. Friend that assurance. I hope that he heard—through some of the groups that have talked to our Department about the issue, including the Wildlife Trust—that we do appreciate the huge amount of volunteering and work by the public, who care passionately about nature and their nature reserves, woodlands and forests. That will, indeed, be integral, and fostering that spirit of volunteering, in the spirit of the big society, is something that the panel will very definitely look at.

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

Does the Secretary of State agree that it makes a hugely refreshing change to have a Government who consult and genuinely listen to the mood of the people, rather than just dogmatically driving through policy in the face of public opposition, as the previous Labour Government did? I compliment the Secretary of State on her courage and honesty and offer her the comfort of remembering that there is never a bad time to do the right thing.

[Mrs Spelman]

Those are very wise words, indeed, and a very important lesson for all of us is that no Government should ever stop listening. Listening is part of what we are called to do as parliamentarians, and I for one hope never to stop listening.

Points of Order

Thursday 17th February 2011 Commons Chamber

13:34

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

On a point of order, Madam Deputy Speaker. In a response to a question that I asked yesterday about 150 job losses at the Department for International Development’s East Kilbride office in my constituency, the International Development Secretary said:

“DFID is not immune from the cuts and will see reductions of some 33% in its administrative spend. I had the opportunity of speaking to all the staff at Abercrombie house just a few days ago to make sure that that was understood.”—[Official Report, 16 February 2011; Vol. 523, c. 947.]

In making that statement, the Secretary of State suggested that he had broken the news of the job losses personally. In actual fact, he visited the office in East Kilbride on 3 February—a week before the job losses were announced. May I ask for your advice, Madam Deputy Speaker, on how we can correct what was probably an inadvertent mistake by the Secretary of State and set the record straight?

[Madam Deputy Speaker (Dawn Primarolo)]

I am grateful to the hon. Gentleman for raising that point of order. The Leader of the House will have heard his comments and, I am sure, be able to pass them on, but I also suggest that the hon. Gentleman goes to the Table Office specifically with a request on how he can pursue the matter through the House in order to clarify the situation.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

On a point of order, Madam Deputy Speaker. On the protection of Back Benchers’ rights, those of us who attend departmental questions regularly are becoming increasingly worried by the way in which Government Whips systematically organise the tabling of questions. Today, if one looks at the Order Paper, one sees that eight questions—eight out of 25—all ask:

“How many apprenticeship starts there have been in the academic year 2010-11”.

We all know that Government Whips use that method to block off other questions; I know it goes on, and I think you know it goes on, Madam Deputy Speaker. If the Whips are going to use it, however, could they be more inventive? They could at least ask people to ask different questions. Indeed, could we not have a method whereby if eight questions are tabled, we take just the first two and exclude the rest? The current situation is an abuse of Back-Bench freedoms.

[Madam Deputy Speaker]

The tabling of questions is not one of the responsibilities of the Chair, but I am sure that all Members heard the hon. Gentleman’s observations. Seeing as he has a proposal for dealing with the point, I suggest that he ask the Procedure Committee to consider whether the issue is within its remit. It is certainly not within mine as a Deputy Speaker.

[Chris Williamson]

(Derby North): On a point of order, Madam Deputy Speaker. In response to a question about atomic veterans from my hon. Friend the Member for Scunthorpe (Nic Dakin) at the most recent Defence questions, the Under-Secretary of State for Defence, the right hon. Member for South Leicestershire (Mr Robathan), inadvertently misled the House when he said that

“the courts have found that there is no causal link whatever between many of the disabilities and illnesses suffered and exposure to any radiation.”—[Official Report, 31 January 2011; Vol. 522, c. 573.]

The truth is that the courts have made no such finding, and all attempts to get the Minister to correct the record have so far proved unsuccessful. Could I therefore ask you, Madam Deputy Speaker, to remind Ministers of the importance of correcting the record when they get their facts wrong?

[Madam Deputy Speaker]

I hope that no Member needs to be urged by the Chair to correct the record if they felt that something they had said in the Chamber was not correct. I feel that the hon. Gentleman is trying to open up the debate again, but, if he wants to pursue the issue, I would give him the same advice as I gave a few moments ago: he should pursue with the Table Office the question of how to ensure that it is clarified. All Members—Ministers and Back Benchers—are responsible for what they say, however, not the Chair.

Business without Debate

Thursday 17th February 2011 Commons Chamber

ESTIMATES

Motion made, and Question put forthwith (Standing Order No. 145),

That this House agrees with the Report [15 February] of the Liaison Committee.—(Sir George Young.)

Question agreed to.

Social Security

Thursday 17th February 2011 Commons Chamber

[Madam Deputy Speaker (Dawn Primarolo)]

I understand that it will be for the convenience of the House if we take motions 2 and 3 together.

13:39

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I beg to move,

That the draft Social Security Benefits Up-rating Order 2011, which was laid before this House on 3 February, be approved.

[Madam Deputy Speaker]

With this we shall discuss the following motion on pensions:

That the draft Guaranteed Minimum Pensions Increase Order 2011, which was laid before this House on 3 February, be approved.

[Steve Webb]

I shall deal briefly with the Guaranteed Minimum Pensions Increase Order 2011. The order provides for contracted-out defined benefits schemes to increase by 3% their members’ guaranteed minimum pensions that accrued between 1988 and 1997. Increases are capped at this level when price inflation exceeds 3%. This is a technical matter that is attended to on an annual basis, and I suspect that it will not be the focus of our discussions.

The broader uprating of social security benefits this year is a landmark event for two reasons. First, it enshrines the restoration of the earnings link for the basic state pension. Secondly, it introduces a clear and consistent approach to price measurement through the move from the retail prices index to the consumer prices index. I suspect that a lot of our debate will focus on that issue, but I want to turn first to pensions and pensioners. It is more than 30 years since the link between the basic state pension and earnings was broken. Although Labour Members talked a good game towards the end of their time in office, they had 13 years in which to restore that link, and they failed every year to do so.

The coalition Government said that they would restore the earnings link for the basic pension, and that is precisely what we have done. Indeed, we have gone one better with the introduction of our triple guarantee, which means that the basic pension will be increased by whichever is highest of earnings, prices or 2.5%. We estimate that the average person retiring on a full basic pension this year will receive more than £15,000 extra in basic state pension income over their retirement than they would have done under the old prices link. This important change will be a benefit to existing and future pensioners. It will provide a more generous basic state pension, giving a solid financial foundation from the state. So from this April, the standard rate for the basic state pension will rise by £4.50 a week, taking it from £97.65 to £102.15 a week. The introduction of this triple guarantee will finally halt the decline in the value of the basic state pension for current and future pensions. It will also mean that even in times of slow earnings growth, we will never again see a repeat of derisory increases such as the 75p rise presided over by the previous Government in 2000.

In addition to restoring the earnings link, we have taken action to ensure that the poorest pensioners do not see the increase to their basic state pension clawed back in the pension credit. This has been done by linking the minimum increase for the pension credit to the cash increase for the basic state pension this year. Therefore, from April 2011, single people on pension credit will receive an above-earnings increase to their standard minimum guarantee of £4.75, which will take their weekly income to £137.35. Of course, as you will be well aware, Madam Deputy Speaker, this is in addition to the key support for pensioners that the coalition protected in the spending review: free NHS eye tests; free NHS prescription charges; free bus passes; free TV licences for over-75s; and winter fuel payments exactly as budgeted for by the previous Government. In addition, we have reversed a planned cut—one of Labour’s many ticking time bombs that I discovered in my in-box. The previous Administration had planned to reduce the cold weather payment from the pre-election—I use that phrase deliberately—rate of £25 a week to just £8.50 a week. We took the view that despite money being tight, helping elderly people on a low income to heat their homes in winter was vital and a priority for the coalition. I can update the House by saying that we have paid slightly more than we thought—an estimated 17.2 million payments worth an estimated £430 million, which we believe is money well spent.

[Kate Green (Stretford and Urmston) (Lab)]

Naturally, elderly people will be relieved by the news about the winter fuel and cold weather payments. However, is not the Minister concerned that in the longer run the cut in funding for Warm Front will mean that those pensioners have higher fuel bills?

[Steve Webb]

The hon. Lady is absolutely right that home insulation is an important part of this: it is not just about helping people to pay their fuel bills, but about improving the insulation standards of their homes. Our colleagues at the Department of Energy and Climate Change are working on the issue and will shortly introduce proposals that will build on the energy rebate scheme, which took place in 2010, whereby low-income pensioners and others—the most vulnerable households—received direct payments. I understand that a further scheme will shortly be brought forward that will benefit exactly the people she talks about.

Despite the pressure on public expenditure, the coalition, through these orders, will spend an extra £4.3 billion in 2011-12 to ensure that people are protected against cost of living increases, and, of that, fully £3.4 billion will be spent on pensioners.

Let me move on to the second landmark change—the move to the consumer prices index. At one stage, the House thought that it might have a jolly three hours on price indices after an all-night sitting, so we are probably all relieved that we got a bit more sleep before entering this territory. The purpose of the annual uprating exercise is to ensure that the purchasing power of social security benefits is protected against inflation. We view the CPI as the most appropriate measure of price inflation for this purpose, although we would acknowledge no single index is perfect. The CPI is

“more reliable because, taking account of spending by all consumers, this consumer prices index gives a better measure than the old RPIX measure of spending patterns. It is more precise because, as in America and the euro area, it takes better account of consumers substituting cheaper for more expensive goods.”—[Official Report, 10 December 2003; Vol. 415, c. 1063.]

They are not my words, but those of the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). I could not agree more. Increases in line with the growth in the CPI maintain benefit and pension value. The CPI is the country’s headline measure of inflation, forming the target for the Bank of England’s Monetary Policy Committee. I remind the House that the legislation under which this order is made requires that we reflect the “general level of prices”.

It would be remiss of me not to thank the Leader of the Opposition for his support for our position on this issue. When Laura Kuenssberg of the BBC challenged him at a press conference on 11 January, saying,

“You’ve said time and time again that you will not oppose every cut; but four months into the job, the list of cuts that you will support remains pretty short,”

the Leader of the Opposition said:

“Let me just say on the cuts, I listed four cuts that we had not opposed, but it’s not just four cuts...from Employment Support Allowance to some of the changes to Disability Living Allowance, to the changes to the Consumer Price Index and RPI, to a range of other measures, we’re not opposing all the cuts.”

I am very grateful to him for his support.

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

Would the hon. Gentleman like to quote the Leader of the Opposition further, where he said that if there were a case to be made for shifting to the CPI, it would be a temporary move, not a permanent one?

[Steve Webb]

I am grateful to the hon. Lady. I have heard it intimated that the Opposition support using a temporary measure of inflation before using a different one in the future. I can see the politics of that, but not its coherence. The duty on my right hon. Friend the Secretary of State is to measure the general increase in price levels in an appropriate way, and it would be very odd if he were to decide one year that the CPI, with its method of calculating on a basket of goods, was the right answer, and then four years later, because there was a bit more money, that there was a different answer. That is not the legal duty on my right hon. Friend.

[Dame Anne Begg]

Will the hon. Gentleman clarify whether the move from RPI to CPI has anything to do with deficit reduction, which would be a reasonable argument as to why it might be temporary?

[Steve Webb]

The hon. Lady asks an important question. I will deal specifically with the budget deficit. However, when we looked at this issue as a new Government, we were prompted particularly by the context of a year in which the RPI had been negative. We arrived in May 2010. In April 2010, uprating had been nil for the state earnings-related pension scheme, public sector pensions and all the connected pensions. That is not because inflation for pensioners had been nil—I have never met a pensioner who thought they had negative inflation in the year to September 2009—but because that is what the RPI said. The RPI was clearly not doing its job then, and that focused our mind on whether it was the right thing. It is true that, on average, the CPI tends to be lower—not always, but generally. I have looked at the past 20 years, and in five of those the RPI has been lower than the CPI. That improves the situation in a difficult financial position; I would not pretend that it does not. However, our job is to have an appropriate, stable measure of inflation, and that is what the CPI achieves. [Interruption.] Indeed, it is much less volatile.

I sometimes think—perhaps this makes me sound a bit sad—that if the CPI were a person, it would be taking people to court for slander and libel for some of the things that have been said about it over the past few weeks and months. It is almost as if it is a stray number that we found on the back of a fag packet and decided to use to up-rate benefits. In fact, it is a careful calculation by the Office for National Statistics, with excruciating amounts of thorough methodological detail about the general increase in consumer prices. It is not the only measure, but it is an entirely decent and proper one.

I want to respond to some of the myths that have grown up about CPI, and to stress that this is not a choice between a good index and a bad index, but about trying to find the most appropriate measure for the purpose. The first argument that is made is that CPI is always lower. As I have pointed out, that is not true, although it is lower on average over the long term. People criticise the methodology that is used. I will explain what the difference is and why we think it is appropriate. Somewhat more than half the difference between RPI and CPI is to do with the way in which CPI assumes that people change their behaviour when prices change. CPI uses a substitution method, which assumes that people substitute for cheaper goods. Interestingly, the Institute for Fiscal Studies, which has looked at this issue, has said that that difference is a

“sound rationale for the switch”

that we are making today. RPI does not do that. Even the Royal Statistical Society, which has been critical of aspects of our proposals, states that RPI arguably overstates inflation as a result. I stress that we are trying to find not a high number or a low number, but an appropriate number with an appropriate method. Particularly for those on benefits, the substitution approach is important.

It is worth adding in parenthesis that people who say that RPI is the only possible way in which we can uprate pensions, because it is appropriate for pensioners, seem to be oblivious to the fact that RPI excludes the poorest fifth of pensioners from its consumption patterns. Their spending patterns are deliberately excluded in the construction of RPI. It seems odd that people are so wedded to RPI on purity grounds when it excludes the most vulnerable pensioners, about whom we should be most concerned.

The second myth is that the UK Statistics Authority does not think that CPI is a proper measure of inflation. [Interruption.] The hon. Member for Leeds West (Rachel Reeves) says that she has not said that, but I assure her that I have seen it in plenty of letters. The UK Statistics Authority oversees the Office for National Statistics, so it would be very odd if it thought that the ONS was producing dodgy figures. CPI is the headline measure and it is the target for the Bank of England, so it is hard to see how it is not a proper measure of inflation.

Thirdly, some say that the Royal Statistical Society does not like CPI. It has certainly criticised some aspects of the change, but it takes a more balanced view and sees limitations in CPI and RPI. As I have said, no single measure is perfect. The Royal Statistical Society has highlighted the issue of housing costs, and I will come on to that because it is clearly important.

The fourth thing that people say is that this is a real cut to the value of benefits. [Interruption.] The hon. Member for Glasgow East (Margaret Curran) says that it is, but it is not. What we are doing is measuring inflation in an entirely proper manner and increasing benefits—revaluing and reflating them—every year in line with inflation, measured in an appropriate way. That is what indexation is meant to do. There is no argument for saying that it is a cut when we are increasing benefits and pensions by inflation. Only a couple of nights ago, the lead story on the BBC news was “Inflation hits 4%”. Indeed, CPI inflation had hit 4%. That was the headline, that is inflation, and that is what we are uprating benefits by.

[Stephen Timms (East Ham) (Lab)]

I think that I know the answer to my question on the basis of what the Minister is saying, but I want him to confirm it. Is it the Government’s intention that the change from RPI to CPI will not be temporary, but permanent?

[Steve Webb]

Yes. For all the reasons I have been giving, we regard CPI as a more stable and appropriate measure for uprating pensions and benefits. We see no reason to change it in the future. The arguments that I am advancing, it seems to me, will stand the test of time.

There is an issue with the treatment of housing costs. One of the reasons why CPI is more appropriate than RPI for pensioners is that only 7% of pensioners have a mortgage. Mortgage interest fluctuations dominate the changes in RPI, sometimes swooping it up and sometimes swooping it down. The year in which RPI went negative, it happened because mortgage rates slumped. Not only was that of no benefit to the vast majority of pensioners; it was a penalty to the vast majority of pensioners because their savings rate fell. Just at the point when pensioners were suffering through low interest rates, RPI came along—to humanise it once again—and kicked them in the teeth and said, “Oh, inflation is falling so you don’t need a benefit rise.” I do not see how that can be right.

[Kate Green]

I am interested in the Minister’s argument for making CPI permanent. Will he comment on Lord Freud’s response to the Select Committee on Work and Pensions on the indexation of housing benefit, in which he suggested that it would be for this Parliament only?

[Steve Webb]

To be clear, my noble Friend was talking about the indexation of the housing benefit limit of the 30th percentile to CPI. We have said specifically that that will be looked at after two years, so that is a quite separate point. The fundamental point I am making is that the more one looks at the argument for using CPI for pensioners, the more powerful it gets.

There is an issue about the role of owner-occupier housing costs, as CPI includes rents and certain housing costs. The CPI advisory committee has said that the ONS should consider whether owner-occupier housing costs should be included. We are entirely open to that proposition and do not rule it out. It is interesting that the CPI advisory committee has already ruled out doing so by lumping in mortgage interest payments in the same way as in RPI. It accepts that putting that into CPI in the way it is put into RPI would not be a good way of doing it. We will obviously consider what the committee comes up with.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Government give the House a time scale in which it will consider these matters to do with CPI? Obviously, council tax also has to be taken into account.

[Steve Webb]

I am grateful to the hon. Lady for raising that point. We are, of course, driven by the Office for National Statistics, so we are not cobbling together our own index. It is undertaking careful work over the next two years. We will then look at its findings and consider whether it is appropriate to use a CPIH-type measure. We are governed by the ONS’s time scales.

I will comment briefly on benefits for people of working age. Unfortunately, last year the Government got themselves into a bit of a mess over uprating. As I have said, RPI was showing negative inflation, mainly as a result of falling mortgage interest. As a result, benefits such as additional state pensions did not increase at all. They would have done under CPI. Other benefits, mainly the disability and carers’ benefits, were the subject of what my notes call a bewildering fudge—I think that roughly sums it up. In the end, disability and carers’ benefits last year were increased by 1.5%, but on the proviso that the pre-election—sorry, that word slipped out again—increase in 2010 would be clawed back in 2011. In other words, that would have happened this year in this order. [Interruption.] The Secretary of State says that we had to decide whether to pick up the ticking time bomb of that 1.5% clawback as well.

Members will be pleased to know that the 2011 uprating order before the House today contains no such sleight of hand. It is based on the straightforward proposition that, aside from increases in the basic pension and pension credit that have already been explained, the other mainstream social security benefits and statutory payments will increase by 3.1%, in line with the annual growth in RPI. There will be no attempt to recoup the value of the 1.5% fudge that we inherited from the previous Government.[Official Report, 7 March 2011, Vol. 524, c. 3MC.]

Finally, I will touch on occupational pensions. Such pensions are not directly the subject of the orders. The changes that relate to the revaluation and indexation of most occupational pensions were the subject of the revaluation order that was tabled before Christmas. However, because of the close link in all pensions matters—everything is connected to everything else—I ought to say a word about this matter. CPI is being used for all social security benefits and additional state pensions, and through statutory linkage, CPI applies to public sector pensions. We had to decide what to do for private sector pensions. I stress that the role of Government is to set the floor for increases to private sector pensions and we had to make a judgment on that. We took the view that the Secretary of State could not decide that inflation was CPI for things that we pay out, but RPI for things that other people pay out. As far as we are concerned, inflation is inflation and we have to be consistent. CPI is therefore the right floor for occupational pensions. However, I stress the word “floor”. Schemes are entirely at liberty to make more generous increases if they wish. This statutory requirement increases only in respect of service after 1997, whereas some schemes index service before that.

[Dame Anne Begg]

Will the Minister quantify the number of private occupational pensions that will not adopt the floor? When the initial announcement was made, the impression was that all private occupational pensions would move to CPI rather than use RPI. I understand a number of them have RPI in their schemes and therefore will not move to the new index. Can the Minister say anything about the volume of such occupational pensions?

[Steve Webb]

When we produced the initial impact assessment on the changes, we divided schemes into four groups according to whether they revalued by RPI or CPI and whether they indexed by RPI or CPI. We found that a good deal of revaluation was done in terms of the revaluation order and hence would go to CPI, but that a lot of the indexation was in terms of RPI. We have gone out into the field and talked to those administrating schemes, and we are revising our estimates of the proportion that will respond to this change.

The hon. Lady brings me on to the point that I wanted to make: some schemes have RPI hard-wired—for want of a better phrase—into them. We faced the difficult decision of whether to override that and put CPI in or whether to say, “Rules are rules, scheme promises are scheme promises,” and keep it how it was. We announced at the start of December that we felt that people’s confidence in pensions is important, and therefore that we would not override scheme rules. If someone has joined a private sector occupational scheme that has RPI in the scheme rules, we will not override it. Obviously, each scheme will make its own decision on how to respond if they have the flexibility to do so, but many schemes do not have that, and therefore will not make the change. We will publish updated estimates of the proportions.

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

I apologise to the Minister and to you, Madam Deputy Speaker, for coming in late to the Chamber.

Will that also apply to the public sector schemes, because I have had a number of letters about those? Will the Minister clarify that matter for me?

[Steve Webb]

I am grateful to the hon. Gentleman for that point, because there is a difference between public and private schemes. The latter very often have the words “retail prices index” or “in line with statutory provisions” in their rules. The rules of public sector pensions did not have the words “retail prices index” in them; statutorily, they simply link to whatever the Government of the day do with state earnings-related pension schemes. Whatever amount or percentage SERPS went up by has always been the legal entitlement for members of public sector schemes, and we have not changed that or the law on it. Obviously, we are defining inflation differently, but the legal entitlement of members of public sector schemes was always whatever happened to SERPS, and we have not changed that.

[Albert Owen (Ynys Môn) (Lab)]

The Minister is giving the House a very thorough outline of his plans, but does he acknowledge that the people he just mentioned—many thousands of them, and those on deferred pensions—will lose out considerably because of the change brought about by the order?

[Steve Webb]

It is important for the people who have contacted the hon. Member for Coventry South (Mr Cunningham) to remember that we are changing two things. We are changing, first, the indexation of the basic state pension that they will receive, and, secondly, the indexation of SERPS and therefore public sector pensions. Overall, most pensioners, and particularly those on lower incomes, will benefit net from the two changes taken together. In other words, although earnings are depressed at the moment, in the long term the earnings link is a substantial boost. The CPI change on average means about 0.8% or 0.9% less over the long run, and the earnings link means close to 2% extra, so people with very large private or public sector pensions will lose net, but people with smaller pensions—the people who are most worried about the changes—will probably gain net. I am grateful to the hon. Member for Ynys Môn (Albert Owen) for raising that point.

[Albert Owen]

Can the Minister say how many people he is talking about? No one has written to me to say that they will benefit from the change, but considerable numbers of people have said that they will lose. I realise that that is the nature of the beast, but has the Minister done any impact assessment?

[Steve Webb]

People often miss one important point. The numbers on pensions in payment are in a sense straightforward, because we know the level of the state pension and the average pension in payment. To give the hon. Gentleman a flavour, the average occupational pension in payment is £70 a week, and the basic state pension is of the order of £100 a week. If we give an extra 2% on the £100 and take 0.8% off the £70, it is clear that people in that typical situation will be better off. Those are long-term changes, so there will be a big cumulative effect for someone who is 25. Of course, they do not see the boost to the state pension—they do not see that, in 40 years’ time, 40 years’ worth of earnings link will be embodied in their state pension. It is very hard to project that, which is why those people do not see it. Overall, I am confident that large numbers of pensioners will be net beneficiaries of the change.

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

I am grateful to the Minister for clarifying the situation on SERPS. Will he confirm that the previous Government did not uprate SERPS in 2010?

[Steve Webb]

My hon. Friend is quite right. One of my first tasks as a Minister was quite strange. I had to write ministerial letters to say why we the Government—meaning my predecessors—had frozen people’s SERPS pensions, which was precisely because the RPI was negative, yet inflation was not.

[Katy Clark (North Ayrshire and Arran) (Lab)]

When the Chancellor announced the change in his emergency Budget last June, he said that it would save more than £6 billion a year by the end of this Parliament. If that is true, it must surely mean that individuals will be worse off.

[Steve Webb]

Just to be clear, my right hon. Friend the Chancellor was talking about the CPI indexation of all social security benefits, not just pensions. Clearly, compared with previous plans, benefits for people of working age will generally increase by less over the Parliament, which will lead to significant savings. I should mention therefore in passing that any political party that went into the election promising to reverse that would also have to indicate where many billions of pounds would come from over the course of a Parliament. However, specifically for pensioners, the earnings link in the long-term is much more generous than the reduction from the CPI change.

[Stephen Timms]

The Minister says that the order enshrines the earnings link. Is there a reference in the text to earnings uprating? I could not find it, but if there is one, where is it?

[Steve Webb]

No. This is the first set of upratings to which we have applied the triple lock. Indeed, we have gone further, and said that because RPI was built into the spending plans, we did not want to go lower than that, so there is an RPI increase of 4.6% this April. When we reintroduced the earnings link last summer, we did not know what the earnings figures would be, but had earnings been higher than any of those figures, we would have used it.

I ought to move on, because many hon. Members want to contribute to the debate. To conclude on occupational pensions, we have not overridden scheme rules. As the Chair of the Work and Pensions Committee pointed out, many people will still get RPI, if that is what the scheme rules say, but those that are free to link to CPI may do so. We will report shortly on our research on the balance between different schemes.

The approach adopted in the uprating order seeks to strike a fair balance between the interests of benefit recipients and pensioners, and the burden placed on the taxpayers of the UK, who often end up footing the bill. Despite the fact that the nation’s finances remain under severe pressure, this Government will spend an extra £4.3 billion in 2011-12 to ensure that people are protected against cost-of-living increases.

We have restored the link between earnings and the basic pension and confirmed that most people on pension credit will benefit from the cash increase enjoyed by those on the state pension. The move to CPI for the uprating of the majority of other pensions and benefits will result in an uplift of 3.1% from April, and sets the future of uprating on a more appropriate, consistent and stable basis that is fair to individuals and fair to the taxpayer. Through this package of uprating, I have outlined our firm commitment to ensure that no one is left behind, and I commend the order to the House.

14:06

[Stephen Timms (East Ham) (Lab)]

It is a happy coincidence that we are debating the order on the same day as the publication of the Welfare Reform Bill, and I am pleased to see the Secretary of State in the Chamber. I welcome the opportunity to make some observations on the Bill—of course, only in so far as they impinge on matters in the order.

However, I want first to respond to some of the Minister’s remarks. The truth is that the two orders signal the start of an ideological move from the use of RPI to CPI as the measure of inflation for uprating benefits, including pensions. The Minister told us that this is the first outing for the much-vaunted triple lock, but actually, in their first effort, the Government have had to override the triple lock. Had they not done so, they would have been rightly criticised for a very low increase to the basic state pension.

The Minister set out in some detail and at some length why it is right to use CPI rather than RPI, but the order uses RPI and not CPI. If he is so persuaded by his arguments on why CPI is the right measure to use, why has he used RPI in the order? The argument that he has put to the House is holed below the water line by the fact that he clearly does not believe it, because on this occasion, he has used RPI.

My hon. Friend the Member for Aberdeen South (Dame Anne Begg), the Chair of the Work and Pensions Committee, rightly asked whether the measure is to do with reducing the deficit. Of course, both the Government and the Opposition agree that we need to cut the budget deficit, even if we take very different views on the speed at which that ought to be done, but we should be clear from the outset that the orders, despite what the Government will tell us fundamentally about deficit reduction, are part of a wider quest. Changing permanently from RPI to CPI, other than in this year, and keeping things that way even after the deficit is long gone, is plainly not a deficit reduction measure—it is ideologically driven, and the Opposition do not support it.

As my hon. Friend the Member for Aberdeen South hinted in her intervention, there would be a case for a time-limited change ensuring that benefits do not fall behind earnings in the next few years. That might well be a fairer alternative to deep cuts in departmental expenditure. Were that on the table, it would be an argument that we would be willing to discuss, and we would work with the Government to consider it. However, that is not the proposal. As the Minister rightly made clear, the Government want a permanent change, with entitlement and pensions continuing to be reduced every year relative to RPI, saving money for the Government even long after the deficit has been eliminated. We will be making our position on that very clear as we go through these debates, and as we seek to amend the Pensions Bill, when the same matter is raised.

[Mike Freer (Finchley and Golders Green) (Con)]

If the right hon. Gentleman looks at the local authority pension schemes here in London, he will see that there is only 75% or 80% viability on future liabilities. A lot of the contribution rates and the inflation from RPI to CPI are about balancing the books for future pensioners, not deficit reduction.

[Stephen Timms]

I was familiar with the call often made when I was in the Minister’s office to release occupational funds from the constraints under which they had long operated, and RPI uprating was one of them. However, the question that has to be asked is whether it is right to change the rules at this stage, effectively to undermine the accrued rights that people have always believed they would benefit from in retirement, and to shift the goalposts. I will come to that very point in a moment. However, I suggest to the hon. Gentleman that this change raises a very serious question about fairness.

Of course, we need to get the economy back on track, but that will take some time. The coalition is doing it too fast. Why do they want pensioners, the armed forces and those on the lowest incomes and least able to bear the burden to continue to lose out even long after the deficit has gone? On average, RPI is between 0.5% and 0.75% higher than CPI, as the Minister pointed out, so in any given year, benefits linked to CPI will give people a lower income by that amount. The CPI for the year to September 2010 is 3.1%, and the RPI figure is 4.6%. At 1.5%, that is a very big percentage point difference. The Minister has decided, perhaps because of the scale of that difference, to use RPI and overrule his triple lock in its first year. However, if the Government intend, as they clearly do, to make CPI indexation permanent and apply that across the pension system, experts estimate that it could cost pensioners 15% of the income that they expect in retirement.

[Jane Ellison (Battersea) (Con)]

We are weeks away from the point when the Opposition, had they won the election, would have commenced their own deficit reduction plan. Given the enormous sum that the welfare bill represents within the public finances, it is inconceivable that the right hon. Gentleman could intend to go through this debate without addressing some serious long-term issues regarding his own policy on deficit reduction.

[Stephen Timms]

I am grateful to the hon. Lady, because that is exactly the point that I have been making. If this was about deficit reduction, there would be a worthwhile point to debate. However, the Government are saying that they want this change to be permanent and lower uprating to be a feature of the pensions and benefit system not just while we are reducing the deficit—I agree with her that there would be an argument for doing it during that period—but long after and into the indefinite future.

[Jane Ellison]

In part, Government Members are talking about addressing the much longer term problems that this country faces, of structural deficits building up and having to be addressed. The right hon. Gentleman has only to look around the world, at the problems in California and all sorts of places where enormous long-term structural problems have built up, particularly in relation to pensions. It is inconceivable that he cannot take a long-term view on this issue.

[Stephen Timms]

The hon. Lady makes an interesting argument. I have to say, however, that before the election I did not hear from her and her hon. Friends the argument that the structural deficit required a reduction in the incomes of the least well-off people in the land. That is the implication of what she is putting to the House. The real key to reducing the deficit is to secure new growth, new investment and new jobs in the economy. As we saw yesterday in the new unemployment figures, however, that is what the Government’s policies are signally failing to produce.

[Mike Freer]

The problem is that for public sector pensions, the fund can meet only 75% or 80% of future liabilities. If we do not reduce the indexation to reduce that drain on future liabilities, we will have to increase contribution rates. Which would the right hon. Gentleman do?

[Stephen Timms]

My point is that people who have been contributing to those schemes throughout their working lives have done so on the basis of a promise, but the Government are now saying that that promise should be torn up, perhaps just a few months before somebody retires. Is that fair? As I am sure that we will hear in this debate, a lot of people feel that it is deeply unfair—and we can all understand why they take that view.

Lord Hutton’s report on public sector occupational pensions pointed out:

“This change in the indexation measure”—

from RPI to CPI—

“may have reduced the value of benefits to scheme members by around 15 per cent on average. When this change is combined with other reforms to date across the major schemes the value to current members of reformed schemes with CPI indexation is, on average, around 25 per cent less than the pre-reform schemes with RPI indexation.”

Even the Minister’s own Department, in numbers slipped out at the end of last week, estimated a fall of £83 billion in the value of occupational pensions over the next 15 years as a result. For the 2 million members of defined benefit schemes, that is broadly the same as a pay cut, on average, of between £2,250 and £2,500 a year.

The figure of £83 billion has gone up by more than 8% since the Department last calculated it in December. We ought to know why the Department got their figures so wrong last time round. My worry is that the Department does not really know what the impact of this ill-thought-through measure will be in reality. I ask the Minister, therefore, whether he can assure us that this—in itself alarming—estimate of the scale of the loss to defined benefit pension scheme members will not be revised any further.

[Rehman Chishti]

Am I right in thinking that the shadow Minister was a Treasury Minister in the previous Government? If so, will he clarify the fact that when the coalition Government came into office last May, we inherited the worst financial deficit of the G20 and the worst structural deficit of the G7 countries, and that that is why we have to make some tough decisions?

[Stephen Timms]

I was indeed a Treasury Minister—on four separate occasions. We managed the global economic crisis with great skill, to the extent that the increase in unemployment, which was widely anticipated before the crisis hit, did not happen. Under the previous Government there was about half the unemployment and half the home repossessions that we experienced in the recession of the early 1990s. I was indeed a Minister at the Treasury when those successes were being achieved.

[Rehman Chishti]

The shadow Minister talks about unemployment and the previous Government’s actions. Is that why my constituency of Gillingham had 30% unemployment for 18 to 24-year-olds in 2006? The figure for youth unemployment remained at 30% in 2007 and 2009, and was the same in 2010 before we came into government. Will the right hon. Gentleman apologise to my constituents for that record?

[Stephen Timms]

I agree with the hon. Gentleman about the damaging impact of youth unemployment, and I hope that he shares my deep regret that it has increased again. It is now the highest that it has been since comparable figures began to be compiled nearly 20 years ago. The highest figure ever recorded was published in the statistics yesterday. I certainly take the view that the Government need to do more to reduce that figure.

The estimate of a hit of £83 billion on defined pension schemes makes it clear that long after the deficit is gone, the Government will be keeping pensioners out of pocket. I fear that the order is the start of a move that will mean that millions of pensioners and other benefit claimants experience a fall in the value of their benefits every year, relative to RPI. If the Government had simply applied the much-vaunted triple lock this year, the basic state pension would be uprated next year far below the RPI level that the previous system would have delivered. That is the problem with the Government’s proposition.

That is not the only Government measure to hit pensioners. The Minister proudly and fairly read out a list of excellent things that the previous Government did for pensioners, which the present Government will not abolish. I am glad that they will not. However, they have increased VAT, which means that pensioner couples will be £275 a year worse off, and single pensioners £125 a year worse off.

The Pensions Bill means that some women approaching retirement will have their state pension delayed by up to two years, with very little time to prepare. That will mean a loss of up to £10,000 in basic state pension, and up to £15,000 for those who would have qualified for pension credit.

My hon. Friend the Member for Leeds West (Rachel Reeves) asked the Minister previously about an individual’s accrued rights, and I referred to that in response to an earlier intervention. Let me press the Minister again on the same subject. Why has he made such an abrupt U-turn? Before the election, he said:

“We are very clear that all accrued rights should be honoured: a pension promise made should be a pension promise kept. Therefore we would not make any changes to pension rights that have already been built up. I have confirmed that I regard accrued index-linked rights as protected.”

I am sure that the Minister would agree that all those who contracted out—all those in the local government scheme that was mentioned a few minutes ago—did so on the basis that RPI would be used for uprating. On the basis of what the Minister said before the election, those rights should also be protected. They are not; they are being explicitly downgraded in the Government’s proposals.

[Mr Robert Syms (Poole) (Con)]

I am listening carefully to the right hon. Gentleman. Can we be clear about the Labour party’s position? Do you oppose the CPI? Do you oppose it just for this year—or are you in favour this year and next year, but want to go back to the RPI in a future year?

[Stephen Timms]

There is a persuasive case for making a change to CPI uprating for a period of time while we are tackling the deficit. However, I do not agree that that should be a permanent change. That aspect of the Government’s proposal is very damaging.

[Jane Ellison]

Does that mean that in the Labour manifesto for the next general election, the Labour party will commit itself to reverting to RPI?

[Stephen Timms]

The whole country eagerly awaits the next Labour party manifesto, but I must urge the hon. Lady to be patient on that front.

We welcome the 4.6% increase in the basic state pension this year, for which the order provides, in line with RPI for next year, not the triple lock or the lower CPI. But this is something of a smokescreen to cover up the true nature of the Government’s intentions, which we have been able to smoke out a little in this debate.

Why does the Minister think that CPI would be a better measure of inflation for pensioners than RPI? I am yet to be convinced of that. For pensioners and low-income families, a strong argument can be made that average inflation is more than either RPI or CPI, because of fuel and food. That point was certainly made in the representations that many of us will have received in recent weeks. In opening the debate, the Minister mentioned the views of the Royal Statistical Society. In its letter to my hon. Friend the Member for Leeds West, it said:

“while the consumer price index (CPI) is acceptable for macroeconomic purposes and for international comparisons within the EU we do not believe its coverage is generally appropriate for inflation compensation purposes”.

That looks like a strong criticism by the society.

[Guy Opperman (Hexham) (Con)]

When answering the question asked by my hon. Friend the Member for Poole (Mr Syms), you said you would—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. All hon. Members are doing this, not just the hon. Gentleman. When addressing the shadow Minister, if they refer to him as “the right hon. Gentleman”, we will not have the problem of whether the Chair is planning the election manifestos of all the political parties for the next election.

[Guy Opperman]

The right hon. Gentleman mentioned “a period of time”. How long would that be?

[Stephen Timms]

If that were the proposition, we would be happy to debate it and consider it, and perhaps work with the Government on it. Sadly, that proposition has not been made. The proposition before the House is that the change should be made for ever, and that is what I object to. It is not just me: the Civil Service Pensioners Alliance—

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I had not planned to intervene, but I wanted to tease out the right hon. Gentleman’s meaning. He is being a little disingenuous, so I invite him to be a little clearer. He knows that commitments are made for a Parliament, at most, and that if there were to be a change of power, the next Government could do whatever they want. He talks about “for ever”, but decisions can be made at the next election. Can we tempt him to say on behalf of his party that during the lifetime of this Parliament—or perhaps for one year or two years—it supports the change to CPI? Or is he saying that his party utterly detests the change and will not support it?

[Stephen Timms]

The Secretary of State is putting a different gloss on this from the one that the Pensions Minister put on it. I asked the Minister directly whether this change was intended to be permanent, and he confirmed that. The Secretary of State suggests that it would be only for this Parliament—[Interruption.] Well, I am anxious to establish the Government’s position. We have had two contradictory positions set out now—

[Mr Duncan Smith]

The right hon. Gentleman may have failed to understand my point. The Opposition are not in government, by definition, and they have to decide what they will do in this Parliament. What is his position in this Parliament? We have said that the change is permanent. Do they support that for this Parliament or not? Do they support it for a year, two years, three years or four years? What is their position on CPI? All we need to know is whether they support it for this Parliament.

[Stephen Timms]

Well, the Secretary of State has shifted back a little way towards the Minister by suggesting that the Government view the change as permanent. As for the view of my party, I simply refer the Secretary of State to what the leader of my party has said, which is that the suggestion that the change should be made for a period—perhaps up to three years—would be something that we could consider. If that proposition were on the table, we would be happy to consider it. But sadly it is not. As we have heard from the Minister—and as I think the Secretary of State has now reluctantly confirmed—the Government’s intention is that this arrangement should be permanent. That is what I strongly object to.

I was just about to refer to what the Civil Service Pensioners Alliance said. It

“firmly”

rejects

“the assertion that the CPI is a ‘better’ measure of inflation for pensioners.”

It urges the Government

“to take account of the advice of their own statisticians before embarking upon a change which will adversely affect the incomes of pensioners for the rest of their lives and not just for the term of the current financial crisis.”

Age UK has made a similar point.

All the main public service schemes are contracted out of the additional state pension. Of course, in the current climate we need restraint over public sector pay and pensions, but one group that the proposed permanent change will hit particularly hard is those who serve in the armed forces and their dependants, who rely on their pensions at an earlier age than almost anyone else. A permanent switch would, as I understand it, mean that somebody who had perhaps lost both legs in a bomb blast in Afghanistan could miss out on half a million pounds in benefit and benefit-related payments over the rest of their life. War widows, too, will lose out severely. For instance, if this change were made permanent, the 34-year-old wife of a staff sergeant killed in Afghanistan would be almost three quarters of a million pounds worse off over her lifetime.

If Ministers are going to pursue this policy, they need to explain why those serving in Afghanistan—already in some cases, as we have heard in the last few days, facing redundancy of which they were informed by e-mail—should see their pensions reduced for the rest of their lives compared with the expectations that they have had until now, and why—

[Steve Webb]

The right hon. Gentleman has raised a serious point. I think both sides of the House would be united in our respect and admiration for our forces and our forces veterans, but surely the issue is that we pay decent forces pensions, not that we choose to measure inflation in a particular way. Those are two quite separate issues. There is the adequacy of forces pensions and there is the proper measurement of inflation, but to conflate the two seems confusing.

[Stephen Timms]

In opening the debate the Minister accepted that in 15 years out of 20, CPI uprating is less than RPI uprating. My point is that those serving in Afghanistan have been contributing to their pensions on the understanding that their pensions, when in payment, would be uprated in line with RPI. Now the Government are saying, “No, they won’t; they’ll be uprated by a smaller amount,” and that is a very worrying development. In view of the sympathy that the Minister has expressed for people in that position, the Government must give further thought to this matter—why war widows, who have had the person most special to them taken away, deserve to have the support that they would otherwise have been able to depend on cut as well.

[John McDonnell (Hayes and Harlington) (Lab)]

May I, through my right hon. Friend, give the Minister an opportunity to respond to a question? Is it not clear that as we identify anomalies like this—and they are bound to arise—it is important for the Government to introduce corrective measures fairly quickly?

[Stephen Timms]

Yes, there are some serious problems here, and I hope we will hear responses to them. I pay tribute to my hon. Friend for the work that he has done on this subject, and I hope that the Government will think again.

The Welfare Reform Bill, which was published this morning, touches on a number of the points that the Social Security Benefits Up-rating Order also touches on. One of the Government’s original proposals, which Opposition Members strongly opposed, was to cut housing benefit by 10% for people in receipt of jobseeker’s allowance for one year. We were all absolutely delighted this morning to hear the Secretary of State say that the Government have reconsidered their position and will not implement that draconian cut. We understand from newspaper reports that the change was brought about as a result of pressure from the leader of the Pensions Minister’s party. The Minister himself may well have had a hand in bringing about that change. If so, I—and many of us—would want to join in congratulating him on his success against the views of the members of the other coalition party, particularly, perhaps, the views of those serving in the Treasury.

As the Minister is on a bit of roll, may I suggest that he go further in changing the Government’s proposals? Under the existing system, most out-of-work benefits are subject to savings limits—currently £16,000, but the Government intend to extend that threshold to in-work benefits as part of the universal credit, and I notice that that threshold is not uprated in the order before us. Under the proposed limit, in future anyone in work who would be entitled to tax credits but has savings of more than £6,000 will have their payment reduced. Those who have savings of more than £16,000 will lose their entitlement to tax credits altogether.

According to calculations by the Social Market Foundation, 400,000 families with children, who are now in receipt of tax credits, would be punished for having £16,000 in the bank by losing all their tax credits. For example, anyone saving up for a deposit to buy a home would suddenly find that they had lost all their tax credits as a punishment for having £16,000 in the bank. Such families would have been doing the right thing, working and saving their money, perhaps to put down a deposit on a house. For many such families, putting down a deposit will be made not only difficult but impossible. The Opposition cannot possibly support the proposed change, and I cannot imagine that many Government Members would want to see such an extraordinary assault on family savings either. I hope that we shall see another initiative by Liberal Democrat Ministers—we saw the benefits of such an initiative this morning—to persuade the Government to abandon that policy as well.

I hope the Government will also scrap the proposal to remove eligibility for the mobility component of disability living allowance for those in residential care. The order does uprate disability living allowance, and my hon. Friend the Member for Glasgow East (Margaret Curran), who is on the Front Bench today, has been making powerful arguments to the Government about the iniquity of removing that benefit from people simply because they are in residential care. I hope the Government will think again about that, and I am delighted that the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), who is responsible for that part of the policy, is on the Government Front Bench today.

The Government are signalling today that they intend a permanent shift from RPI to CPI as the inflation measure for uprating benefits and pensions. The Opposition do not support that. It is not right to continue to reduce the incomes of pensioners, widows and those on low incomes long after the deficit has gone. [Interruption.] From a sedentary position, the Minister says that we will not vote against the order, but that is because it uprates the basic state pension next year by RPI. Therefore, it does not do what the Government have told us they want to do in perpetuity. The order overrides the policy that he set out today, and no Labour Member would object to uprating the basic state pension by RPI, as that was always the practice under the previous Government—and quite right, too. As the Minister rightly pointed out, pension credit, which has done an enormous amount to reduce pensioner poverty in the UK since its introduction, will also be uprated accordingly, and we support that as well.

[Jane Ellison]

As the right hon. Gentleman has opened up the debate about other welfare payments, I shall have one more go at my question before he concludes his remarks. Given the scale of the welfare bill and the fact that we are weeks away from when the Opposition’s deficit reduction plan would have commenced, will he please comment on how he would reduce that bill if he were running affairs?

[Stephen Timms]

On a number of occasions during the debate I have made the point that there is a case for temporary lower uprating to contribute to reducing the deficit. My objection is to the permanent character of what is being proposed, and I hope the House will not support it.

The order does not uprate the basic state pension by CPI or by the triple lock; it overrides that, and increases the payment by RPI. I do not expect Labour Members to object to that, but the move to commit to CPI uprating and to make the change permanent, not just while the deficit is being reduced but in perpetuity, is what we object to, and we will be working hard in the months ahead to try to persuade the Government that their policy on that is wrong.

14:39

[Jenny Willott (Cardiff Central) (LD)]

Like the right hon. Member for East Ham (Stephen Timms), I refer to the Welfare Reform Bill, although we are debating the uprating orders. With the introduction of the universal credit when the Bill becomes law, the complicated changes that we are processing in these orders will become a thing of the past, which I think we welcome on both sides of the House. It will be much simpler for people to understand their entitlement to benefits, and there will be a much better deal for many people who are in receipt of working-age benefits.

[Rachel Reeves (Leeds West) (Lab)]

The hon. Lady says that we will not debate uprating in the future, but because the Government have reneged on the universal pension, we shall be debating uprating for pensions every year.

[Jenny Willott]

I shall clarify my remarks in case anyone misunderstood me. I said that we will not be debating complicated uprating changes every year. Clearly, there will still be a debate every year, I assume, on the uprating of benefits; I should hate to think they will be frozen in future. I shall talk about pensions later in my remarks.

According to the Institute for Fiscal Studies, the universal credit will mean that 2.5 million families will be better off. They will get more money, which will in time help to reduce the total benefit bill by making it more worthwhile for people to get work and remain in work and off benefits. That should generate support on both sides of the House, as it is something we all want families to do.

As well as an improvement in prospects for those on working-age benefits, as the Minister said, this morning the Government introduced changes that will make a significant difference to pensioner incomes. The level of pensioner poverty in the UK is a complete disgrace in a civilised country. During the shadow Minister’s remarks, it slightly got me that he seemed to criticise the Government for not sticking to the CPI increase for pensions and going for a larger increase in pensions this year. In 2000, the previous Government were happy to see an increase of only 75p in the state pension, which most of us found stingy, measly and completely unforgiveable. At least, this Government are tackling pensioner poverty and are willing to do something serious about it.

Labour’s efforts to lift older members of society out of poverty resulted in a massively complicated, overly bureaucratic system based on means-tested benefits that has left 2 million pensioners still living below the poverty line. Clearly there is something wrong with the current system, so I am delighted that real progress is being made to safeguard the value of the basic state pension. Current pensioners will now be protected by the triple lock, which is welcome. I am delighted that a Liberal Democrat manifesto commitment is being implemented by the Liberal Democrats in government. What we promised we have delivered, and the state pension will increase by earnings, 2.5% or CPI, whichever is greatest. People over the age of retirement will have the protection they deserve. As the Minister said, the amount can be quite significant. We are talking about £15,000 over a person’s lifetime, which will make a significant difference for a large number of pensioners and will, I hope, have an impact on pensioner poverty.

I am glad to see that change. However, I believe that we are still building up problems for future generations of pensioners. Current pensioners’ circumstances will improve significantly, but the ticking pension’s time bomb was not tackled by the Labour Government or by previous Governments. I would like the current Government to take the bull by the horns and ensure that we do not end up with a problem in decades to come. Far too many people are not saving for retirement. Auto-enrolment will help in that regard, but people need to know that it will pay to save. We must reduce the amount of means-testing to ensure that people know that, if they save while they are working, it will benefit them in retirement.

We have an uncertain jobs market. There are no more jobs for life. Occupational pension schemes are closing at a terrifying rate. Many occupational schemes are defined-contribution, rather than defined-benefit, and far less generous. Even with the triple lock, problems will increase. I would be grateful if the Minister told us what the Government plan to do in the long term to tackle the time bomb. The triple lock will make a significant difference, but we need to look at the whole pension system to ensure that we reform it in decades to come so that it is more appropriate to the needs of society.

Clearly, a big issue is the move from RPI to CPI. I understand why people are concerned about that, but I say to pensioners who are worried about the impact on their basic state pensions that they will be protected by the triple lock. As the Minister made clear, the majority of people on public sector pensions will be protected from a potential reduction in their long-term benefits by the triple lock on the state pension, so they will end up better off in the long term. The impact on people will not be as great as many Opposition Members have said it will be.

I can see that benefits come with the change to CPI. It is more stable. It means that we will not face issues such as the one that arose last year when benefits were frozen, which caused significant hardship for many millions of people. CPI is also a more appropriate system as 70% of pensioners own their homes outright. As the Minister said, there is a negative impact for those pensioners as the rate of mortgage interest is taken into account under RPI. They do not benefit in any way from the massive fluctuations that that can generate in their pension increase.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

One of the big concerns is that the Royal Statistical Society has said that the CPI is not a good measure for pension inflation. The differential impact of that measure is causing many Opposition Members concern.

[Jenny Willott]

I thank the hon. Lady for her comment. The issue is likely to be taken up by the Minister in his summing-up because, from his comments from a sedentary position, he seemed to disagree with similar comments by the shadow Minister. I do not have a copy of the whole quote in front of me, but I am sure that he will be able to fill the House in on that and respond to her question later.

[Kate Green]

Does the hon. Lady accept that CPI is not a good measure for most working-age households precisely because of its exclusion of housing costs?

[Jenny Willott]

As I understand the way in which that relates to working-age households, people who are on benefits are much more likely to be living in social housing and so will not face large fluctuations in mortgage costs. For those of working age who are on benefits and do have mortgage costs, there is a lot of assistance from the state. They are not bearing the full brunt of mortgage interest fluctuations because a lot of that is borne by the state. Therefore, I believe that CPI relates appropriately to that group, too.

The financial implications, over this Parliament and beyond, for the Government of the difference between CPI and RPI have been discussed a lot today. We are in very difficult financial circumstances and the Government have had to make some extremely difficult financial decisions. The Minister has laid out why the Government believe that CPI is the right measure to use, but the financial benefits of that for the Government coffers are significant. By introducing the triple lock, the Government are protecting the most vulnerable pensioners. The people potentially most penalised are being protected, while the amount of money saved is quite significant and will help the economy to grow in future.

The shadow Minister, the right hon. Member for East Ham (Stephen Timms), eventually made it clear that the Opposition will not vote against the orders and will support the changes and the uprating, which seems to suggest that they understand the logic and agree with the overall decision. Whether it be for the moment, for three years or until the next Parliament, I am not entirely sure, but it is good to see it when occasionally agreement breaks out across the House. It is also good and quite a novelty to see Labour Members finally supporting measures that will save the Treasury some money. If they plan to return to RPI in the future, I look forward to seeing how they plan to find the billions of pounds that will be necessary to implement it.

I congratulate the Government on introducing the triple lock for pensioners, which is a significant step forward. It is also pleasing for me as a Liberal Democrat to see a manifesto commitment implemented.

[Hywel Williams (Arfon) (PC)]

The hon. Lady is generous. She has mentioned the triple lock many times. Is she at all concerned about the ratcheting effect of implementing it, which has been a consideration in the past?

[Jenny Willott]

I would have thought that being too generous to pensioners was a good thing.

[Hywel Williams]

I am unconcerned about it being too generous. When the ratcheting effect was considered in the ’80s, when Barbara Castle presented her proposals for pensioners, I was supportive of her, but concern was expressed in the House at the time.

[Jenny Willott]

Like the hon. Gentleman, I was not a Member of Parliament at the time, but I would have expressed my disagreement with those views. Pensioners are among those in society with the lowest incomes, so they are most in need of protection. Anything that prevents them from falling even further behind, as they have over the past few decades, is a good thing. Since the link to earnings was taken away under the previous Conservative Government, pensioners’ incomes have fallen significantly behind. Pensioner poverty is still at a disgraceful rate. I am glad to see measures being put in place today that will start to tackle that problem and stop pensioners falling further behind the rest of society.

[Sheila Gilmore]

Does the hon. Lady not accept that pensioner poverty was substantially tackled by the Labour Government, as pensioners were among 1 million people lifted out of poverty by their policies?

[Jenny Willott]

I absolutely accept that the previous Labour Government tried to tackle pensioner poverty by introducing pension credit, guarantee credit and so forth. However, the system they introduced has had a number of unintended consequences. It was so complicated that millions, or at least hundreds of thousands, of pensioners did not apply for the benefits to which they are entitled. The system is so degrading and complicated that they do not receive the benefits due to them. These are people living below the poverty line who are among the most vulnerable in our society.

Another unintended consequence of the system is that when people are working, they do not know whether they will end up better off when they retire. The system acts as a disincentive for people on low incomes to save. With auto-enrolment into pension schemes, I would like to see the means-testing taken out of the system so that people know that every penny they save when they are working and earning low incomes will benefit them in retirement. That is preferable to ending up being trapped, as a number of people are, in the pocket between those able to get means-tested benefits and those who are not. Although a lot was done under the Labour Government, the unintended consequences have, I feel, been quite damaging as well. The Office for National Statistics says that more than 2 million pensioners live in poverty; for me, that is far too many and I would like to see the problem tackled further.

[Sheila Gilmore]

Do I take it from the hon. Lady that she would support the raising of the basic state pension to the level of pension credit for everyone? Does she accept the consequential decisions that we would have to take as a society about the level of taxation appropriate to support such a change?

[Jenny Willott]

As the hon. Lady might well be aware, as a Liberal Democrat I stood on a manifesto that said we would like to introduce a citizen’s pension, which would result in the basic state pension being lifted to the level of pension credit so that everyone who was retired would be living on a decent pension above, or at, the poverty line, rather than people having to go through the demeaning process of applying to the Government to lift their income above the poverty line. That would also remove the disincentive to save. Perhaps the Minister will say in his summation whether he agrees with me that we should introduce such a citizen’s pension.

Given that the Welfare Reform Bill was launched yesterday with proposals to update significantly the system of working-age benefits, will the Minister tell us what the Government will do to update the old-fashioned and outdated system of benefits that go to those of pension age? We seem at present to be able to think imaginatively about changes to benefits and state support, so I hope the Minister will tell us a bit more about what vision the Government might have for older members of our society.

14:56

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

It is nice to see such a large crowd of Members in the Chamber for this debate. I have attended benefits uprating debates for a number of years, and there are usually three people, possibly including one who really likes statistics, sitting somewhere on the Back Benches. As the Minister has suggested, the greater attendance this afternoon is probably a result of the fact that the entire basic indexation of the benefit system is about to change from RPI to CPI.

Benefits uprating orders are all or nothing orders; we cannot pick and choose what we want to be in them. There are bits that Labour Members are not particularly happy about, but we are happy with other bits, and if these orders do not get passed today no uprating will take place, which is the dilemma facing those of us who have concerns, particularly about the move from RPI to CPI for public sector pensions. I think I can speak on behalf of my party colleagues in saying that we will not vote against the motion, but neither will we necessarily vote for it. If the order does not pass, nobody gets anything, and we would not want that to happen.

The Minister is a very clever man, and I found his analysis fascinating. He gave a very clear and logical explanation of why CPI should be used as the inflation measure for indexation; everything fell into place, as we would expect from him. He said it is such a good measure that we are going to use it for public sector pensions, and, if we can get away with it, possibly for private sector pensions and occupational pensions. Apparently, it is so good that we are going to use it for everything except the basic state pension. I have no problem with the fact that the Government are increasing the basic state pension by more than the triple lock would have given, but this undermines the Minister’s logical argument as to why CPI is so good. My right hon. Friend the Member for East Ham (Stephen Timms) picked up on this and I would like the Minister to explain his position. Why is the basic state pension going up by RPI, or 4.6%? CPI stood at 3.1% during the period; we are talking about last year’s inflation figures here.

I am also delighted that the Government have recognised the importance of pension credit, which was introduced by a Labour Government, and of keeping that increase in line with inflation. Under the Labour Government, it was the pension credit element, rather than the basic state pension, that went up by the higher rate of indexation, because the Government wanted to narrow the gap between rich and poor pensioners and that was the easiest way to make sure the poorest pensioners got the most. Under this new uprating, however, pension credit is not going up by the 4.6% under RPI that the basic state pension is going up by. It is going up by only 3.6%, which is in line with neither CPI nor the triple lock. I am not quite sure where that figure has come from. I am not complaining that the uprating is not more than it should be, but perhaps it is less than the Minister was led to believe.

We can see from last year’s figures and the indexation that we are looking at a CPI of 3.1% and an RPI of 4.6%. That is one third less. Many people are concerned about the compounding effect of CPI over the years on their take-home pension.

[Stephen Lloyd (Eastbourne) (LD)]

Does the hon. Lady agree that even under CPI, because the coalition Government are linking it with earnings, that would be the equivalent over a full term of an additional £15,000 to someone’s pension pot?

[Dame Anne Begg]

But that is assuming that the only income that pensioners have is the basic state pension, which is not the case. Most pensioners supplement the basic state pension with an occupational pension or, if they worked in the public sector, with a public sector pension. That is where the Government have sometimes missed a trick. In obsessing about the triple lock and the basic state pension, they have taken their eye off the ball with regard to all other pension income.

Because other pension income will be reduced as a result of the link with CPI, many pensioners will find themselves worse off, or certainly not as well off as they expected or as the rhetoric from the Government would suggest. To listen to the Government, one would think they are doing everything that pensioners ever wanted, whereas they have taken action only on the narrow area of the basic state pension.

We already know that inflation is going up. VAT went up, thanks to the Chancellor. The Opposition expect inflation to go up much further because we do not think the Chancellor has the right policies. We know from the most recent inflation figures for January this year that CPI is now up to 4%—good news, one would think, for pensioners—but RPI is up to 5%. It is that differential that will cause problems.

We are considering not just pensions, but uprating for the whole benefits system. Even the Minister must recognise that there is an enormous irony in using CPI to uprate housing benefit—CPI being the one inflation measure that does not include housing costs, notwithstanding the point that the hon. Member for Cardiff Central (Jenny Willott) made about the poorest people being in social housing. That is not the case in cities such as London, and it is not the case because of the shortage of housing.

We know that large numbers of people are dependent on housing benefit—or, more accurately, local housing allowance—and they will be hit. When the Select Committee on Work and Pensions looked into the matter, we thought there were some figures to show that within a very short time nobody on housing benefit would be able to afford houses in the private rented sector that fit into the 30th percentile.

[Steve Webb]

For the avoidance of doubt—this has been said incorrectly twice in the debate—the CPI includes rent, so it is owner-occupiers’ housing costs that are not included. As rent is included in CPI, it is entirely appropriate to index housing benefit by it.

[Dame Anne Begg]

CPI is still much less. Perhaps the average is taken from rent overall, not only in the private rented sector. That is where some of the differential might come from.

[Jeremy Corbyn (Islington North) (Lab)]

My hon. Friend has made an important argument about the level of rent increases, particularly in the private sector in London, where rent increases and demand go up by far more than any rate of inflation or any other measurement. The Government’s cap on housing benefit has the perverse effect of driving many of the poorest people out of central London because they will not be able to meet the rent demands and normal costs of living within the global cap on benefits.

[Dame Anne Begg]

My hon. Friend is right. There is a triple whammy on people who live in London in high rent areas: the local housing allowance is to be capped, possibly below the level of the rents; they will have access only to houses within the 30th percentile; and they will not see the inflationary increases in the indexation of their housing benefit to meet those conditions. They will be hit more than once with regard to the affordability of their rents. That certainly came over loud and clear when the Select Committee looked at what was happening to local housing allowance.

The effects of the Welfare Reform Bill have been mentioned. The universal credit will make it difficult to project benefit uprating into the future to work out what percentage of their incomes people are likely to loose. There will be no straight line from the current benefits to the universal benefit, because they will be mixed up. It is difficult to see what will happen. The compounding effect will probably be seen in pensions, particularly for those in receipt of the state pension, and the level of pension will be less.

In reply to my hon. Friend the Member for Eastbourne (Stephen Lloyd)—I am sorry, Madam Deputy Speaker; I always refer to fellow Committee members as hon. Friends—I said that the assumption is that the largest part of a pensioner’s income is the basic state pension, but we know that for many people that is not the case. Even if the state pension makes up a large part of their pension, it is often not all of it. Many people on the lower pension are dependent on SERPS, which of course will now be moving up in line with CPI, rather than RPI.

On the basic state pension, I accept the Minister’s figures indicating that it will rise from £97.65 to £102.15, an increase of around £4.50 a week. No one would say that that is wrong, because we all agree that £234 a year is great. However, the average public sector pension of £7,800 will be reduced by around £117 because of the difference between RPI and CPI. I am not very good at the arithmetic, but that means that instead of getting a rise in income of 4.6%, the people affected will get a rise of less than 2%. It is a rise, but it is not as much as they were expecting, and we must remember that we are living in a time when inflation is increasing.

A woman who receives the average local government pension of £2,600 will be £40 worse off than if her pension had been linked to RPI. If she has paid the small stamp, she might get no extra money through the basic state pension anyway, not even the compensatory increase in it. She might not have made full contributions and so will get some of it, but not all. The Government’s proposal is unfair to pensioners, and it is particularly unfair to women.

My right hon. Friend the Member for East Ham has already mentioned the particular unfairness of raising the state pension age to 66 by 2020. To be clear on the Opposition’s position, we have no qualms about raising the state pension age to 66 in principle, but we are concerned about the speed with which the Government are doing so. That overrides what was already in place for women who were born in the 1950s, who were going to see their pension age rise to 65 by 2020 anyway.

Women who began their working lives expecting to get a state pension at 60—that happens to include me—will now have to wait another six years for it. On a quick calculation, that will save the Government £32,000 on today’s basic state pension. It will come out of the pockets of women who are roughly my age and will stay with the Government. We will have to increase the indexation an awful lot more to make up for the £32,000 that those women will lose as a result of the increase in the state pension age by six years.

I appreciate that the measure whereby women born in 1955 would have to wait until 2020, when they were 65, to receive their income was already in train, but what about the women born between 6 October 1953 and 5 April 1955, who had already made all their financial plans but will now have to work for more than one further year before they can receive their basic state pension? The Minister has said on numerous occasions that that measure alone will save the Government £10 billion. All that is a win-win for the Government: the Government win, because they do not have to pay the money out, and because they have changed the indexation. The people who lose are those who expected to receive their pensions at a certain point, and in this case those people are women.

I would understand the Government’s rationale if the measure was part of their deficit reduction plan, but they have already said that they intend to get the deficit off the books in four years’ time, and none of this stuff comes in until after the deficit is meant to have been reduced, so it cannot be part of a deficit reduction plan. The Government should be more honest. We have heard that the change to CPI is going to be permanent, so they should say, “We’re doing this as a long-term measure, because we want to save money.” That is part and parcel of what the Government are about: saving money.

[Steve Webb]

The hon. Lady is a thoughtful person who will know that there is an issue of short-term deficit reduction and an issue of the long-term sustainability of the public finances. Leaving aside the £1.3 trillion of public debt, which will still exist and need to be dealt with even when the deficit is no longer adding to it, does she not accept that the Office for Budget Responsibility has challenged the Government to do something the previous Government did not do and get a grip on the long-term sustainability of spending, particularly on older people?

[Dame Anne Begg]

My right hon. Friend the Member for East Ham claimed that there might be a case for deficit reduction in the short term. We are considering women and the accelerated increase in the state retirement age to 66, however, and, in terms of the 50-year pension policy and the long term, why could not the Government have waited another year or even two before equalising the state pension age at 66? The Minister keeps bandying about the £10 billion figure, but in terms of equity and fairness it would have been much more sensible if the Government had taken a long-term view. Theirs is a very short-term view, meaning that a large number of women—half a million—will lose out.

The Government could have introduced a measure that people considered fair, rational and part of a long-term decision to ensure that pensions are affordable, and it is ironic that, while they have made the decision on equalisation, they have forgotten about the long-term sustainability of the basic state pension. They have done so because the Liberal Democrats had an election promise—the one they seem to have kept to, when they have managed to ditch all the others—that was all to do with the triple lock. The Minister will not accept this point in the Chamber, although he might do privately, but the triple lock debate has skewed the Government’s entire pension policy. We are not looking at the issue in the round or over the long term, when perhaps we should be.

We do not know what inflation will be in years to come, so in the private and public occupational pensions sectors in particular it is difficult to work out exactly how much people will lose compared with what they expected to receive. Lord Hutton, in his interim report, thought that on average they would lose up to 15% of their pension’s worth, but I have seen lots of other figures for, and various calculations of, what a pensioner would have expected if their pension had been linked to RPI as opposed to CPI.

This measure cannot just be about paying off the deficit, because we know that the big-time savings kick in well after the Government propose to have paid off the deficit. The Government will win, but the people who will lose are, unfortunately, the pensioners of this country.

15:14

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

I very much welcome these initiatives by the Government, as they will help to improve the quality of life of the elderly, who have given so much to our society, and that of the most vulnerable in society. It is absolutely right and proper that we help those who are most vulnerable.

I believe that the Government are right to use one index for uprating additional state pensions, public and private pensions and social security benefits, and that the consumer prices index is a more appropriate measure of changes in the cost of living than the retail prices index. The CPI is the headline measure of inflation in Great Britain, forming the target for the Bank of England’s Monetary Policy Committee. The CPI excludes mortgage interest payments, which are not relevant to the majority of pensioners and benefit recipients. In fact, only 7% of pensioners have a mortgage, and working-age benefit recipients can get help with their housing costs. The methodology used to calculate the CPI takes into account the fact that many people tend to trade down to cheaper goods when prices rise; the RPI does not do that. That comprises a significant portion of the gap between the CPI and the RPI. In terms of population coverage, the RPI excludes the significant group of pensioner households who receive 75% or more of their income from the state; the CPI includes them.

The intention of indexing benefits and pensions is to protect their purchasing power, not to give the highest increase possible. Increases in line with growth in the CPI maintain benefit and pension value and put the system on a more sustainable footing, allowing the Government to focus help where it is needed most.

[Sheila Gilmore]

If the change to the CPI is such a good move, why are the Government running scared of using it as part of the triple lock for the basic state pension this year and picking another figure out of the air in order, presumably, to make pensioners feel better about what is happening?

[Rehman Chishti]

The hon. Lady raises an interesting point, which I think was dealt with by the Minister. She refers to pensioners getting the right deal from the triple lock. It is important that we listen to what people in the third sector, not only politicians, say about how this will affect people. I have here a quote from Age UK’s charity director, Michelle Mitchell:

“We are delighted the Government is introducing a ‘triple guarantee’ to raise the basic state pension from April, and also a matching increase for Pension Credit which will help the poorest in later life.”

[Stephen Lloyd]

I take my hon. Friend’s point entirely. Does he agree that one of the profound advantages of the triple lock is that we will not have the deplorable situation of a few years ago under the previous Government, when pensions were uprated by 50p? There are real advantages to the triple lock: it means that people can be sure that they will have a decent minimum rise.

[Rehman Chishti]

The hon. Gentleman raises a good and pertinent point. He said 50p, but to be fair to the Opposition, I think that it was 75p. Even so, it was totally unacceptable. If we link that to other things that happened to pensioners and the elderly—for example, the closure of so many post offices that were a lifeline for them—it is clear that the overall package under the previous Government was completely unacceptable. This measure goes a long way towards improving their quality of life.

It is estimated that the average person retiring on a full basic state pension in 2011 will receive £15,000 more in basic state pension income, and that can only be a good thing. In the light of what I have described, it is absolutely right and proper. I fully support the move to the CPI and the wider package that the Government are putting forward.

Looking at the time and applying the principle that brevity is a virtue, not a vice, I will end my remarks.

15:18

[Hywel Williams (Arfon) (PC)]

I begin by welcoming the Government’s change of mind on housing benefits. If that had not happened, there would have been a disastrous effect on constituencies such as mine which have high unemployment rates and slim prospects of people finding a job within a year. There will be a general welcome for that. I wanted to say that because I have campaigned about it in the past, as have many of my constituents.

I should like briefly to refer to correspondence from pensioner constituents who are concerned about the change from RPI to CPI. At the very least, there is a problem of perception. People see that RPI for the third quarter of 2010 was 4.6%, whereas CPI was 3.1%. They see that the current rate of inflation under RPI is 5.1% and that it is 4% under CPI. Clearly, people are worried. People have made long-term financial decisions on expectations that might not be realised. I raised the triple lock in an intervention and I do not want to discuss it in detail, but I worry about its longevity because of concerns that have been expressed many times in the past.

I have received correspondence about CPI and RPI from the Public and Commercial Services Union, the Civil Service Pensioners Alliance, Age UK and my constituents. My attention has been drawn to some statistics and I would like to read them into the record. The PCS states that using the base of 1988, had CPI been used to uprate a £10,000 pension, its value now would be £18,035, compared with £20,935 under RPI—a difference of 16%. A pensioner on the median public sector pension of £5,500 who has been retired for 20 years would now be on £4,845—a loss of 12% or £655. It is those sorts of figures that worry people.

Obviously, CPI has been higher than RPI in some years—1991, 1993, 1996, 1999 and 2008—but the Treasury itself reckons that over the next five years, RPI will consistently be higher than CPI. Perhaps that is because of the predicted steeper rises in housing costs. I refer the House to table C2 in the Budget Red Book, which puts the overall change to 2016 of CPI at 13.7% and of RPI at 22.1%. That is a substantial difference. Of course, a gloss has been put on, but I will not go into that at the moment.

[Naomi Long (Belfast East) (Alliance)]

One argument for the change to CPI is that many of those in receipt of a pension are insulated from fluctuations in housing costs because they are not paying a mortgage. However, does the hon. Gentleman agree that they often have other private housing costs that are not reflected in CPI, such as insurance costs and the depreciation of their properties?

[Hywel Williams]

That is a valid point. Of course, the variation across the country is quite substantial. I refer again to my own constituency, where there has traditionally always been a very high level of owner-occupation. There are older people who own their houses, but in other areas people are still paying off their mortgages. The figure of 7% has been mentioned—that is a lot of people who will be hit.

[Sheila Gilmore]

Does the hon. Gentleman agree that that figure might well grow in future? Given the level of borrowing that many people have made to buy properties, and that a lot of people are buying at a much later age, many more people are likely to move into retirement with a mortgage still to repay.

[Hywel Williams]

That is a very good point. Indeed, I think I might be one of those people. I understand that the average age of the first-time buyer is now 38. These are valid worries that people have.

The arguments on RPI and CPI have been well rehearsed this afternoon so I will not go further into them. I have a great deal of respect for the Minister and I think he would agree with me and many other people that what we need is a bit of calm and consensus on pensions policy—something that has been lacking for 25 or 30 years. I worry that this change will not lead to consensus and that he might have fallen in with a bad lot.

15:24

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

A lot has been said about CPI and RPI, but I will avoid the technical aspects of that and restrict my comments to two others.

First, my hon. Friend the Member for Cardiff Central (Jenny Willott) mentioned that it was a Conservative Government who many years ago broke the link between the basic state pension and earnings. I was one of few Conservatives to oppose that at the time. About 11 years ago, when I was the parliamentary candidate in Luton South, I went to see the late Jack Jones, who was president of the National Pensioners Convention, to offer my support to the campaign to restore the link. Jack, sitting at the other side of a desk, was astounded that a Tory had come to offer his support, and he said, “Gordon, I really appreciate that you’re backing me, but I have to tell you, son, you’re never going to get your party to agree to restore the link.” Jack died a couple of years ago, and I wish he was alive today to see that a Conservative-led coalition is restoring the link.

That is long overdue. I shall not make any partisan points about the previous Government not delivering, because looking after our pensioners is beyond party politics. When I supported the pensioners way back in 2001, I was one of few parliamentary candidates who went into the election wanting to restore the link—I was certainly the only such Conservative candidate—but it was not Labour party, Conservative party or Lib Dem policy at that time. I am delighted that we have moved on and that we will restore the link.

I am even more pleased with the Government, because many of the pensioners in my constituency did not want us just to restore the link to earnings, because RPI is sometimes higher than earnings. Jack Jones mentioned that too. We then started campaigning not for the restoration of the link with earnings, but to ensure that we used whichever of earnings inflation or prices inflation was the higher. As I said, I will not go into the technical differences between CPI and RPI, because the pensioners in my constituency just want a decent increase in their pensions based on the higher measure of inflation. The triple lock now includes the 2.5% stipulation, so if either inflation measure is less than that, the increase will be 2.5%. They welcome that, so I thank Ministers and my coalition Government for delivering on a long-standing promise.

The second aspect of the orders that I want to talk about relates to a problem that is experienced by many women pensioners who have worked in the civil service. I will give one example. One woman who retired early on a civil service pension came to see me in my surgery recently—I have written to the Minister, and hope to get a response some time soon. She had reached the age of 60, and told me that some arcane measure in the civil service pension scheme means that there is a reduction in the amount that is paid once someone starts to receive the basic state pension. I am not sure of the technicalities, but she explained how she was written to way back in November to say that now she was 60, her civil service pension would be reduced, because she was receiving the basic state pension. Of course, however, because she is a woman and the age at which women start to receive their pension is to be higher, she will not start to get her basic state pension until May this year. Although the period is only a few short months, there will be women for whom the gap is a lot longer. I would be extremely grateful if the Minister addressed that point when he winds up. I listened carefully to his opening remarks, and I thought that he put a very good case for CPI which will help me when I talk to my pensioners. I thank him.

15:30

[John McDonnell (Hayes and Harlington) (Lab)]

I will not apologise for breaking the consensus—although I was about to apologise to the hon. Member for Cardiff Central (Jenny Willott), who welcomed the consensus across the House. I oppose the order, and will seek to vote against it. I do not accept that the installation of CPI will be of benefit in either the long term or the short term. I am grateful that the Government have not introduced it for the basic state pension at least for this year, but its installation across all the other benefits will result in detriment. To take £6 billion out of the payments to the poorest in our society is unacceptable. My hon. Friend the Member for Aberdeen South (Dame Anne Begg) said that the order is indivisible, so by not voting for it we would prevent other overall increases from going ahead. However, it is not beyond the wit of any Government to introduce another order within hours—or at least days—that could amend what is in this order to enable us to get some justice for pensioners.

I am reticent about criticising the Minister. I think that I have moved a Budget amendment on restoring the link with earnings every year for the past 13 years, and I think that we walked through the Lobby together on an annual basis in that endeavour. I am grateful, therefore, for the restoration of the link with earnings. I know that it was in the Labour party’s most recent manifesto to restore the link in due course. I just wish that we had done it earlier, because that would have demonstrated our overall commitment to tackling pensioner poverty. However, I know how much the previous Government did to tackle pensioner poverty. Many people, particularly pensioners and many on benefits, are now living lives so much better than they would have been had it not been for the previous Government’s policies.

I was a critic of the extension of the means-testing system. I thought that it was a disincentive to saving and costly to administer. Nevertheless, I welcome what the previous Government did. I still think, however, that in a civilised society it is a mark of shame that reflects on all of us that there are still 2 million pensioners living in poverty, given that we are the fifth richest country in the world. It behoves all parties to tackle this issue. The question has been asked time and time again: how should we do it? For me the answer is straightforward, and expresses an argument that we have been putting forward since the foundation of the Labour party—fairer taxation and redistribution of wealth.

I have listened to the debate on moving from RPI to CPI. We can all marshal different battalions on the field of this debate—quotes from the Institute for Fiscal Studies, the Office for National Statistics, and so on. Most Members will have received through the post this week an assessment of the Government’s welfare reform policies by the Social Policy Association. I concur with the chapter in the report by Alan Walker of the University of Sheffield, who states:

“The Government claims that the CPI represents low income groups’ expenditure better than RPI but there is no convincing evidence to support this claim and according to IFS (2010) it is the RPI that provides a ‘superior’ coverage of goods and services.”

To some extent, we can dance angels on the head of a pin on this subject. As someone who has studied some statistics in the past, I have gone into the debates on the difference between the geometric mean and the arithmetic mean. From that, I conclude that CPI is 0.5% minimum off the calculation compared with RPI. However, there are concerns that the use of CPI will result in a reduction. As my right hon. Friend the Member for East Ham (Stephen Timms) asked, if that was not the case, why would the Government need to try to protect pensions this year? As my hon. Friend the Member for Aberdeen South said, the reduction from 4.6% to 3.1% is nearly one third of people’s overall increase. That is significant, so I am pleased that the Government are protecting the increase for this year, but the pensioners in my constituency will be worried about the introduction of CPI for future years.

I remain unconvinced about housing costs, partly because of some of the arguments that have been presented about the 7% of people—that still represents a sizeable number not to be taken into account—who will be affected, who do have housing costs. As my right hon. Friend said, there is an ageing profile of people who are taking on mortgages later in life, so housing costs will become a more significant factor.

In addition, one of the burdens that many pensioners feel in particular is increased council tax. I do not believe that that element is covered by the CPI calculation as it was with RPI.

The hon. Member for Sittingbourne—

[Gordon Henderson]

And Sheppey.

[John McDonnell]

I would not want to miss out Sheppey. Let us take the common-sense approach of the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) and ask, “What do pensioners feel like at the moment?” I think that they feel that they are under significant pressure as a result of inflation. The researchers’ evidence shows that inflationary pressures hit pensioners harder than the average household.

I am concerned about the shift, which I oppose. It is a momentous shift: it represents one third off an increase. I say to the Minister that this should have been properly debated before the election if it was to be a long-term shift. I can understand, though I do not believe, the argument that when the Government came to power they opened the books and found that they had to introduce emergency measures. However, that is not being argued. It is being argued that this proposal, per se, is the beneficial or right thing to do. If that were the case, it should have been outlined before the election with examples of the implications for pensions and benefits overall. To make this change at this time casts doubt on the motivation for the change from RPI to CPI. We should have been more honest in the debate before the election.

As for the knock-on effects on occupational pensions, I chair the PCS trade union parliamentary group, and we have circulated fairly detailed evidence of the implications for public sector workers. It looks as though, on average, there will be a loss of between £500 and £700 a year. The cumulative effect of that in the long term is significant, and I am grateful that other Members have read its implications into the record.

My right hon. Friend quoted the Hutton report. I take those concerns seriously—a 15% cut, and possibly a consequential cut of up to 25% in the long term. I firmly believe that those are accrued rights—we have had that debate on the civil service compensation scheme—and that people have planned their lives on the basis of what they thought they could expect as a pension in the long term. To undermine those accrued rights is not only wrong and immoral but legally dubious, and there may be challenges to that effect.

The effects spread far beyond that. The right hon. Member for Uxbridge and South Ruislip (Mr Randall) and I have constituents who work at Heathrow airport for British Airways and are members of the British Airways pension scheme. They work for a former nationalised industry, so their pensions shadow what happens in the public sector. We have had letters demonstrating the potential consequences in terms of cuts in their pensions in the long term. Again, the problem came upon them relatively suddenly, and should have been properly explained and discussed before the general election.

My concern now is that the change will have an immediate detrimental effect over the next few years. Like most London Members, and many others, I deal in my constituency surgery with people living in poverty and on the margins of dignity. Any cut, in the short or long term, in their pensions or benefits will push some of them over the edge into virtual destitution. That is why I am anxious about anything that will decrease their incomes. On that basis, I cannot support this order. I understand why some of my hon. Friends do not wish to participate in a vote, but I want to put my opposition on record, because the change will have an impact on my constituents. It will also add to poverty and deprivation in our society—something that any Government should tackle.

We should, collectively, be ashamed of the way in which we have treated pensioners over decades. Our pension is now 16% of average earnings, whereas in France it is 60% and in the Netherlands 82%. Over time and incrementally, we have allowed our pensioners to lose their right to a decent pension, and therefore to a decent quality of life. This order will add to that incremental undermining of the quality of life of my constituents, and on that basis I will seek a Division on it.

15:41

[Mike Freer (Finchley and Golders Green) (Con)]

I wish to correct the hon. Member for Edinburgh East (Sheila Gilmore), who talked about mortgages in retirement. I come from a financial services background—indeed, I have the scars on my back from being regulated by the Financial Services Authority—and I can tell her that it is virtually impossible to sell a mortgage to someone beyond retirement age. The regulator simply will not allow it.

I compliment the Minister, because it is a pleasure to see a Minister with such a grip on his portfolio. Indeed, it is almost scary to see a Minister in such charge of the detail. I welcome his clarity about the net effect of the triple lock on the lower pension indexation, which means that our pensioners will be better off both today and in the long term.

A key issue is the long-term viability of public sector pension schemes. I tried to press the right hon. Member for East Ham (Stephen Timms) on that point, but I was unable to get a firm response. I hope that the Minister will address the point when he winds up. I admit that my knowledge of pension fund management is a little rusty, as I stepped down as a pension fund trustee some 18 months ago, but one of the key issues facing the public sector is not necessarily the pensioners but the fact that most public sector pensions are structurally non-viable. The contributions simply do not meet the future liabilities. For example, the local government pension scheme for London—and for many of the bodies that are attached to it—is running at 75% to 80% of contributions to future liabilities. That is not sustainable.

I may be wrong, but one of the long-term benefits of the move from RPI to CPI is surely that it would address that structural imbalance between contributions and future liabilities. You cannot run a pension scheme with a 20% gap between liabilities and contributions. You can plug that gap only by reducing the pensions drawn down or increasing the contributions from the employer—in London that means the council tax payer or the taxpayer in some other form—or from the employee. There is no money tree on which the Government can draw to plug the gap in public sector pension schemes. The money can come only from the taxpayer or from the employee. We must address that structural deficit.

Will the Minister confirm that one underlying reason for the change is to address that structural gap between contributions and viability? May I gently ask him to stray beyond his brief and say whether the Government will consider closing the existing defined benefit schemes for the public sector and moving to defined contribution schemes, not only to increase portability but to increase the transparency of what people are getting for their money and, most importantly, increase the affordability of those pension schemes for the public purse?

15:45

[Katy Clark (North Ayrshire and Arran) (Lab)]

My contribution will be brief, but I want to speak because we are taking a momentous decision today. It is very sad, on the day when we are passing legislation that will reinstate the link between earnings and pensions—for which I and many Labour Members have campaigned over many years, and which Government Members have been able to get their Ministers to deliver on—that we are also probably going to pass legislation that will make a very significant, and probably a very long-term, change to the way in which we uprate pensions and benefits.

Today’s debate has made it very clear that these proposals are being made not just because of the current economic situation or because of the Government’s policy of deficit reduction, but because of the belief on the Government Benches that this is a more appropriate means of uprating. I have always taken the view—the trade union view—that pensions are deferred pay. It is very important that people have certainty in arrangements for their retirement. The decision we are making today will have implications for many of the lowest-income people, who are dependent on benefits, and some of the poorest pensioners.

I have been lobbied by a considerable number of constituents on this issue, but that number is a very small fraction of the number of people who will be affected by these changes and, I suspect, will be very angry when they realise the impact that the changes will have on them. I have also been lobbied by several of the trade unions that represent the affected individuals.

My hon. Friend the Member for Aberdeen South (Dame Anne Begg) mentioned women in the local government pension scheme, who have an average pension of approximately £2,600 per annum and will be worse off by £40 this year if the changes go ahead. They would have been £40 better off if the RPI link had been maintained. According to the trade union Unison, the average person who receives a pension from the local government pension scheme receives £4,100 per annum, and they will be £62 worse off in the coming year if the change goes ahead. A woman who works in the national health service receives, on average, a pension of £3,500; these are not people on high incomes, by any stretch of the imagination, and they will be £53 worse off this year if the change goes ahead.

If we pass the order today, it is likely that next year a similar order will be proposed, and the same approach will be taken for decades. The cumulative effect on the pensions of individuals will be very substantial indeed. Reference was made to figures released by the PCS trade union showing the impact that it thinks the change will have on its members.

These are very considerable public policy issues, about the extent to which we feel it is important as a society—

[Jane Ellison]

I must press the hon. Lady. She refers to the impact on pensioners, but does she give regard to the impact for the taxpayer of an aspect mentioned by my hon. Friend the Member for Finchley and Golders Green (Mike Freer)—the long-term lack of viability of major pension funds in the public sector?

[Katy Clark]

The matter under discussion has long-term and considerable public policy implications. Indeed, the Fire Brigades Union informs me that part of Lord Hutton’s interim report states that pay freezes and work force reductions will reduce future pension costs. Further, the gross cost of paying unfunded public service pensions is expected to fall from 1.9% of GDP in 2011 to 1.4% of GDP by 2060. If the long-term effect is that we pay less as a society towards pension funds, that will have significant implications for the individuals concerned, who will have less income, but also for the public purse. If people do not have adequate pension provision for their retirement, the state will have to pick up the cost, perhaps in greater benefit bills.

If public policy does not develop in such a way that people employed in the private and public sectors have pensions constructed and funded to be their main source of income in retirement, that will have substantial implications. If the changes go ahead, constituents of Members on both sides of the House will be worse off. No Member should take that lightly, given that inflation is rising and people are facing difficulties. I say to the hon. Lady and to other Members who support the decision that we as a society need to find the funds collectively. We need a public policy that encourages individuals to save for their retirement, but that also puts provision in place to ensure that they have adequate pensions in retirement.

In the emergency Budget in June last year, the Chancellor announced that the change would result in a saving of more than £6 billion a year by the end of this Parliament. There is no doubt, therefore, that the proposal is cost driven. My submission is that, as an ageing society, we need to find ways, collectively and individually, to put more aside for our retirement. We need pensions that are at a reasonable level for people to live on in retirement. If the change goes ahead, fewer people will have pensions that allow them an adequate standard of living in retirement.

15:53

[The Minister of State, Department for Work and Pensions (Steve Webb)]

We have had a worthwhile debate, with some thoughtful and well-informed contributions. I compliment all Members who have taken part, as the issue is important to our constituents. All Members will have received representations on the matter, and Members who are here on the final Thursday afternoon before a recess show their sense of priorities.

I enjoyed the accusation from the right hon. Member for East Ham (Stephen Timms), whom I think of as my right hon. Friend, that the policy is ideologically driven. I have never heard the use of the geometric mean described as ideologically driven. Intriguingly, his position seemed to be that it would be bad to make such a proposal on a point of principle, but that he could support it if it was a temporary expedient because of a financial mess. That is not the position of the Government, whose judgment is that CPI is a better measure of inflation, not a temporary fix. I am grateful that he appeared to be saying that he would support us for three years on grounds of expediency.

[Stephen Timms]

If CPI uprating is right in principle, why are the Government not doing it this year?

[Steve Webb]

We are doing it this year for pretty much every benefit in the entire uprating order, which runs to many pages. The ones we are not doing it for are the basic pension and the pension credit. We are not doing it for the basic pension because the budget we inherited provided for a larger increase and we did not want to pay a smaller increase than was planned. If the right hon. Gentleman thinks we should have done so, I will take that advice, but he probably welcomes the fact that we did not follow it.

The Chair of the Select Committee, the hon. Member for Aberdeen South (Dame Anne Begg), indicated that unfortunately she could not be in the Chamber for the wind-ups. She asked why we had chosen a different figure for the pension credit. As I think I explained in my opening remarks, as we were putting the basic state pension up by about £4.50 a week, we did not want the increase in pension credit to be less than that, because the poorest pensioners would not have the full benefit of the pension rise. That was the basis for the increase in pension credit.

The right hon. Member for East Ham asked about the impact assessment on occupational pensions, and I am happy to say a few words about that. In December, we published an impact assessment suggesting a £76 billion impact from the reduction in revaluation and indexation. To respond to a point made by my hon. Friend the Member for Finchley and Golders Green (Mike Freer), one way of looking at that is to see £76 billion less in pensions, but another way is to see a £76 billion boost for British business. We are trying to reduce the regulatory burden on British business, so an advantage of the change—albeit not the purpose—is that major British firms will make a saving, and they and their pension funds will be in a stronger position as a result. Many pension schemes and companies have welcomed the change for that reason.

We discovered an error. We made a mistake, for which I apologise. As soon as we found it, we decided to give the House a revised estimate. In addition, we were asked by the Regulatory Policy Committee to revise the way we calculate net present values; I know that the right hon. Gentleman takes a close interest in such matters, and if he is not careful I shall tell him what it was. To draw the threads together, we reissued the figures last week, ahead of this debate, with an £83 billion estimate. That is a further interim estimate. We then undertook field research, as I mentioned, to ask companies how they will respond to CPI/RPI. We have early results; it would be premature to say what the impact will be, but early indications are that fewer pension funds will take advantage of CPI than we had thought. Such things are complex and there could be factors that move them in the other direction, but my sense is that the final version of the figures is more likely to be lower than the one we have already published, but we thought we should give the latest estimate as soon as we had it.

The right hon. Gentleman raised the important issue of accrued rights. It is a fundamental point and it relates to my pre-election remarks about a pension promise made being a pension promise kept. What is the accrued right of someone in a public sector pension scheme, or any pension scheme? The first point is that everything accrued to date—all the revaluations to date, based on RPI—stand; we are not going back and saying that all the revaluations to date have to be reworked according to CPI. The provision is prospective, not retrospective.

The question then is what future expectation people legitimately have. If they are in a company scheme that has RPI in the rules, we actively chose not to override that. If that was their expectation, because it was in the rules, that is what they will get. However, people in the public sector are members of a scheme whose rules are tied by statute to what we do to SERPS. That is the accrued right they have always had, and we are not changing it. We shall go on indexing their pensions in line with what we do to SERPS each year. That was the pension promise they were made; that is the pension promise we are keeping. We are indexing SERPS by CPI. I accept that, and I also accept that on average that will be lower than RPI, typically by about 0.8% a year. I do not dispute that. The accrued right is the one we are honouring.

The right hon. Gentleman said in parenthesis that pensioner inflation is typically higher than general inflation. I do not know whether he actually believes that; it was never something his Government took into account when setting pensions. They never uprated pensions differently because of pensioner inflation. There are certainly periods when pensioner inflation is higher when, as the right hon. Gentleman said, the costs of fuel and food are rising faster than the norm, but there are other periods when it is lower. I have asked officials to look at the matter and there is no evidence over a 20-year run that pensioners buy goods that have that inflation time bomb ticking away inside them. There are times when inflation is higher, which may include recently, and times when it is lower, but over the long run there is no evidence for that proposition.

My hon. Friend the Member for Cardiff Central (Jenny Willott) welcomed the restoration of the earnings link, and the triple lock. I am grateful for her support. She quite properly put me on the spot about the future of the pension system. I accept her analysis; we need a pension system fit for the future. If we are to auto-enrol 10 million of our fellow citizens, we need to be confident that it pays to save, and that they will be better off. I assure her that that is absolutely central to our thinking about long-term pension reform. We are making good progress on that project.

The Chair of the Select Committee asked a number of questions. I will respond to one or two on the record, although she has explained why she is not here to hear the response. She kept making the point that the basic state pension is not the only part of a pensioner’s income. Of course it is not.

I thought that the hon. Member for North Ayrshire and Arran (Katy Clark) made some sincere comments. She raised the issue of people with relatively modest occupational pensions who will get less under CPI. The state pension is bigger than all of those figures. Every one of the figures she quoted is less than the basic state pension. The package of Government policy on pension indexation is for an earnings link on the basic and a CPI link on the additional. The basic pension of every person she is concerned about is bigger than their additional pension, the earnings link in the long run is worth 2% more than prices and CPI is 0.8% less than RPI. The people she is most concerned about will overwhelmingly benefit from our package of policies. Therefore, I can assure her on that point. Taking the package as a whole, they will be better off, not worse off.

My hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) made an important contribution and pointed out that Age UK, which is very much an independent organisation, was delighted by the triple lock, because it is a historic move to give pensioners the best of earnings, prices, plus 2.5%. I wish only that we were able to do this in a normal year—in 16 of the past 20 years, earnings were greater than prices. People would then start to see the benefit of the earnings link and the triple lock, and in time they will.

The hon. Member for Arfon (Hywel Williams) quoted some civil service pension figures. I make the same point to him. All the figures he quoted, based on average civil service pensions, prove my point. If we take them in isolation, CPI is lower than RPI, but people do not just get their civil service pension—they also get their state pension. We are putting more in through the state pension than we are taking away typically through the additional pension because of the relative sizes and the difference between the various indices. Our constituents write to us and raise the bit they see, but overall the state pension will more than make up for that for the vast majority of people, although not for people with very large pensions.

On the ratchet, I simply accept the hon. Gentleman’s rebuke for fiscal irresponsibility. I will take it on the chin and pass it on to the Chancellor for him.

I enjoyed the contribution of my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) and his account of his conversation with Jack Jones. I am delighted to say that both coalition partners supported that. We needed the Chancellor on board for that one. I regard it as being to the credit of both coalition partners that we have been able finally to restore the earnings link. I am grateful to my hon. Friend for raising the case of his constituent. As he was describing it, I was thinking that I was sure I signed a letter on that the other day, and I gather he has now received it. I apologise to his constituent for the mistake that was made and I hope that that has now been resolved.

The hon. Member for Hayes and Harlington (John McDonnell) perfectly properly says that he will not support the order and that he is against mass means-testing and so am I. A pension system that allows too many people to retire poor and means that they have to be swept up by a leaky safety net is not a good, sustainable long-term pension system. I have set it as my goal to do something about that. We may not agree about these orders but we have common cause on that principle.

[John McDonnell]

Did the Minister ever consider a quadruple lock so that, earnings or inflation, CPI or RPI, whichever was the higher, would be used?

[Steve Webb]

We did look at that. Either one could say that what one is trying to do with pensions and benefits is protect pensioners’ spending power—that would be a price measure—or one could protect people’s position relative to the rest of society, which is an earnings measure. One wants to avoid silly small figures such as 75p, which is where the 2.5% comes from. To say, “But we will measure inflation according to different measures and we will pick the biggest” conceptually does not work for me. We could have done that, but in our judgment the point of revaluation is to maintain spending power fairly for the group in question. Our judgment is that CPI is the answer to that question.

There is a separate question about whether pensions should be higher or lower. In a way, the hon. Gentleman and the hon. Member for North Ayrshire and Arran are saying that we should be paying bigger pensions. It seems to me that that is an entirely separate debate from how we should correct for inflation. That is where CPI comes in.

[John McDonnell]

There is a point of principle that the Minister and I have argued over the past 13 years at least, which is that, whatever measure is introduced, there should not be a loss. Having that quadruple lock would convince people that this is at least a way forward, because people would be protected against years such as those five out of the past 20 where CPI was higher than RPI.

[Steve Webb]

I come back to my point that as the basic state pension is a big part of pensioners’ income, particularly for the most vulnerable, we are protecting their living standards overall—they will get bigger increases under this package of indexation than they would have on the basis of a straightforward RPI level alone. I believe we are doing the right thing.

I am grateful to my hon. Friend the Member for Finchley and Golders Green (Mike Freer) for his kind comments and I appreciate the expertise he brings to the debate. He was absolutely right that the idea that large numbers of pensioners will have large mortgages is quite implausible. It is true that 7% have some mortgage interest at the moment, but even those who face mortgage interest will typically have lower average amounts because they will be towards the end of their mortgage terms. Basing an inflation measure on an index that includes mortgage interest seems to me to be quite inappropriate for pensioners. As my hon. Friend pointed out, one consequence of CPI schemes such as the local government pension scheme is that it will help to put pensioners on a more even keel. As he also rightly said, this money has to come from somewhere—somebody has to find it—and this order will have the consequence of getting the systems on to a more sustainable basis. My hon. Friend tempts me on public sector pension reform, but I obviously must not pre-empt what Lord Hutton will say. He will be saying what he is going to say within the next few weeks, so we do not have much longer to wait.

Drawing the threads together, this debate has provided a worthwhile exploration of the issues. Our fundamental point is that the principal order will cost the Government £4.3 billion to protect and enhance the benefits for the people who need them the most. I am proud to commend these provisions to the House.

Question put,

16:06

Division 212

Ayes: 247

---

Conservative: 209
Liberal Democrat: 38

Noes: 19

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Labour: 11
Scottish National Party: 5
Democratic Unionist Party: 1
Alliance: 1
Plaid Cymru: 1

Resolved,

That the draft Social Security Benefits Up-rating Order 2011, which was laid before this House on 3 February, be approved.

pensions

Resolved,

That the draft Guaranteed Minimum Pensions Increase Order 2011, which was laid before this House on 3 February, be approved.—(Steve Webb.)

petitions

Thursday 17th February 2011 Commons Chamber

16:18

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I wish to present a petition on behalf of the tutors and students of English for speakers of other languages—ESOL—in Liverpool. The petitioners believe that the proposed changes will have a devastating effect on ESOL provision, ESOL teachers’ jobs and ESOL students, particularly those on low wages or on no wage at all.

I am grateful for the support of my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), who is unfortunately unable to be here owing to parliamentary business in Westminster Hall, but is also a supporter of the petition. There are 322 signatures.

The petition states:

The Petition of tutors and students of English for speakers of other languages (ESOL) in Liverpool,

Declares that the Petitioners oppose the proposed changes to the funding for English for speakers of other languages (ESOL) courses in the Government’s ‘Investing in Skills for Sustainable Growth’ document; notes that the Petitioners believe that the proposed changes will have a devastating effect on ESOL provision, ESOL teachers’ jobs and ESOL students, particularly those on low wages; and further notes that the Petitioners believe that in Liverpool many students will be left with little hope of improving their language skills and job prospects as a result of the changes.

The Petitioners therefore request that the House of Commons urges the Government not to cut funding for ESOL courses.

And the Petitioners remain, etc.

[P000889]

16:20

[Chris Skidmore (Kingswood) (Con)]

I wish to present the petition of the residents of Longwell Green, Hanham, Mangotsfield, Emersons Green, North Common, Oldland Common, Warmley, Siston, Bridgeyate, Bitton, Willsbridge, and Kingswood.

The petition states:

The Petition of residents of Longwell Green, Hanham, Mangotsfield, Emersons Green, North Common, Oldland Common, Warmley, Siston, Bridgeyate, Bitton, Willsbridge, and Kingswood,

Declares that the Petitioners are concerned by attempts to build inappropriate development on the Kingswood Green Belt; notes that Green Belt sites at Williams Close, Longwell Green, Cossham Street, Mangotsfield and Barry Road, Oldland Common have faced applications to build housing which has consistently been opposed by local residents, locally elected councillors and the Member of Parliament; notes that South Gloucestershire Council’s Core Strategy protects the Kingswood Green Belt; notes that Regional Spatial Strategies responsible for placing local Green Belts at risk will shortly be abolished; notes that the Planning Inspectorate must take the abolition of Regional Spatial Strategies into account as a material consideration when ruling on current appeals; and further welcomes that decisions over future development will be returned to democratically elected councillors.

The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to protect and preserve the Kingswood Green Belt for future generations to come.

And the Petitioners remain, etc.

[P000890]

Housing Benefit

Thursday 17th February 2011 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Miss Chloe Smith.)

16:22

[Jon Cruddas (Dagenham and Rainham) (Lab)]

I think that I now have two hours and eight minutes in which to speak on the single room rate—only joking. This debate dovetails with the last debate on benefits uprating, as often happens with Adjournment debates, purely by accident. Today, we have also seen one of the most dramatic overhauls of welfare reform in this country. I want to make a few comments on the likely consequences of changes to the shared room rate, sometimes known as the single room rate, proposed by the Government. I do not do so simply to make party political points, but because I am concerned about specific, substantive consequences that might emerge for many young people in this country. My comments echo those contained in a letter dated 2 November to the Minister for Housing and Local Government from 16 of the country’s leading organisations providing housing and support services to homeless people.

Today we have seen a significant change in the Government’s proposed housing benefit reforms, with the removal, supposedly, of the 10% reduction for those on housing benefit after one year on jobseeker’s allowance. I suggest to the Minister that he might like to signal another change on the proposed benefit regulations. I doubt that that will happen, but I know that he will give thorough consideration to my points.

The shared room rate currently applies to single people under 25 on housing benefit in the private rented sector. Local housing allowance claimants who are single, under 25 and without dependants are currently eligible only for sufficient LHA to cover the rent of a single room in a shared house, rather than self-contained accommodation. Under measures announced in the comprehensive spending review, the threshold for the shared room rate will be increased to 35 years of age from April 2012. All single, childless adults under 35 will see their LHA cut from the current one-bedroom rate to the SRR. The Government estimate that 88,000 people will be affected by this change.

The Department for Work and Pensions housing benefit statistics show, however, that in August 2010 120,000 single people aged 25 to 35 years old were claiming LHA. The Minister might want to comment on that in his response, because it means that if the proposal goes ahead an additional 120,000 people will be competing for shared accommodation. That will be an issue not just in inner London, as we often hear in the House during debates about housing benefit changes, or even in outer London; the evidence suggests that it will affect tens of thousands of young—actually, not that young—people up to the age of 35 across the length and breadth of this country.

We know that the SRR causes considerable problems for young people, with many unable to secure or sustain affordable accommodation and left facing shortfalls, arrears and homelessness under the current regime. According to the housing charity, Crisis, the average loss will be £47 per week, with some people seeing their benefit entitlement literally halved.

Even at current LHA rates, the difference between the one-bedroom rate and the SRR rate can be substantial. For example, according to Shelter, the shared room rate stands at £71 per week on average, while the rate for a one-bedroom flat is £137 per week. In the east Thames valley, it is £88 versus £150 per week; in inner east London, it is £103 compared with an average of £235; and in Oxford, the figures are £80 and £150. In more than half of all areas, shared accommodation rates are about one third or more lower than one-bedroom LHA rates.

Everyone will admit that those are very high losses from a very low baseline. Currently, the maximum award of local housing allowance—housing benefit in the private rented sector—is only £107 per week for a one-bedroom property, and that falls to just £69 for SRR claimants. Obviously, that is before other cuts to housing benefits kick in, which will reduce those rates even further. LHA rates will drop from the 50th to the 30th percentile of local market rents from April, and many 25 to 34-year-olds will therefore suffer a double wave of cuts and, arguably, have no choice but to move.

For example, a 33-year-old on the Wirral is currently eligible for the one-bedroom rate and will receive £91 a week in LHA. The LHA cut will bring the one-bedroom rate down to £86 per week, but from that point they will be eligible only for the SRR, which is expected to be £56 a week, meaning a accumulative overall cut in the local housing allowance of some £35 a week. Cuts at that level will be replicated throughout the country and leave single adult households with unaffordable shortfalls in their rent. Many will have no choice but to move to cheaper accommodation. Crucially, however, owing to a lack of shared accommodation, many will be unable to find a single room and be forced to remain in more expensive self-contained accommodation, creating further shortfalls, the risk of eviction and, possibly, homelessness.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Does my hon. Friend agree that the proposed changes will have a subsequent impact, increasing homelessness especially in areas where people already find it difficult to get accommodation?

[Jon Cruddas]

That is one of the points that I want to address in the long time that I have to develop my arguments.

Some 75,000 people claim SRR, so the change will more than double the number of claimants, placing significant further pressure on the limited existing pool of shared properties. According to housing charities that deal with the homeless, the vast majority of people affected by the change will lose their current accommodation; and they will have to go somewhere. It is unlikely that landlords will accept such significant reductions in rent, or that someone on a limited income will be able to make up such shortfalls. To confirm what my colleague just said, tens of thousands of people currently in self-contained flats will therefore be forced to seek shared accommodation, or they will arguably become homeless.

There is simply not enough shared accommodation available. Current claimants already struggle to find an affordable property, with DWP figures showing that some 67% face a shortfall between their benefit and their rent, averaging out at £29 per week, compared with 49% of all LHA claimants. On anyone’s account, that is a significant amount for people on a low income, and it will cause problems such as debt, arrears and homelessness, which all MPs will undoubtedly witness every week.

This change, as my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) said, is likely to cause more homelessness, including, in the worst instances, rough sleeping. Apart from the impact on individuals, it is extremely costly to the public purse. Crisis estimates that the annual cost of homelessness per person is between £9,000 and £41,000 per year.

For vulnerable people who have been homeless or are leaving supported accommodation, care or prison, sharing is particularly inappropriate and can be extremely detrimental to their well-being. Currently, the only exemptions from the SRR are young care leavers aged under 22 and those who receive the middle or higher-rate care component of disability living allowance for people who are severely disabled and need a carer. Other people with serious disabilities or illnesses, mental health or behavioural problems, or who are vulnerable in other ways, will not be exempt and will be expected to share accommodation—a situation which, in many instances, will be inappropriate, as professional advisers argue.

As regards homeless people and those leaving an institution, 20 to 35-year-olds are already disproportionately likely to end up sleeping on the streets, while 27% of rough sleepers in London are aged between 26 and 35, and 36% of Crisis’s clients are in the age group affected by this change. The change will place significant barriers in the way of breaking out of the cycle of homelessness and undo progress that has been made by formerly homeless people who have now secured private accommodation. Charities working with young homeless people are often unable to move them into appropriate accommodation because of the SRR, and this problem must increase, all else being equal, as more people are restricted to the lower rate. A Crisis survey of schemes that help people to find private rented accommodation found that the low level of the SRR was the biggest policy concern.

There are consequences for hostels, too, as costly beds will become blocked with people unable to move on. For offenders leaving prison, sharing can be particularly inappropriate. There is already a problem with individuals under 25 bed-blocking probation hostel places because of the SRR, and that problem is likely to increase under the current proposals. It should also be noted that those convicted of serious offences are disproportionately likely to be in the same cohort of those aged about 25 to 34, and, for many, sharing with others poses particular risks. Reoffending costs the economy £13.5 billion annually, but stable accommodation reduces the risk of reoffending by some 20%.

What about people with mental and physical health problems or dependency issues? For these groups, sharing can cause particular problems, as they may have particular needs in relation to the type of accommodation that they can occupy or find it very difficult to get on with other people. There are fears that other difficulties such as bullying could result. People with dependency problems may have a negative effect on others in a shared property.

Moreover, we should consider parents or expectant mothers. Non-resident parents who want to maintain a good relationship with their children can have them to stay in a self-contained flat, but this is unlikely to be possible or appropriate in shared accommodation. When parents live some distance away, that could mean that they are unable to maintain contact with their children. Pregnant single women may have to return to a shared property with their newborn, precisely at the point when moving can be financially and physically unrealistic.

At a time of rising youth unemployment, this change risks penalising young people even further. Those under 25 already face a lower rate of jobseeker’s allowance and are therefore likely to struggle to make up even small shortfalls between the benefit and their rent. Competing with older tenants will make it even more difficult for them to secure affordable accommodation.

What about the impact on communities and houses in multiple occupation? This policy may increase the number of HMOs in deprived areas at a time when some local authorities are using recently introduced powers actively to tackle the prevalence of HMOs, which are often poor-quality properties run by unscrupulous landlords.

We should also consider the problems facing benefit recipients when searching for housing. Claimants can struggle to access shared accommodation, even where it does exist. Adverts for shared property are the most likely explicitly to bar benefit claimants. Research by Shelter suggests that as few as 7% of tenants in shared accommodation would let a spare room to a benefit claimant. Many house-shares are reluctant to let to benefit claimants because of real or perceived problems with the benefits system, such as delays in processing payments and the practice of paying benefit in arrears when rent is payable in advance.

The arguments that I have put forward have been technical, but it is useful to demonstrate the possible consequences in human terms, so I will report a number of case studies of single, homeless men that have been brought to my attention this week by various housing charities. The first is the case of a man with trust and gambling issues who moved from supported accommodation to a self-contained flat:

“He is working with a Tenancy Sustainment Team. He has always tried his best to work and LHA has supported him a little due to the low pay he is receiving. Moving him into shared accommodation would place him in severe hardship.”

Another case study is of

“A man with mental health issues, trust issues and who suffered from abuse as a child. He struggles to be around people.”

He, too, moved from supported accommodation to a self-contained flat and is supported by a tenancy sustainment team. The case study continues:

“To move him into shared accommodation would no doubt place him in either a homeless situation…or end up in prison.”

That is the advice of the professionals.

Another case is that of a young man who was moved on from supported accommodation:

“His main goal was to get accommodation so that he could bond with his child. He has anger issues and works with a Tenancy Sustainment Team worker. His child can now come and stay with him at his home from time to time. To move him to shared accommodation would affect the arrangements with his child that he waited so long for and could well place him back on the streets or lead him to abandon his accommodation. He struggles to support his child with the little money he has at present.”

Another case is that of a 24-year-old who has had one custodial sentence for a sexual offence and has breached his licence on more than one occasion:

“He is currently in a hostel having resided there for three and a half years, but due to pressure…he is having to be moved on. Probation are unwilling to allow him to reside in a shared house due to the risk he poses to females. Probation have advised that should he move into a shared house his offences have to be shared with the landlord and fellow tenants, which means this could put his safety at risk.”

Another case brought to me this week is of a 27-year-old client who is a sex offender. He has been living in a probation hostel and is ready to move on. He is vulnerable and requires ongoing, floating support. He needs self-contained accommodation because of sharing issues, particularly if females live at the property, visit it or stay with other tenants.

Another client has bipolar disorder and suffers from periods of extreme depression and paranoia. He is very concerned. He has been sectioned a few times and is worried about it happening again. He is being discharged and is having to return to a shared house. He finds others knowing about his condition very uncomfortable because there is still prejudice and misunderstanding about mental health issues. All those cases are concrete examples of the consequences of the reform that have been brought to my attention in just the last few days.

What is the Government’s rationale for the change? I will anticipate the Minister’s response slightly by offering a few reasons that he is likely to give. First, there appears to be an argument that many young people share houses and that, everything else being equal, many benefit recipients should therefore also share houses—thus the change to the single room rate. The Government will also argue that the age of the first-time buyer has risen. Although that may well be the case, it is not true that large numbers of people share properties. In fact, 2% of people share properties with someone who is not a relative or a partner. If the changes come in, 17% of those on local housing allowance will be in shared accommodation.

People who are not on housing benefit and who do share, such as young professionals in this city, do so largely out of choice so that they can live in a better location, live with friends or have more disposable income to save for a deposit to get into the housing market. It is simply not the case that the same characteristics apply for housing benefit recipients. What is more, people who are not on housing benefit have access to a much greater pool of properties because, as I have said, many landlords will not let to benefit claimants. People who are not on housing benefit generally have a choice about who they live with, which is rarely available to people on lower incomes.

Many who share accommodation by choice in the private rented sector will do so with one or two others. Largely, that will be more expensive, and so unaffordable on the SRR, claimants of which are therefore likely to have to share with larger numbers of people, with a higher turnover of tenants, and with little or no choice over with whom to share. Unlike students or young professionals, who tend to share with people whom they know or who have similar backgrounds, people on housing benefit often share with strangers, which can lead to inappropriate sharing situations, and suitability and security problems, and it can affect the sustainability of a tenancy. Supportive evidence is provided by the Joseph Rowntree Foundation, which has analysed the SRR and the views of claimants. It says that

“the prospect of sharing with strangers was a source of considerable anxiety”

and

“having to share with older people was noted to be particularly daunting, especially for female claimants.”

I tentatively suppose that the Minister will put forward a second argument: that landlords will lower their rents or people can be supported by discretionary housing payments. The Government have argued that people might be able to renegotiate rents, but, given such significant losses in entitlements—some could be halved—that hardly seems likely. With our housing department, I have done a survey of letting agencies and the current state of the housing market in our local borough. In the cheapest housing market in Greater London, there is no evidence of a lack of demand for such properties, and therefore no evidence of a downward flexibility in rents in our communities. I tentatively suggest that that is probably the case around the country.

The Government also make the case that they have increased the discretionary housing payments budget to help local authorities to give additional support where they consider it is needed. However, the amounts are insignificant. Our borough is, I believe, the fastest-changing community in Britain because of the dynamics of the city’s housing market. It is the lowest-cost housing market in Greater London, with the lowest rents, but it has taken the strain of the city’s demographic shifts in past 10 years. In total, I believe that we will receive some £120,000 of that discretionary money, but I tentatively suggest that that will not quite be enough because of the extraordinary flows of people caused by the broader housing benefit changes proposed by the Government.

I therefore suggest that the argument that the discretionary housing payments are significant enough to allow for the system to bed in does not stack up. Indeed, over a four-year period, the total DHP pot is £190 million. That is intended to help both those who currently experience a shortfall and those affected by all of the changes to the housing benefit system. To put that in context, the Budget announced £1.8 billion of cuts to housing benefit, and estimated a further £215 million saving from changes to the SRR.

The third argument that the Minister might come up with goes something like this: some LHA claimants chose to live in shared accommodation, so there cannot be that much of a shortage. Indeed, some housing benefit claimants do choose to share when they are in fact entitled to live in self-contained accommodation. For some people in some areas, sharing is appropriate, particularly if they have friends they can share with or if they were in a shared property before needing recourse to housing benefit. However, it is quite a different proposition to ask 120,000 to leave their current accommodation and try to find a shared property.

In conclusion, I urge the Government to rethink raising the SRR threshold, or at the very least to delay the measure to give local authorities time to ensure that there is sufficient housing stock to meet the increased demand for shared accommodation. I urge the Minister to reflect on what Centrepoint says when he considers the consequences of some of the changes that I have outlined:

“If young people are not supported to access affordable move-on accommodation, they will be forced to access expensive emergency and supported accommodation for longer periods. This failure to progress can lead to young people losing confidence and re-engaging in destructive behaviour patterns”.

While achieving savings in the short term, the proposed changes could lead to greater costs to the taxpayer in the medium to longer term. I urge the Government to rethink.

16:44

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for Dagenham and Rainham (Jon Cruddas) on securing this debate. It is the second debate of his to which I have responded in the House, and he raised his issues in a thoughtful and measured way. I think that the House appreciates that.

This is a welcome opportunity to consider the shared accommodation rate. Many of the other aspects of housing benefit reform have been aired quite extensively, but this one has perhaps been a bit overlooked. It is important to focus on that and the potential implications. I want to reflect on the proposition: what is now known as the SAR currently applies to under-25s in the private rented sector, and is based on rent levels for accommodation where at least one room—for instance, a kitchen or a bathroom—is shared. The spending review has announced that, from April 2012, it will be extended to under-35s. Furthermore, as the hon. Gentleman acknowledged, there are exemptions for those in certain vulnerable situations. There is also the issue of discretionary housing payments, to which I will return, because he raised some important questions.

Clearly, one reason for introducing this measure is to reduce the budget deficit. It is worth noting, therefore, that it will save £130 million in housing benefits in 2012, rising to £225 million in 2013. There are two ways of looking at that: it is a lot of people, but it is also a significant amount of money for the Exchequer. It is not done lightly, but it is an important contribution to the Department’s efforts to rein in the budget deficit.

On the number of people affected, the hon. Gentleman mentioned the figure of 120,000, but that is the answer to a slightly different question. We think that the figure will be 80,000 to 90,000. Those are the sorts of numbers we are talking about. He is right that the shortfalls, particularly in London, will be significant. Whereas with some of the caps—certainly the 30th percentile —in some cases the shortfall will typically be £10 a week or less, such shortfalls will be very different. The sorts of examples and figures that he gave are available on the internet. Other than in exceptional cases, it is unlikely that people will make up the shortfall from their spare cash. I take his point entirely that the shortfalls will be significant and that, although there might be occasions on which tenants can renegotiate their rents, that will probably be the exception rather than the rule. Although he kindly tried to write my speech for me—I was writing furiously all the good points he made—I am not going to say, “We don’t need to worry, because landlords will just slash their rents”, because that is not realistic.

Why are we introducing this measure? As the hon. Gentleman said, the thinking behind the under-25s rate is to save money and have a level playing field for young people on benefits and other young people on low-paid jobs who commonly will share accommodation. For the under-25s, the figure is about 45%. That means that about 45% of single, non-student—students would obviously bump up the figures—childless people who are under 25 and not on benefits are in shared accommodation. That is our control group. He might ask what the figure is for 25 to 34-year-olds. The answer is 40%. He used a figure of 2%, and I have seen that number, because when I saw the crisis briefing, I thought, “Oh my goodness, 2%”. However, it turns out that 2% is the answer to a totally different question—it includes all tenure types and all ages. The appropriate benchmark is that roughly two in five of the sort of folk we are talking about, and who are not on benefits, are sharing. The question is: what is the appropriate level of support from the taxpayer? Should the taxpayer pay the full cost of a self-contained flat for a 29-year-old, when many of their contemporaries would be living in shared accommodation? That is the thinking behind this.

If, therefore, this measure leads to shortfalls, and if renegotiation of rents is a limited option, what alternatives are available? I have mentioned the limited exemptions, particularly for vulnerable people. The hon. Gentleman downplayed the role of discretionary housing payments rather more than I would, so let me explain why. The discretionary housing benefit budget is increasing nationally from £20 million this year, to £30 million next year and to £60 million in each of the following three years. It is being trebled compared with the year just ending. However, we will not spread the money incredibly thinly across the whole country, but focus it where it is most needed, and the impact of the SAR is one of the things that will dictate where the money goes. I cannot forecast what his local authority will get beyond next year, but clearly London authorities as a whole will get a significant proportion of that increase—I strongly suspect that it will be more than the national average increase.

There is a case for saying that discretionary housing payments are the right approach, whereas using broad categories of people probably is not. The hon. Gentleman mentioned a whole set of people, but what was striking about his individual examples was how individual they were. We do not necessarily want to say that every ex-offender should have support, but to consider particular situations. Clearly, we need some block exemptions for the most vulnerable—we have that—but discretionary funding should be used in specific circumstances to ease some of the examples that the hon. Gentleman gave.

Discretionary housing payments are clearly a top-up, which are not meant to meet the whole rent. Housing benefit is already doing much of that, and discretionary housing payments cover the shortfall. The hon. Gentleman says that £120,000 is not much. Off the top of my head, a shortfall of £20 a week means £1,000 a year, so the sum covers 120 people. It does not sound like a huge amount, but it will treble across the country and can help some of the vulnerable groups that he mentioned.

There is a question about the options for young people. The hon. Gentleman pre-empted one of my points, but I shall make it again anyway. He rightly pointed out that quite a few young people have chosen—some have freely chosen but others may have felt constrained because of availability—to live in shared accommodation. Even though they are over 25 and the benefits system would pay for a self-contained flat, they have chosen shared accommodation.

We think that nearly half the local housing allowance cases that are currently assessed under the shared accommodation rate would be entitled to higher rates if they lived in separate accommodation. Nearly half the people to whom we pay the shared accommodation rate—that is what they get if they are in shared accommodation—do not need to be in shared accommodation because of the benefits system, but are there anyway. I must admit that that surprised me. Clearly, that is not all about choice. It is partly about availability, but it again suggests that what we ask is not quite as unreasonable as perhaps it might seem at first sight.

When considering that group’s characteristics, there is a question about how soon they can support themselves and not be on benefit. Clearly, a shortfall of £30 or £40 is difficult but manageable for a short period for many people, if they have been working, but difficult to sustain for a long time. That group tends to have relatively short jobseeker’s allowance durations. If we consider the 25 to 49-year-olds, for whom data are readily available, we estimate that around 60% of that group have been on JSA for less than six months. Clearly, after six months of a shortfall, someone is well out of pocket. However, although there might be a shortfall at a point in time for quite a few of those people, many might have a reasonable expectation of getting back into work and then being able to afford their rent in self-contained accommodation.

There is a question about what their options are if they decide not to carry on in free-standing accommodation. One option for some will be living with mum, dad or family. The hon. Gentleman and I both well know that it is not a perfect solution or something that works for people who have irreparable family breakdown. It is not a blanket solution. However, in general, that age group—I think they are called the boomerang generation—are doing precisely that. Many 28-year-olds and 31-year-olds are back with mum and dad or family. Perhaps they are saving for a house, and they have made the decision to stay with family because it is cheaper and they can put money by. Should we ask the taxpayer to pay for some 29-year-olds and 31-year-olds to have a flat of their own, rent fully paid, when others have to live with mum and dad and save the money? Again, it is a balance of fairness. Living at home with the family is not an option for all, but it will be for some. The hon. Gentleman talked about bonds with family and their breaking down—I do not know what living with your mum and dad at the age of 31 does to you, but it will be an option for some. At a time when money is tight, it is not an unreasonable thing to ask young people to include in the range of options that they consider.

There is also an important issue, which is underestimated, about being a lodger. Again, I take the hon. Gentleman’s point about individuals with particular needs. Her Majesty’s Revenue and Customs runs a special scheme called Rent a Room. It was introduced in 1992 to boost the private rented sector and was designed specifically to encourage individuals to offer spare accommodation in their homes at affordable rents to low-income groups such as nurses and students. Under the scheme, home owners and tenants who let furnished accommodation in their own homes are exempt from income tax on rental income of up to £4,250 a year. They receive relief on the rent and tax relief on meals, goods and services, such as cleaning and laundry. As people who get less than that amount do not have to tell HMRC, we do not know exactly how many people benefit from the scheme. However, we have survey data from the family resources survey, and roughly 130,000 landlords do not pay tax on their rental income under the scheme.

The situation is very dynamic, and as young people start to realise that they cannot get benefit for a flat on their own and start to look for lodgings, another family who may have lost income through redundancy or loss of overtime in these difficult economic circumstances might wish to let out their spare rooms. So the availability changes over time. There are tentative signs of a new supply of shared accommodation. Indeed, in east London, there is some suggestion that the housing benefit cap will mean that larger family homes will be converted into shared accommodation. I take the hon. Gentleman’s point about HMOs, and I will come back to that in a minute. Clearly it does not solve the problem for those families, but in the context of this debate it could mean three or four new single rooms will be available for young people. The situation is dynamic and changing.

The hon. Gentleman raised the issue of delay or cancellation. Although the change starts in April 2012—on current plans—it would kick in on the anniversary of a claim. So someone who starts a claim in November 2011 would have it renewed in November 2012. The position will not change all at once on a single day so that everyone turns up at the local hostel saying, “I’m homeless.” There will be a gradual change and people will start to explore other opportunities. They will know that the change is coming—we are talking here in late 2010-11—and there will be a chance for new supply to come on stream so that people can think about their options. We are keen not to do these things suddenly because we recognise that people will need time to adjust.

The hon. Gentleman mentioned some of the problems of HMOs, and the Government recognise that those need to be handled carefully. He will know better than most that HMO licensing is mandatory for houses of more than three storeys housing five or more persons. Local authorities also have discretionary powers to extend licensing to small HMOs where they have identified problems with management or property condition. This is known as additional HMO licensing. Local authorities will be able to impose conditions on those licences, such as requirements for occupation by a set maximum number of people or the provision of adequate amenities. Fines of up to £5,000 can be imposed for breach of a licence and letting a property without a licence is a criminal offence subject to a fine of up to £20,000. That is not to suggest that everything is perfect, but the Government are aware of the problems.

Since April last year, there has been a general consent for local authorities to introduce this additional HMO licensing and they do not need permission from central Government to do it. If councils think it necessary in their area—such as the hon. Gentleman’s area—they have those additional powers to crack down on rogue landlords. It is important to point out that sharing a house with a few other people is not synonymous with slum accommodation and rogue landlords. Both versions are out there, and we want to encourage the provision of good shared accommodation and drive the bad guys out.

The Department has always planned to monitor the impact of these changes, but when the other place considered the housing regulations it was agreed, after discussions with Lord Best, that there would be full independent monitoring and evaluation of the housing benefit reforms. I assure the hon. Gentleman that we are committed to comprehensive review of the changes to housing benefit, some of which will come into effect from this April. That will include independent, comprehensive primary research that looks at the effects on different types of households in a range of areas including London. The evaluation will cover a whole list of things, including homelessness and moves; the shared room rate and HMOs; the impact on Greater London; black and minority ethnic households; landlords; the housing market; and the labour market. To update the House, we have just completed an expression-of-interest exercise for potential contractors for the research, and we are drafting a specification for the monitoring. The idea is that the results will be published.

We recognise that these are significant changes, and that there will be people who are adversely affected; that is why we have trebled the discretionary housing payment budget. The hon. Gentleman was absolutely right to raise his concerns about that group, and it is something that we are looking at carefully. I thank him for bringing the matter to the attention of the House and reassure him that we take seriously the points that he raises.

Question put and agreed to.

17:00

House adjourned.

Westminster Hall

Thursday 17th February 2011 Westminster Hall

Thursday 17 February 2011

[Albert Owen in the Chair]

Rail Investment

Thursday 17th February 2011 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Miss Chloe Smith.)

14:30

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

I am pleased to speak under your chairmanship, Mr Owen. I am delighted to have the opportunity to discuss rail investment in this Westminster Hall debate. I welcome the Minister to her place; I shall be listening carefully to what she has to say.

The Transport Committee published its report on priorities for rail investment in February 2010, during the previous Parliament. The Committee wanted to assess the value of investing in Britain’s rail network and to identify essential rail priorities for the future. We emphasised the importance of protecting Government funding of £16 billion committed to rail projects between 2009 and 2014. We also identified some of the emerging priorities for the next control period, from 2014 to 2019.

We should remember that rail is a great success story; 1.2 billion passenger journeys were made last year, and 100 million tonnes of freight, or 9%, was carried by rail. The Committee emphasised in its report the importance of rail to the economy, as well as to the environment. There have been many changes since the report was published last year. We have had a change of Government and a comprehensive spending review, but the questions raised by the Committee and the priorities that we identified remain highly relevant. I shall focus on two broad areas this afternoon. First, I shall deal with the Government’s more immediate rail priorities during this Parliament. Secondly, I shall look ahead to some of the important rail schemes that will require investment during control period 5 and beyond.

Following the comprehensive spending review, I am pleased to say that many major rail investment commitments have continued. Indeed, £18.2 billion was committed for that period. Although I welcome that commitment and that scale of investment, we should recognise that much of that money was already contractually committed, and works on the ground for many projects were well under way prior to the spending review. Setting out priorities and committing spending in that way was done to ensure that the rail industry had some certainty about investment, and I am glad that that could be achieved even in the current financial situation. The Government have confirmed their commitment to Crossrail and to Thameslink, although there are delays and reductions in funding.

[Margaret Beckett (Derby South) (Lab)]

I congratulate my hon. Friend not only on her Committee’s report but on securing today’s debate. I am particularly glad to hear her mention Thameslink. The report mentions investment in the north, but she will be well aware that it is the order of new trains for Thameslink that will release the existing fleet to newly electrified projects in the north-west. She spoke a moment ago about the need for certainty in the rail industry. I am sure that she—and, I hope, the House—will sympathise with the concerns of the thousands of my constituents who work for Bombardier and in the supply chain, who are anxiously awaiting the go-ahead for the Thameslink project.

[Mrs Ellman]

I thank my right hon. Friend for her comments and I agree with her sentiments. The delay is problematic in its own right, and it certainly has consequences for what is termed the cascading of rolling stock to the north, among other places. The major redevelopment of Birmingham New Street and Reading stations is proceeding.

[Kelvin Hopkins (Luton North) (Lab)]

I reinforce the strong point made by my right hon. Friend the Member for Derby South (Margaret Beckett). We must do everything that we can to maximise the possibility of keeping manufacturing in Britain. Bombardier, a British-based firm, should be considered for that if we are serious about rebuilding our manufacturing base.

[Mrs Ellman]

My hon. Friend makes an important point. He reinforces the important link between rail investment and jobs.

Electrification that was planned long before the comprehensive spending review is going ahead, but only in part. I am pleased that the Government have confirmed the electrification of the Manchester-Liverpool line and the line from Preston to Blackpool. However, there are still problems with the electrification of the Great Western main line.

[Paul Flynn (Newport West) (Lab)]

On top of the other hammer blows that Wales has suffered under this Government—the cancellation of a prison in north Wales, the cancellation of plans for a Severn barrage and the loss of jobs at St Athan—comes the fact that electrification of the line to Wales will not go ahead. My hon. Friend will be aware of the great disappointment that that has caused, and the damage that it will do to Wales’ perceived image in the rest of the United Kingdom.

[Mrs Ellman]

I thank my hon. Friend for his comments. Indeed, electrification has been promised between London and Didcot, Oxford and Newbury; but there is no promise and no confirmation of electrification of the line into Wales. In December, the Secretary of State told us that discussions were ongoing with the Welsh Assembly Government, but what will happen is still unclear. I share my hon. Friend’s concerns about the impact of the delay—is it a delay or a postponement, or is it a cancellation?—on the Welsh economy. In addition, the ongoing saga of the inter-city trains has implications for electrification on the line, to which I shall refer later.

The Committee’s report also advocated the electrification of the midland main line that links Sheffield and London. It is unclear what progress is being made there. It is clear that enhancing our rail network represents a worth-while investment of public funds, with economic regeneration and environmental benefits. The comments of my right hon. and hon. Friends reinforce that point.

It is not only investment that is important. It is equally important that we secure value for money for the public purse. The previous Government asked Sir Roy McNulty to study the rail industry and to consider how to secure better value for money. It is unacceptable that our rail industry is up to 40% more expensive than its European comparators, as the Office of Rail Regulation discovered. Sir Roy published his interim findings in December 2010. Promisingly, he has identified potential savings of up to £1 billion, which he believes can be achieved without cutting services. Like the rail industry, my Committee awaits Sir Roy’s final report with great interest. Certainly there is a mood for change, and it is important that the Government seize this window of opportunity to make improvements.

The interim findings of the McNulty review suggest that the way forward is a greater alignment of incentives between the different players in the industry. The Government have already set up a high-level group with the industry to examine the options for Network Rail and train operators to work together more efficiently. I would be grateful if the Minister were to elaborate on the options that the Government are considering, and whether those aspirations will result in real long-term savings to the industry, without compromising passenger safety or service provision.

The Secretary of State has promised a White Paper on the future structure of the industry, following the findings of the McNulty review. I hope that it will spell out the Government’s broad longer-term strategy for the rail industry. Do the Government share the previous Government’s aspiration that increasing capacity on the rail network must be at the heart of their strategy? As passenger numbers and the amount of freight carried by rail continue to grow, we need to increase capacity. As right hon. and hon. Members know, the issue of overcrowding remains a serious problem on parts of the network, particularly at peak times. Overcrowding is a consequence of success and must not be ignored, and neither must its related health and safety issues, which are often hidden.

Giving evidence to the Committee in October 2009, the Office of Rail Regulation forecast that passenger numbers would double over the next 25 to 30 years. Alleviating capacity constraints must be at the heart of any strategy on the future of the rail network. Will the Minister tell us something about the White Paper that is expected soon? What sorts of policy initiatives will it contain and what kind of consultation will it be subject to?

The Committee recognised that rail was important for the environment, economy and regeneration. I was concerned to see that in January, when the Department published its report “Public Attitudes towards Climate Change and the Impact of Transport”, it did not mention rail. I hope that that was an unfortunate omission. None the less, I would like some reassurance from the Minister that the Government recognise the environmental benefits of increasing rail travel.

I come now to the important issue of rail fares. The Government have announced that regulated rail fares will rise from RPI plus 1% to RPI plus 3% from 2012 to 2015. Disturbingly, they have stated that train operators should actively look to manage overcrowding through the fare box; in other words through increasing fares.

[Martin Horwood (Cheltenham) (LD)]

I am reluctant to correct the hon. Lady as she is giving an expert explanation of the Select Committee’s point of view. None the less, will she not accept that although rail fares can rise by that amount, they will not necessarily do so?

[Mrs Ellman]

I do not totally agree with the hon. Gentleman, and I will explain why in a moment. My concern is that it now appears to be a deliberate Government policy to drive people off rail by increasing fares. Indeed, it seems rather perverse. It is true that Government policy is to increase fares by an average of RPI plus 3% . I must stress, though, that that is not an actual increase; it is an average. The reality could be a rise of RPI plus 8% for individual fares, which is a very great increase indeed. For example, the annual season ticket between Bournemouth and London would increase by £211 at RPI plus 3%, but by £645 if RPI plus 8% was applied, which is possible under the Government’s formula.

Current forecasts for the third quarter of 2011 are that RPI could be 3.9%, the base against which RPI for the following year is assessed. That means fares could rise by an average of 6.9% in 2012, with individual fares increasing by up to 11.9%. Those are significant increases and a matter of great concern. We all recognise that there are economic and financial problems, but it is disturbing to think that there could now be a national policy to price people off rail. I look forward to hearing the Minister’s response to that concern.

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

The hon. Lady is making an excellent speech. No one wants to see fares rising, but the economic reality is that if we are to continue investing in the railways, we must increase fares. Does the hon. Lady not think that if we are moving from the retail prices index to the consumer prices index, fares should increase by CPI plus 3% rather than RPI plus 3%.?

[Mrs Ellman]

The hon. Gentleman makes an interesting point. We must all recognise economic constraints, but we have to consider seriously the implications of any policy that might price people off rail.

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

I hope that I can give the hon. Lady some reassurance. Of course we want to see passenger numbers increase. That is important for our economic future and for our environmental policies. We have had to take a difficult decision on fares in order to deliver the vitally needed rail capacity improvements. As we are dealing with an enormous deficit that we inherited from our predecessors, we have had to ask passengers to pay a bit more to contribute towards the investment that they want to see put into the railways.

[Mrs Ellman]

I thank the right hon. Lady for her comments. I recognise the Government policy context in which these decisions are taken.

Let me now draw attention to the issue of rolling stock. If people are going to be asked to pay more for their fares, it is reasonable to ask whether the rolling stock will be adequate to ensure that people have a reasonable journey. The more people pay, the more concerned they will be if the rolling stock is not adequate. The situation is extremely confusing. The announcements made by the Department for Transport on what rolling stock is to be provided, where and when have been unclear.

When our Committee issued its report last year, we expressed deep concern at the postponement in issuing the rolling stock plan for 1,300 new carriages that were expected by 2014, and at the uncertainty and confusion the delay was causing within the industry, but we recognised that the commitment to electrification legitimised the pause in assessing exactly what rolling stock was required and when. However, since then, little real progress has been made in delivering new carriages. Instead, we recently received another announcement by the Department that 2,100 new carriages would be delivered by 2019, 1,850 of which will be net additional vehicles. As my right hon. Friend the Member for Derby South (Margaret Beckett) said, many of these are for the Crossrail and Thameslink projects, which will then lead to electric carriages on the network being cascaded to other parts of the country, including the north. If and when that happens, I hope that it will not be a matter of the north getting the cast-offs from the south. I expect the stock to be in good condition and well suited to meet the needs of the people in the north.

Given that the completion dates for both Crossrail and Thameslink have been delayed to 2018, will the Minister tell us when these much-needed carriages that the industry has been waiting for, will finally be delivered? How many of those carriages expected by 2014 will actually be delivered by that date?

[Mr Leech]

Does the hon. Lady not accept that the previous Government did not have a good record on delivering on promised rolling stock?

[Mrs Ellman]

Indeed. The hon. Gentleman may recall that previous reports of the Transport Committee during the time of the previous Government were not slow to criticise the inadequacies of the Government where we felt it was appropriate to do so, and rolling stock was one of those areas. We also have the ongoing saga of the new generation of InterCity trains. In November, the Government announced that they had narrowed their options for the replacement of the old InterCity 125s down to two: a bid from Agility Trains for a mixture of electric and hybrid trains; and a proposal for a fleet of all-new electric trains that could be coupled to new diesel locomotives where the overhead electric power lines end. I know that many of my colleagues in Wales are anxious for that decision to be made because of the impact that it will have on the Great Western main line to Swansea. Again, the Government have not been very clear about what is happening regarding that line and I would be grateful for any clarification.

During the next control period, which is between 2014 and 2019, and beyond, it is extremely important that we have continuing and substantial investment in the rail network, improving it to accommodate passenger growth and to alleviate unacceptable overcrowding. One of the priorities for the next control period must be investment in the rail infrastructure in the north of England. Our Committee’s report shows very clearly how the south, particularly London, has benefited from rail investment. We support that investment, but we noted in the report that when we examined the amount of transport investment per head we found that there was three times as much in London and the south-east as in other regions of the country. We support investment in London and the south-east, but similar interest should be shown in the needs of the north.

The particular project that we recommended in our report was the northern hub. That bottleneck in the Manchester area critically affects the operation of both passenger and freight services right across the north of England, including in Leeds, Liverpool and Newcastle. The Northern Way study concluded that addressing the northern hub could provide economic benefits worth up to £16 billion for the economy of the north.

Investing in the northern hub remains as important as ever. However, there is particular concern about that issue, because of what has happened to the organisations that brought the project together. The combined work of the three northern regional development agencies was very significant in developing the project, costing it and working out its implications and benefits. Sadly, the project for the northern hub—the Northern Way project—may no longer be supported because the RDAs are being disbanded. Indeed, it is very unclear what will happen to the organisation that has developed and costed that project in such great detail. I would be very pleased if the Minister could confirm that she will support that project as a top-priority project for the north in the period ahead.

The longer-term investment priority is the development of a high-speed network. Our Committee welcomed the previous Government’s change of policy when they decided to support high-speed rail. However, we emphasised that investment in high-speed rail should not detract from investment in the existing classic network. Moreover, if high-speed rail is important for the route from London to Birmingham—as the current Government have stated, and I agree with them—it is equally important that it extends to the north.

The case for high-speed rail has been put forward, based largely on the need for additional capacity for both passengers and freight. That argument is very important, but it is also very important that the economic impact of high-speed rail is recognised. Indeed, the Government have said as much many times. They have said that their support for high-speed rail is based on the need to reduce the disparities between north and south. That means that if high-speed rail goes ahead, as I hope it will, it must go beyond Birmingham to the north.

[Andrea Leadsom (South Northamptonshire) (Con)]

Does the hon. Lady accept that there are concerns about whether High Speed 2 is necessary to achieve the capacity increases that are so badly needed between London and Birmingham?

[Mrs Ellman]

I thank the hon. Lady for her comments. That is an important issue and indeed it is extremely important that the Government spell out their case very clearly on the need for HS2, particularly given the considerable opposition to HS2 from a number of quarters. The Government must do that.

Finally, my Committee has recently returned from a visit to Brussels where we met the Transport Commissioner, European Commission officials and Members of the European Parliament, including members of the Transport and Tourism Committee. One of the subjects that we discussed was the UK’s failure to apply for funding from the European Union. We received information that suggested that the EU might be willing to part-fund the cost of feasibility studies into HS2, paying 50% of those costs. However, it appears that no application has been made for Trans-European Transport Networks, or TEN-T, funding, which could part-fund the costs of looking into HS2. Indeed, when members of my Committee questioned the Minister recently in our inquiry into European issues, it appeared that the UK was rather slow, or perhaps loth, to apply for European funding. I wonder if we could receive some assurance from the Minister today that the Government will look at that issue again, particularly the possibility of securing European funding for studies into the viability of HS2.

Deciding the priorities for rail is a very important task. Our Committee’s report was produced a year ago, but it is clear that the priorities and concerns that we highlighted are equally relevant today. I hope that this debate today will help to take the debate on rail priorities forward and help to secure increasing investment for the extremely important service that is our rail network.

[Albert Owen (in the Chair)]

Before I call Mr Paul Maynard, I wish to inform Members that I will ask Mrs Ellman to make some concluding remarks.

14:56

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

It is a pleasure to serve under your chairmanship, Mr Owen, as it is to follow the Chair of the Transport Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman), whom I hold in great esteem.

It is also a great pleasure to discuss the Transport Committee’s report on rail priorities. It is not one that I have any personal responsibility for, as I had not been elected to Parliament when it was drawn up. None the less, priorities for rail investment is a worthy topic for debate, not least because of the amount of public money that our railways consume. We have a democratic duty to ensure that that investment is properly apportioned.

For me, the sacred text in this area remains the Eddington report, which the previous Government commissioned and which included several pertinent points. In particular, when prioritising investment Sir Rod Eddington stressed that we needed to focus on three main areas, namely congested urban areas and travel-to-work areas, key inter-urban corridors and key international gateways and hubs. All three were coming under pressure from increasing congestion and the associated unreliability.

As the hon. Member for Liverpool, Riverside pointed out, a lot has changed since her Committee’s report was published. We have a new Government—we even have a new MP for Blackpool North and Cleveleys. We have also had welcome confirmation from the Government of the importance of infrastructure investment. Amid all the talk of spending reductions, I was pleased to learn that many of the feared cuts that we were all told were coming down the line did not materialise and that important projects such as electrification are continuing, which is welcome. It is also true that the issue of high-speed rail has assumed a much greater importance in our political discourse, and I will discuss that issue in more detail later.

One aspect of policy making has been diminished since the election, which is regrettable—maybe this is a misinterpretation on my part; I do not know. As a Member of Parliament for the north of England, I recognise that regional development agencies had their faults and their problems. They were by no means perfect organisations, and they needed immediate reform. I agree with the hon. Member for Liverpool, Riverside that one area where they made a contribution was the quality of the transport planning that they provided through the Northern Way project. I have had the pleasure of meeting representatives of that project time and time again. The quality of the work that they have done was one reason why the Government’s infrastructure announcements for the north of England went down so well, and I have genuine concerns about the quality of policy making if the Northern Way does not find a niche within the new Government structures.

The north is different, and this is not just special pleading or the usual carping about London getting all the transport money. We know that there is a substantial productivity gap between the north and the south of England. I recognise that London is our national capital—a global capital, if anything—and that it needs substantial public investment, but we cannot overlook the fact that the north has, over many years, been getting a raw deal rather than its fair share.

The hon. Member for Newport West (Paul Flynn) suggested earlier today that I read his book on how to be a Back Bencher. I have learned one essential truth so far, which is that it is only when an MP is bored with talking about an issue that he knows he has got his point across. With some trepidation, therefore, I shall discuss the northern hub.

When the report was first published, the northern hub was still the Manchester hub, and I take some pleasure in having played a role in getting it renamed, if only to reflect the fact that it benefits the whole of the north of England and the north of Wales from Anglesey to Newcastle. The northern hub is not only a building in Manchester, but a series of discrete projects that unlock the potential of the rich, dense rail network that exists across the north of England, and it is vital that it goes ahead. I welcome all the positive indications that we have had so far from the Minister. Every time I have bored her and the Secretary of State by asking about it, I have got a nod and a wink that it will be in control period 5, and I ask once again for that to be restated.

We have to realise that whenever we discuss inter-city travel in the UK, for those of us who are London-centric or come down here all the time, north-south journeys matter, but for business men in my constituency and across the north of England, east-west journeys are just as important. People in Manchester occasionally need to go across the Pennines to Leeds and even further to Newcastle. Sometimes, my constituents want to go to the north Wales seaside, because they have had enough of Blackpool—surely not. East-west travel matters, and the Council for the Protection of Rural England backs better trans-Pennine rail links, although I am not sure whether it would do so with HS2.

[Kelvin Hopkins]

I strongly agree with the hon. Gentleman’s view about east-west links being equally important. Does he agree that it is vital to keep the Woodhead tunnel for future transport use and not let it be poisoned by having electricity cables put through it? The previous Government arranged for that to happen, and I hope that the present Government will continue to preserve the tunnel for future transport use.

[Paul Maynard]

As with all matters relating to rail freight, I bow to the hon. Gentleman’s superior knowledge, and would not dare trespass on it for fear of being shown up as an ignoramus.

I shall discuss HS2, because it is so controversial and cannot be avoided. The arguments are difficult, and whichever side of the argument someone is on their policy must be evidence based, because it is only through an evidence base that the politics of the proposals can start to be addressed. I recognise that there are arguments on both sides. As a northern Member of Parliament, I see immense potential benefits, but I am sure that if I were an MP in an area affected by the proposed route, I would have enormous concerns. It is, however, dangerous to base our argument solely on a few simplistic notions. Building the railway will not in itself heal the north-south divide, and it is foolish to base the argument on that soundbite alone. It is equally dangerous to base it on saying that there will somehow be magnificent environmental benefits by domestic aviation being rendered unnecessary. At the moment, we cannot see even one or two years ahead in our domestic aviation environment, let alone 15 to 20. Who knows where Heathrow will be by then?

[Martin Horwood]

The evidence from other high-speed rail systems around the world is that where they are over sufficient distances—which, admittedly, probably means further than Birmingham—there is something like an 80% drop in air traffic over those distances. London to Paris is a good example.

[Paul Maynard]

I agree almost entirely with that point—but perhaps only 80%. It very much depends on where someone is flying from and where they are going to, and I suggest that in 15 years’ time perhaps no one will be flying domestically to Heathrow, if only because it might have ceased to be an international hub. We might all be flying to Paris, Amsterdam or Frankfurt, but that is another matter entirely.

The key variable in the discussion on HS2 is demand. Whether demand will increase is contested, but as someone who travels regularly on the west coast main line, I know full well that that line is already reaching capacity. The east coast main line is also struggling, and we cannot have people being herded into pens at Euston station on a Friday evening and say that we are not at capacity already. I accept entirely the argument that extra capacity has to be provided, but it is not simply a matter of expanding a few platforms here and inserting a few carriages there, making cattle class a literal concept for millions of travellers. We have to discuss what type of capacity to provide, and I realise that that is perhaps a confused area for people on both sides of the argument.

[Mr Tom Harris (Glasgow South) (Lab)]

The record will show that the hon. Gentleman has just referred to a literal cattle class. I hope that he will take time to examine exactly what that means. When I was in a previous position and people used to challenge me about whether it was right to treat humans in the same way as cattle, I was always quick to point out that the cattle’s final destination was somewhat less enjoyable than Paddington.

[Paul Maynard]

I accept the hon. Gentleman’s point, but the conditions that many passengers are forced to face on our inter-city trains are analogous to those experienced by animals, even if their end destination is perhaps more pleasant.

[Mr Leech]

My hon. Friend has mentioned that he uses the west coast main line regularly, as do I. The trouble is that if the number of west coast main line trains from Manchester to London were increased from three to four an hour, it would have a detrimental impact on local services. That is why high-speed rail is so important in ensuring that we can maintain local and inter-regional services as well as the inter-city ones.

[Paul Maynard]

The hon. Gentleman has anticipated my next point. I take entirely the point that the network of high-speed rail that has been mapped out links areas with a high concentration of service industries, which is key to saying that the predictions for demand are more robust than they were, for instance, in Spain, where Madrid and Seville were linked. Seville had a high level of heavy industry but no service industry, so no demand occurred.

I want to make a number of other points before concluding and allowing as many hon. Members as possible to participate in the debate. May I make a plea to the Minister on open-access rail? We have just seen the sad failure of the Wrexham and Shrewsbury service, which was a good example of open access, but it failed to make money. There are other examples around the country, such as Grand Central, which have shown that open access can work. I urge the Minister unambiguously to state her support for open access in the forthcoming White Paper, and indeed today, because many open access companies are uncertain about their future. In Blackpool, open access is perhaps our only chance of getting a link to London. I urge her, therefore, to make some positive noises on open access.

In conclusion, whenever we write reports, there is always the temptation to come up with a wish list, and I have fallen into the trap myself today by highlighting the northern hub. Wish lists are easy to make, but it is far harder to have a discussion and come to a view on how to prioritise policy making. How do we reconcile all the different competing local priorities that we each have in our constituencies with the apportioning of public money? That is not easy.

[Guto Bebb (Aberconwy) (Con)]

As a north Wales MP, my question concerns the extent to which there should be a recognition of the economic impact of railway investment, and to what degree the investment should take regional variations into account. My understanding is that investment in railways does not, for example, take into account investment in Wales, so we cannot even compare investment in Wales with investment in other parts of the United Kingdom. Should we have a system that allows us to identify investment in Wales as a percentage of overall investment in the railways?

[Paul Maynard]

It is important that we have more local decision making. It is easy to say such things, and we all do—we all talk about localism now—but we have to realise that it is not a case of build it and they will come. We recently heard evidence about Stratford International rail station, which has no international rail services. Merely building transport infrastructure does not guarantee passengers or even economic growth. Those involved in local government often place too much hope in signature schemes, which they spend public money on promoting. They tell us that those schemes will be transformational, but, 10 years down the road, they are shown to be nothing of the sort.

We need more innovation. Yes, it is easy to say that, too, and we all do. Small local schemes—a passing place here, a passing place there, a slightly longer platform somewhere else—can be cost-effective ways of increasing capacity. However, priorities also need to be decided at the regional and sub-regional levels, as well as at a national level. We have an increasingly complex and dense map of economic decision-making organisations. We have travel-to-work areas, city regions, local enterprise partnerships, strategic transport partnerships and smaller, micro-local organisations. One of the best transport submissions that I have ever seen came from a body called Upper Calder Valley Renaissance. It was incredibly powerful and full of good ideas, with a real understanding of the local transport economy, but it covered a micro-area.

I make a plea to the Minister to somehow grasp that nettle. We have a profusion of expertise out there, which enables us to make good quality, evidence-based decisions at local level. I despair when I hear the Department for Transport arguing the toss over the siting of a vending machine on a platform at Crewe station, because that has nothing to do with the Department. However, the Department has a role to play in ensuring that rail investment decisions are based on the greatest economic benefit and that proposals are evidence based. We can then worry about the politics.

15:12

[Kelvin Hopkins (Luton North) (Lab)]

It is a pleasure to speak under your chairmanship, Mr Owen. It is also a pleasure to follow the good speeches that we have heard so far, especially from my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), who is the Chair of the Transport Committee. I have been a member of the Committee for the past few months, and I have much enjoyed that time.

I am a passionate lover of, and believer in, railways. Even when they were unfashionable, I still believed that they would be the transport of the future. I suspect that they will outlive the internal combustion engine and possibly even air flight and that, however far ahead we look, there will still be railways. I have a real interest in passengers and freight, and I would like to think that I have some informed proposals to make.

I should declare some interests. I am the chair of the ASLEF group of Members of Parliament. I am also a member of the National Union of Rail, Maritime and Transport Workers group, and my constituency fund received RMT donations before the last election. However, the views I express today have nothing to do with anyone else—they are purely my own—and I would like to think that I have given them sufficient thought to make them worth while.

Like Eddington and others, I am somewhat sceptical about HS2. That is not because I would not, in the best of all possible worlds, want a superb high-speed line that went everywhere. However, ours is a relatively small, densely populated country, and given that funds are, inevitably, limited, there is, as Eddington suggested, a considerable opportunity cost involved in spending money on HS2 rather than other things. It would also be expensive.

I think I can also make the case that HS2 is not absolutely essential to provide the transport that we need. We need lots more investment in existing passenger routes. Improvements to existing routes could make an enormous difference to their capacity. There are a number of problems on the east coast main line. There are two tracks at Welwyn, and we need another viaduct so that we can have four. That bottleneck causes serious problems, and that would be the case particularly for high-speed trains, especially during peak hours of commuter traffic. We therefore need another viaduct at Welwyn.

Further north, we need a flyover where the Cambridge trains branch off at Hitchin. We need passing loops at Peterborough and a flyover at Newark. If we had those, we could have 140 mph non-stop working between King’s Cross and Edinburgh if we chose to. Indeed, in 1992, a trial run was undertaken between King’s Cross and Edinburgh, with a two-minute stop at Newcastle. The journey was done in three and a half hours based on a standard operating speed of 140 mph, so these things can be done. It is interesting that the proponents of HS2, looking into the future, came up with a time of three and a half hours for services between King’s Cross and Edinburgh—exactly the same time as was achieved in 1992.

We need new signalling and higher running frequencies. We can have much higher frequency running if we have modern signalling. One problem is that we have 50-year-old signalling systems. Geographical interlocking signal boxes were installed in the 1960s and they are now out of date and need replacing. With modern signalling, we can achieve higher frequencies and faster throughput.

[Guto Bebb]

As a Welsh Member, I would be fully in favour of electrifying the south Wales line. As far as the north Wales coast line is concerned, the hon. Gentleman is completely right that signalling improvements could make a huge difference to the frequency and speed of services, and that would be critical to the area’s economic success.

[Kelvin Hopkins]

Indeed, and that is true not just of north-south routes, but other routes, too.

Unfortunately, we have a lot of ancient equipment on the railways. It was worthy in British Rail’s time, but we have moved on. One problem with privatisation is that companies have no great incentive to improve investment in such things when they are trying to run as profitably as possible with existing equipment. Some people, including Eddington, suggest that capacity on main lines could be doubled with modern signalling and more frequent running. We could have trains every 180 seconds on those routes if we get the modern signalling.

We have heard a lot about extra rolling stock. In the short term, there are more than 100 unused carriages in Ireland. They are essentially Mark IIIs, and they could be immediately imported, re-bogied and used on main lines in Britain. Actually, they are more modern than our Mark IIIs because they have automatic doors, rather than slam doors. They could be bought cheaply now and installed quickly on our routes. That is a short-term fix—obviously, we want more investment and more rolling stock to be built, particularly by Bombardier—but we can make such changes.

On the west coast main line, the maximum operating speed will be 130 mph because there are tighter curves than on the east coast main line. However, 130 mph operation with modern signalling and high-frequency trains would still be sufficient, particularly if we got freight off the lines. That brings me to my next proposal, which is to get freight off the lines. Those who know me well will know that I have been proposing for a long time that we have a dedicated freight route from the channel tunnel to Glasgow, which would link all of Britain’s main conurbations. Why do we need a dedicated freight line? When it comes to existing freight routes, passengers and freight do not mix. They have different operating speeds and so on. Time and again, when there is a bit of a problem with a passenger train, the freight trains will be parked on one side while the passengers are given priority—people get much more upset than freight when they are delayed. Of course, freight operators get upset, but they have to suffer. However, if we have a dedicated freight line with no passengers, we would overcome those problems.

[Mr Leech]

The hon. Gentleman has been a long-time supporter of a dedicated freight route, but is it not possible, with the onset of a High Speed 2 line, that the extra capacity on the existing network would be enough to provide extra routes for freight movement? I totally agree that we need to move more freight from road to rail, but with the onset of an additional, high-speed line there would surely be enough capacity on the existing mainline networks to provide the necessary service.

[Kelvin Hopkins]

The hon. Gentleman raises the point that I want to address now. The problem with putting more freight on such routes is that it would be impossible to fund the provision of sufficient gauge. It would be prohibitively expensive to make all the tunnels, bridges, platforms and so on able to take freight. We must have trains these days that are capable of taking full-scale containers—that is W10—and I suggest a scheme that could take full-scale lorry trailers on trains. Hauliers would put their trailers on the trains and they would be taken straight through from Glasgow to Rome, or Rome to Glasgow. I have spoken to the logistics managers of big companies and asked whether they would like to bring their water, wine or whatever from Bordeaux, which is a favourite town of mine, to Birmingham. They say it would be wonderful—fabulous—to send it all the way on the train. What they do now is train it to the coast of the continent and then put it on lorries. That transit would become unnecessary. They could roll a trailer on in Rome or Bordeaux and roll it off in Birmingham or Glasgow.

The problem with trying to upgrade all the existing routes for freight is that there would have to be a through-operation for continental freight trains. They are larger gauge and cannot get through our platforms, because they are wider, or through our tunnels or under our bridges, because they are taller. Certainly we could never have lorry trailers or double stack containers, as we are suggesting. To get serious volumes of freight through, a dedicated freight route is needed, and that is what our scheme is about. As I have said, I have no pecuniary interest in it. I have been passionate about it ever since I heard about it some years ago, and I have spoken on many platforms. I took a team of people to see Geoff Hoon when he was Secretary of State for Transport; they included representatives of supermarkets, Eurotunnel, the rail constructors and AXA—the insurance giant that funds terminals. There were 15 of us. I think that we answered every question put to us adequately. We could not persuade the Secretary of State then, but I hope that the present Government may listen sympathetically, at least.

What I propose could be done very cheaply. We have a precise route, which would involve only 14 miles of new route, nine of which would be in tunnels. The route would, as I have mentioned, use the Woodhead tunnel. The rest would be on existing under-utilised routes and old track bed. Initially we put a cost of £4 billion on it. One of the rail constructors said it could do it for £3 billion. We are now being generous and suggesting £6 billion; but that is still one third of what we propose to spend on Crossrail—which I also support. Nevertheless, our whole scheme, with its 400-mile route, would cost a third of what we are to spend on Crossrail, and would be commercially viable, because of the amount of traffic on it.

[Mr Tom Harris]

Just for the record, and so that we are talking about exactly the same figures, is my hon. Friend aware, when he talks about the scheme costing a third of what Crossrail does, that the Government’s funding of Crossrail is less than £6 billion, and is a third of the total?

[Kelvin Hopkins]

Indeed. I suggest, although I am a public investment person, that the scheme I am describing would attract outside investment. Already, at the meeting with Geoff Hoon, AXA said it would fund the terminals. It already does that. The prospect would be commercially viable. We suggest it would take 5 million lorry loads off the roads.

Finally, the scheme would make a massive difference to carbon emissions. Heavy freight taken by road produces 12 times as much CO₂ per tonne-km or tonne-mile as freight taken by rail. Even lighter freight produces six to eight times the amount. That is a massive carbon saving from rail. Every tonne we put on to rail makes a substantial saving in CO₂ emissions on those 5 million lorry loads a year on a 400-mile route. That would also transform the links between the northern economies and the continent of Europe and breathe new life into the northern, Welsh and Scottish economies. It would not just be about the south-east. At the moment lorries must get through the treacle of the south-east. With a through, dedicated rail freight route we would overcome that problem. It would be of enormous benefit to colleagues who represent northern constituencies. Instead of being peripheral to the core of the European economy they would become part of the central European economy, which would benefit them and the country enormously.

15:24

[Duncan Hames (Chippenham) (LD)]

I want to express to the hon. Member for Liverpool, Riverside (Mrs Ellman) my appreciation for the work of her Committee in producing its report, and providing us with the opportunity to debate an issue that is vital not only for our railways but our economy and environment. The report identifies nine priorities for rail investment in control period 5, from 2014 to 2019. I want to address three in particular: rolling stock, to deal with capacity constraints, electrification and operational strategy, such as new signalling technology. I do not expect the Minister to make my constituents a national priority, but I make no apology for pursuing their interests, which enables me to show the wider merit of the proposals in question for the rest of the country.

Any debate about major infrastructural investment decisions needs to take a long-term strategic view, and should include all parts of the supply chain for the industry. It is a matter of concern that no such long-term strategy exists in the rail industry. We do not want to risk directing public funds to the wrong projects, or to poorly timed projects, in an unco-ordinated way, as it is costly and inefficient to stop and start again. Nor is it a good idea to subject major transport investment schemes to the vagaries of political, or even economic, cycles. A new planning framework, extending beyond the current five-year planning process of the Government and the Office of Rail Regulation, setting out a clear vision for investment, covering a period of as much as 25 years, would go a long way to combating that short-termism. Longer franchises are also a necessary component of longer-term planning. Suppliers would be able to invest with more confidence, particularly in the arena of technological innovation. The lack of a long-term strategy currently makes it difficult to research and develop the technologies that ultimately save travellers’ time and taxpayers’ money.

The Committee identified the Manchester hub as a top priority for control period 5. I would not want to detract from its observations, but a similar logic applies to Bristol and its travel-to-work area. Bristol is the biggest city outside London in the south of England and the eighth largest in the United Kingdom. From a commuter perspective, on Brunel’s railway, Bristol looks like an attractive proposition, which it is as long as people do not mind how full or late their train to work might be. Network Rail’s Great Western route utilisation strategy, which was published a month after the Transport Committee’s report, identifies Bristol’s rail capacity at peak times—and, indeed, the performance there—as key gaps that will be in need of attention and investment in control period 5. Bristol Temple Meads, in particular, is a pinch point on the network, and passenger numbers are projected to grow by 37% by 2019. That will result in passenger delays, which are already among the worst on the network, increasing by more than a third.

The route utilisation strategy isolates several key regional services that are suffering severe overcrowding and on which investment in extra carriages will reap significant benefits for capacity and connectivity. For example, five extra vehicles on the Cardiff to Portsmouth line, which passes through Bradford-on-Avon in my constituency, would make it possible to provide two extra services in every morning peak, and three each evening. Just one or two carriages from the humble 153 class, allocated to the trans-Wilts line, would also reduce the number of passengers in congested Bath, who only want to get across Wiltshire.

Further electrification of the national rail network is to be welcomed. Electric trains are cheaper, faster, greener and more reliable than their diesel counterparts. They transport a greater number of passengers, and since they are lighter and cause less infrastructural wear and tear their operating cost is roughly half that of their diesel equivalents. The Great Western main line, which clearly is not anticipating the benefits of High Speed 2, has one of the strongest cases for electrification. I welcome the Transport Secretary’s announcement before Christmas that the line from Paddington would be electrified as far as Didcot, Oxford and Newbury. I understand the need to make decisions about powering future inter-city services, which have delayed decisions about the rest of the line. However, I ask the Government to bring forward their proposals for further electrification of the line, to give the rail industry, businesses and passengers alike the certainty that they need to plan for the future.

I have two more points to make on the matter. First, I ask the Minister that electrification should not just be on the line to Bristol Parkway, but also the line through Chippenham and Bath to Bristol Temple Meads. Secondly, I suggest that it would be of benefit to extend the planned electrification of the line to Newbury as far as Westbury. Westbury is not only a more logical network staging post on the line from Reading but a useful interchange for many journeys, and it was identified by Network Rail as needing investment during the next funding period.

On operational strategy, one investment priority that provides opportunities but has not received as much attention as others is new signalling technologies. That is unfortunate, as smart signalling technologies could secure serious improvements in efficiency, environmental performance and capacity within any given infrastructure. Invensys Rail, headquartered in Chippenham in my constituency, is an internationally renowned company at the forefront of developing control and communications technology. On the potential environmental wins of smart signalling, the European rail traffic management system, which Invensys is helping to implement, could enable a 46% reduction in carbon emissions from rail transport by 2030. The system creates wireless connections between trains and control centres, which would be a step change from current infrastructure on our railways. The links can be used to measure energy use and send instructions to trains to reduce their consumption whenever possible. However, the technology would have to be embedded in both rolling stock and track-side infrastructure, which would require joined-up organisation and long-term investment.

To take advantage of such technology, we must develop a more strategic view of the rail supply chain. It is a good time to begin that process. The McNulty value-for-money study is nearly complete, and the Transport Secretary is establishing a high-level group to examine the railways’ future further.

Firms such as Invensys have an important role to play in advising policy makers on the potential of new technology. They are not just a shop window from which we pluck impressive bits of kit. Their technology has been developed in response to the needs of rail systems around the world. As a result, they have accumulated expertise that can make a valuable contribution to discussion of the future of the UK network. I was pleased that the Minister accepted my recent invitation to visit Chippenham in order to see for herself the innovations spearheaded by Invensys. I look forward to welcoming her to Wiltshire in due course.

Among the investment priorities identified by the Transport Committee’s report are several examples of low-hanging fruit—good value, small-scale projects that would not involve the major infrastructure developments of high-speed rail or the complexity of fixing regional bottlenecks. In that respect, the report echoed Eddington’s finding that smaller-scale transport interventions are often the most cost-effective solutions and acknowledged that many small but growing communities around the country could reap substantial benefits from better access to the rail network. I wholeheartedly agree, as my constituency has two good examples, the towns of Melksham and Corsham.

I have made several appeals in Parliament on behalf of the campaign for an improved service on the trans-Wilts line, which runs from Swindon to Salisbury via Chippenham, Melksham and Trowbridge. Members can find out more about it on the website transwilts.org.uk, organised by the community rail partnership. Melksham is the fourth largest town in Wiltshire by population, yet its rail service is derisory, consisting of just two trains a day at times that are, frankly, useless for residents hoping to commute by train.

The trans-Wilts line was well used until the current Great Western franchise began in 2006, when the previous Government dropped the requirement to provide a decent service on the route. As I pointed out to the Secretary of State in November when he announced 650 carriages for the network, just one extra carriage allocated to the line could provide more services at economically meaningful times of the day, connecting the county’s population centres and alleviating pressure on commuter lines in the Bristol area. Demand for the service is strong, and it is supported by the local business community, Wiltshire council and other local Members of Parliament, co-ordinated by an excellent campaign group, the Trans-Wilts Community Rail Partnership. In recent weeks, 1,500 people and 150 businesses have completed a survey on the website about how they would use a better service on the line.

In my correspondence with the Minister, I have received some encouraging signs from the Department about the trans-Wilts campaign. Once more, I ask her to examine closely what benefits could accrue from such locally driven initiatives. Colleagues will forgive me, I am sure, for going to such lengths to make the case for my constituents. They might want to consider what I will call the Melksham challenge. Can they identify a settlement larger than Melksham—it has more than 20,000 people—with an open station that has a passenger rail service as poor as our two services a day each way? I believe that it is an exceptional case.

[Andrew Gwynne (Denton and Reddish) (Lab)]

I am sorry to disappoint the hon. Gentleman, but the town of Denton, which I have the privilege to represent, has a population of 32,000, an open station and one train a week, in one direction only.

[Duncan Hames]

I stand corrected. I hope that the hon. Gentleman will appreciate the opportunity that I have given him to make the case on behalf of his constituents. I would argue that neither Denton nor Melksham deserves to be left any longer in such a plight.

I know that other Members want to speak, so I will conclude. I have tried to use examples local to my constituents to illustrate a few national discussion points about the future direction of rail investment. Each region, area and sector of the industry—indeed, each Government—has had its own priorities for the future, but we are discussing substantial investment commitments that will far outlast this Parliament, the political careers of many of us and the current economic cycle. Rail planning has too often been characterised by short-termism and a lack of strategic vision. The coalition Government’s stated belief is that

“a modern transport infrastructure is essential for a dynamic and entrepreneurial economy”

and that

“we need to make the transport sector greener and more sustainable.”

I could not agree more, and I do not think that any Member here would depart substantially from that view. It is certainly consistent with the Transport Committee report that forms the basis for this debate. Our challenge is to take a long-term strategic view, interact with all players in the rail supply chain, engage with the businesses and communities that use the railways and align our objectives for rail planning with wider economic and environmental aims.

15:37

[Mr Tom Harris (Glasgow South) (Lab)]

I have been involved with the railway industry to a greater or lesser degree for the best part of 20 years now, but I have never suffered the ignominy of going native. When I was the Minister with responsibility for railways—the Minister is welcome to use this joke if she wishes, although most of her audiences will have heard it a number of times from me—I used to joke that although I had succumbed to the lure of the railways and started buying railway magazines regularly, I was always careful to buy a copy of Playboy and put the railway magazine inside it to avoid embarrassment.

There is a healthy turnout of right hon. and hon. Members here. It says something about the lure of the railways that 80% of our constituents do not use them—I expect that it is more than 80% in most constituencies—but the subject attracts and engages Members of Parliament. I suspect that most of us receive more letters a week from our constituents about railways than about motorways or local roads, despite the fact that roads are a vastly more popular mode of transport.

[Kelvin Hopkins]

Are the railways regarded as a national treasure like our forests?

[Mr Harris]

I will refrain from trespassing on the Government’s sadness at this juncture.

Although I do not stand every weekend with a flask of tea, a pair of binoculars and a camera at the end of the platforms at Glasgow Central, I am, if not an enthusiast, a strong supporter of the railway industry. I congratulate the Government, because most of us feared the worst when this shower came in.

In the previous Parliament, the Labour Government did a great deal to invest in the railways to try to improve the services that our constituents rely on. The figures show that we have the largest number of passengers travelling on the railways, apart from during the wartime period, since they began. We also have the best safety record and there are more services running per weekday than at any time in the history of the railways. There was concern upon the arrival of the new Government, whose Ministers seem unable to speak without using expressions such as, “Cleaning up the mess left by the previous Government,” and talking about deficits and so on. We assumed that that would be a simple mechanism and excuse for starving the railways of investment. However, I must say, in all seriousness, that that has not happened, and I am delighted about that.

I am also delighted about the Government’s commitment to High Speed 2, and I regret that my own Government only saw the light on high-speed rail in the latter part of their period in office. That was a mistake, and I accept my own personal responsibility for not pushing it as hard as I could have done when I had the opportunity to do so. I was the Minister who saw through the Crossrail Act 2008, so I am delighted that Crossrail, as well as Thameslink, will be fully funded. There is a lot to celebrate in relation to the railways—there always has been, even at the most difficult times in the network’s history. We have now had two successive Governments who seem to have a genuine commitment to growing the network.

On procurement, my right hon. Friend the Member for Derby South (Margaret Beckett), who is no longer present, mentioned that the manufacturing base of the railway industry in this country is, sadly, significantly smaller than it has ever been. She mentioned Bombardier in particular. I totally understand the pressure that Ministers are under in relation to procurement and an open procurement process throughout the European Union. The Minister will be aware, and she will have been told by her officials, that certain European countries somehow manage to get around the procurement rules and, miraculously, give very large and helpful contracts to their domestic manufacturers rather than to foreign competitors, which is something that Britain has, sadly, never managed to do.

I do not expect the Minister to deviate from her line—I understand the legal ramifications if she were to say that she agrees with me in any respect at all—and I do not even expect her to mention this when she makes her summing-up speech, but she will find very little, or no, opposition from my party if she could find a way of making it easier, within the rules, for British manufacturing companies to be given the same kind of contracts that foreign companies get from their own Governments. If she has that fight with the Treasury, she will have my full backing.

Luton is very well represented on the Transport Committee, and my hon. Friend the Member for Luton North (Kelvin Hopkins) made a point about signalling, which is absolutely crucial. I will not labour the point, because he made it very well, but, given that there is no commitment to building new lines outside HS2, if we are to get more trains more frequently on the existing network, the only way of increasing capacity is to invest in new signalling. When we were in Brussels last week, we heard about the ongoing Galileo project. It is a new satellite system that might, in a couple of hundred years, if it is given an infinite amount of money by every country in the European Union, be able to go into operation. It is the kind of global positioning system that would help provide railways with a satellite navigation system in future, provided that it is accurate enough, which it is not yet. Perhaps Galileo, if it is given an infinite amount of money, might be able to provide that solution.

Value for money is crucial to the railways. My hon. Friend and I are members of the same party, but I hope that he will not object if I say that we come from different parts of it. We have a different view of who owns the railways and whether public or private ownership is the right way. I shall let you conclude for yourself, Mr Owen, which side I fall on and which side my hon. Friend supports. I do not think it matters much whether Network Rail is publicly or privately owned. The fact is that the McNulty review on value for money is absolutely crucial, if we are going to identify ways to cut the costs of the railways.

[Kelvin Hopkins]

McNulty has concluded that our railways cost up to 40% more than continental railways to run. The only major difference between them and us is that they are publicly owned and integrated, while we are privately owned and fragmented. I have made that point to the Secretary of State, who did not strongly disagree.

[Mr Harris]

I am grateful, as always, for my hon. Friend’s intervention, but I disagree with him. Network Rail has had imposed on it an obligation to improve its efficiency and make significant improvements year on year. I do not believe that it is a failing organisation, or that it matters whether it is privately or publicly owned. I am glad, however, that the Secretary of State has thrown out any pretence that Network Rail is a private company, inasmuch as he does not seem to care whether the National Audit Office will, with the stroke of a pen, commit Network Rail’s debt to the public books, which Ministers in the previous Government went to great lengths to avoid. The Secretary of State has taken a more relaxed, and probably more sensible, approach. By the end of this year, Network Rail may well be categorised as a nationalised company. However, if it is not efficient and is not doing the job, does it really matter who owns it? We must get efficiencies back into the railway industry, and we must make sure that the public purse, which is asked to pay a significant amount of the cost of the railway industry, is getting value for money. That is the way to restore people’s trust in the railway industry.

In the run-up to the general election, the Labour Government had a much greater willingness to look at longer franchises. The franchising process itself costs huge amounts of money, not only for the competing companies but for the Department for Transport. The figure of £5 million is often quoted as the cost to the Department, and the longer the franchise, the less often that cost has to be borne. Recently, I had an interesting conversation with an ex-civil servant, who shall not be named. He told me that the reason why seven years was seen as the best period for railway franchises to begin with—from 1995, when the railways were privatised—was that they would start in 1995 and end after the first term of an unpopular Labour Government, at which point, the Conservatives would be able to come back in and look again at the franchise system. But things did not quite work out that way. Seven years is clearly too short a period, and some of the franchises that have been let recently are, for practical reasons, even shorter than that. I hope that we move to a longer franchise period of, perhaps, a standard 10 years, with a two or three-year extension, depending on performance.

I will mention open-access and freight operators in the same breath, because those two users of the network are entirely free of public subsidy of any kind. Open-access operators are, in my view, a good thing. That may not be the view of certain officials in the Department, but we should welcome a private company if it can come in and run a profitable passenger service between two points without seeking any public subsidy, without taking any of the revenue from existing franchises, and without causing any delays to other franchises or to freight operators. I am disappointed that the Wrexham, Shropshire and Marylebone railway finally shut up shop at the end of January, which was a great blow to those people who used it. I say to my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), who chairs the Transport Committee, that open-access operators are of great interest to the wider railway and to the travelling public. I hope that, at some point soon, we will have the opportunity to look at the whole open-access framework in order to think about what makes open access valuable, what makes it work and, crucially, what makes it fail.

My hon. Friend the Member for Liverpool, Riverside has mentioned fares, and I hope that the Minister will address that issue when she speaks. When Lord Adonis was Secretary of State for Transport, he made an instruction to the train operating companies that resulted in a radical change from previous practice. As has already been said, the retail prices index plus 1% fares annual increase was interpreted in a very generous and broad way by the train operating companies. The highest increase had to be RPI plus 1%, but the train operating companies would take a basket of fares. Within that basket, there could be reductions and increases by up to RPI plus 6%. However, Lord Adonis said that all regulated fares must be increased by a maximum of RPI plus 1%. That took away a lot of manoeuvrability and flexibility from train operating companies, who obviously had a vested interest in increasing season tickets and other fares by more than RPI plus 1%. There may well be perfectly valid reasons for moving away from that approach. If possible, will the Minister say something about where we are now and what effect that policy has had during the past 18 months or so?

Innovation does not sound as if it is directly related to priorities for investment, but the issue comes back to value for money. The criticism made by my hon. Friend the Member for Luton North of the privatisation of the railways is entirely valid in the following respect. It is the only privatised industry in which innovation virtually disappeared—from the point of privatisation until now. In almost every other industry that was intrinsically profitable and was therefore privatised, innovation flourished. However, that has not happened in the railway industry. I tried to do something about that when I was the Minister, but there is very little that the Minister and the DFT can do, because it is up to the industry. If there is a level of innovation that can transform the processes within the industry and the passenger experience, that is how we partly move towards a situation in which we develop better value for money for the passenger.

[Kelvin Hopkins]

One of the problems is that the railways are long-term and expensive and private companies have short-term balance sheets. Inevitably, the tendency is to sweat the assets to maximise profit in the short term and leave long-term considerations to others.

[Mr Harris]

That is undoubtedly the case, but I do not accept that that is necessarily an immovable barrier to innovation. Network Rail is the greatest purchaser and procurer in the whole of the industry and it works in the long term. Frankly, many of the manufacturing companies that rely on contracts from Network Rail want to deal in long-term investment and want a long-term reassurance that the work will be there 10 or 20 years down the line. If the will is there, innovation can happen and, as I have said, that is irrespective of whether the industry is privately or publicly owned.

I shall say a few words about High Speed 2. I have long been a supporter of the project, although not on environmental grounds. As Rod Eddington said in his 2006 report, there may well be a case for high speed on capacity grounds, but there is probably not an environmental case. In addition, there is probably not a great case in terms of connectivity, because Britain is a relatively small country and is already pretty well connected. However, there is a case for high speed on capacity grounds. When we get letters and complaints from our constituents, apart from fares, capacity is the burning issue at the moment. It has been for a number of years and will continue to be until we do something serious about capacity. HS2 will relieve capacity on the west coast main line, and I hope that it will do something for freight as well.

I worry about the debate that is developing in this country on HS2 and that supporters of it are dismissing out of hand the concerns of people who live along the line and colleagues who represent communities based along the line. I hope that we can conduct that debate in a more consensual and less provocative manner.

[Mrs Villiers]

The hon. Gentleman is too pessimistic when he says that the supporters of HS2 dismiss the concerns of local communities. As far as I know, the vast majority of supporters of HS2, including the Government, take those concerns very seriously. We believe that significant efforts need to be made to mitigate what will inevitably have some local impact on communities.

[Mr Harris]

I accept the Minister’s reassurance on that. I simply speak from the point of view of reading reports of the debate that is going on. I am not trying to separate the arguments; I am trying to bring people together. I make the point that people’s concerns are not down to nimbyism or the fact that they are selfish or somehow anti-public transport. People have valid concerns, which can be overcome. HS2 is a nationally important strategic piece of infrastructure that must go ahead for the good of the country, but we cannot sweep those concerns under the carpet. I have heard the Minister say that those concerns will not be swept under the carpet, and I therefore hope that between now and when construction starts, we can come to some kind of agreement and compromise. We need to accept that those concerns are absolutely valid and that people have a perfect right to protest and raise concerns about something that might well have an adverse impact on their local environment. I thank you for giving me the opportunity to speak, Mr Owen.

15:56

[Stuart Andrew (Pudsey) (Con)]

As a good Anglesey lad, may I say what a pleasure it is to serve under your chairmanship, Mr Owen? I congratulate the hon. Member for Liverpool, Riverside (Mrs Ellman) on securing the debate. I will try to be as brief as possible because I know that other hon. Members are keen to contribute to this important debate. Enhancing our rail network is something that will benefit all of us in all parts of our country.

Even in these very difficult financial times, it is good that the Government have shown their commitment to our railways. The billions of pounds that they are investing are to be welcomed. I am particularly glad to see that there is a rebalancing of the amount of money being spent on transport projects across the country. Other hon. Members have spoken about national projects, but I shall be unashamedly parochial and talk about my region. Obviously, I have to speak up for the north of England, particularly Yorkshire and Leeds.

On the comment of my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) about the northern hub, I congratulate him and others on renaming it. The term “Manchester hub” created a divide in the north and those of us on the right side of the border were naturally sceptical. Realistically, that project will create enormous benefits for our economy and I hope that it will get the support that it needs. The cost of the project is about £500 million, which is a fraction of the £16 billion spent on Crossrail.

I would first like to comment on the south access that the Government have funded at Leeds station. I cannot say how important that is for some of the poorest parts of the city. Over the years, the south side of the city of Leeds has not enjoyed the benefits of economic regeneration, and the money that the Government have kindly given in support of that project will open up opportunities for significant regeneration in that area. I welcome that.

I shall now turn to my pet project. I am in danger of causing what I call a crossing-the-road scenario with my right hon. Friend the Minister. In my previous life, I was the head of fundraising at a number of hospices. When I walked down the road, people would cross over to avoid me because I was usually asking for something—whether it was money for the charity or sponsorship. Whenever I see my right hon. Friend the Minister, she gives me that “Oh God, not him” look.

Kirkstall forge is a large brownfield site just outside my constituency. It offers real potential for creating lots of new jobs and employment opportunities, with massive private investment—we are looking at about £350 million. In addition, we hope that there will be the opportunity for two new stations: one that will serve that site and help to relieve the congestion caused by massive development, in my constituency in recent years and in other areas, on very busy roads; and one at Apperley Bridge. That is in the development stage at the moment and I hope that all the work that has been done by the local authority—Leeds city council and the private investors—will be recognised and that the Government will look favourably on providing the funding for this important project, which will help to relieve some of the most congested roads in Yorkshire.

I would also like to talk a little bit about rolling stock. In 2007, the White Paper suggested that Northern Rail would need approximately 182 carriages. It has not received a single one of them, so I was delighted to hear the announcement that carriages will be made available. I would just like to make a plea. In the north, we seem to suffer in that regard and getting third hand-me-downs would be better than nothing. We have had absolutely nothing in the past, so we would be happy with that.

Looking at future Parliaments, I am in danger of probably upsetting my hon. Friend the Member for South Northamptonshire (Andrea Leadsom), for whom I have an enormous amount of respect, because we are on opposite sides of the argument about HS2. My hon. Friend the Member for Blackpool North and Cleveleys made a valid point—we must take on board the concerns of hon. Members. I am glad that Ministers have taken the time to visit communities that are affected and will probably not see the benefits of HS2. For the north, however, it will be a significant boost. I was delighted when it was announced that it would be a Y route. That is hugely important to Yorkshire. If the other suggestion had been chosen, it probably would not have been worth it, so I am delighted that the Government made that decision.

My hon. Friend made a point about it just being about breaking down the barrier of the north-south divide, and I take that on board as it is a valid point, but the decision shows a tremendous amount of confidence in the north of England. Leeds, for example, has been a big financial centre in recent years and having such a link would help to improve that. As we have heard, it will release capacity on the east coast main line. As somebody who uses that line every week, I can say our long-suffering commuters will be glad to see that. It is also important to remember that it will release capacity at Heathrow. It is important that we try to maintain Heathrow as an international hub, and I hope that this will go some way to doing that.

My last plea and wish is for us to look—I recognise that it will take some time, given the financial situation—at links to Leeds-Bradford International airport. It is the only airport in the country where the only access is along single-track roads. It is an isolated airport, and there is an opportunity for us to look at providing a tram-train link from the Harrogate line up to the airport and then down on to the Guiseley line, which would then, for the first time, connect Bradford with Harrogate and offer options for passengers. It is worth noting that there is a collection of community groups in the area called WARD, which noted that when the volcanic ash problem happened, the roads servicing that airport were considerably quieter during that period. That demonstrated that the only way people can get to the airport is by car and we really need to look at a sustainable way of doing that.

I congratulate the Transport Committee on an excellent report. I just hope that the Minister will not cross the road next time I see her.

16:04

[Gavin Shuker (Luton South) (Lab/Co-op)]

Thank you, Mr Owen, for chairing the debate on such an important issue. As a member of the Transport Committee, I would like to thank those who went before me and prepared the report. As someone who commutes by train on a daily basis, this is a matter that is close to my heart, as it will be for my constituents and for all our constituents. Today, I would like to focus on investment plans for railway stations rather than track and carriages, in particular those known as category B stations, such as the one in my constituency of Luton South.

The Transport Committee’s third report “Priorities for investment in the railways” helpfully outlines the current investment needs of our railways. The report sets the discussion in its historical context. Despite the successes of passenger numbers in many places, our railways are sadly still overcrowded, outdated and underinvested. The rapid increase in passenger growth, up by 73% since privatisation, has simply not been matched with sufficient investment, for whatever reason. At the outset here, I would like to challenge the retort that the deficit gives a licence to scrap all prior recommendations. The Committee’s report was published in early 2010, when the challenge of the recession was real to us all. Cuts to investment were anticipated, so the Committee sought to make its recommendations on the basis of key priority needs. The recommendations in the report then are not pipe dreams, but the basic steps needed to bring our railways in line with essential common standards.

The report states:

“Cuts in transport investment are easy to make, but are costly in the long term, undermining future growth prospects and depriving future generations of a lasting legacy of good transport services.”

It concludes:

“Investment in improving transport infrastructure should be based on the long-term needs of the economy and society, not directed by the need for immediate public expenditure savings”.

In fact, the report speaks very highly of the benefits of investing in our railways.

16:07

Sitting suspended for a Division in the House.

16:21

On resuming—

[Albert Owen (in the Chair)]

Order. Before I call Gavin Shuker, I will just explain that I will call the Front Benchers at about 5.15 pm, as we have an extra 15 minutes from the Division. Four Members are trying to catch my eye, so if the next speakers can consider a time limit of 10 minutes, we will get in everyone who wants to participate in the debate.

[Gavin Shuker]

Thank you, Mr Owen.

As I was saying before we were so rudely interrupted by the business in the main Chamber, the Select Committee report concludes:

“Investment in improving transport infrastructure should be based on the long-term needs of the economy and society, not directed by the need for immediate public expenditure savings.”

In fact, the report spoke highly of the benefits of investing in our railways, recognising that enhancements often

“provide good value-for-money”—

what we put in regularly, we get back in increased usage. Targeted investment can have “important economic benefits” for community connection and regeneration, which means that not only the service provider, but our local businesses and communities cash in. The Government desperately need growth, and they must not ignore the potential for economic growth in the improvement of our railways.

[Kelvin Hopkins]

Like my hon. Friend, I travel from Luton station every day. Does he agree that railway stations are about not only transport facilities but the appearance and the impression given when people arrive in a town? The better a station looks, the more likely it is to encourage people to visit and businesses to stay, because it looks nice. That is a simple thing, but I am certain we need it, and I hope my hon. Friend agrees.

[Gavin Shuker]

I absolutely agree with my hon. Friend. Luton station welcomes us both home at the end of a long evening in Parliament, and I only wish that all passengers had the enjoyment of sitting opposite my hon. Friend the Member for Luton North (Kelvin Hopkins) on their return journeys, so that their conversations might be as enlightened as ours often are. He makes a strong point that stations are the gateway to broader communities. Investment in infrastructure, transport infrastructure and stations in particular bring a halo effect.

As we all know, rail is particularly important as a mode of transport for business. In my region, the east of England, eight out of 10 rail journeys are made for business purposes, all by people commuting to work. If we are to support people fully in their ability to get to work, investment in our railways is vital. Eddington argued that

“the rising cost of congestion will waste an extra £22 billion worth of time in England alone by 2025.”

Our transport links, therefore, are a

“key enabler of productivity and competitiveness”—

according to the Select Committee report—and, in short, we have no choice but to invest if we want growth and jobs. Let us not dismiss our future prosperity with a narrow argument made solely in the name of the deficit.

It is also worth noting that investment in construction is one of the silver bullets in Government action to get significant economic growth. The improvement of stations is identified in the report as one of the key improvement projects worthy of consideration in the next control period. Station upgrades are highlighted as beneficial in wider area regeneration. Stations are not simply sheds in which we shelter from the rain, as my hon. Friend the Member for Luton North has said. They are key functional zones and play an important role in the total journey experience and in enabling economic productivity in a wider region.

We all know that first impressions count. I am incredibly proud of the town of Luton—I am, indeed, from what I hope shortly to call the city of Luton. However, I confess that it is not with pride that I welcome visitors at Luton railway station. The station has been assessed as one of the worst stations in the whole of the United Kingdom, measured by equivalent passenger numbers. In the words of my hon. Friend the Member for Luton North, in his Adjournment debate last year:

“It is drab, dreary and depressing.”—[Official Report, 23 March 2010; Vol. 508, c. 63WH.]

It does not do our area justice, and the population of Luton has been complaining about it for long enough.

[Julie Hilling (Bolton West) (Lab)]

In addition to those remarks, I had the experience of going to Luton many years ago, but I suspect that the station is exactly the same as it was then. Safety is also involved. As a woman, certainly, I felt incredibly unsafe in Luton station, because of the layout and everything else. That is such an important element.

[Gavin Shuker]

My hon. Friend has anticipated my next point. We ought to expect certain key standards from major stations. If stations do not live up to them, as in Luton, they require significant investment.

Do not take that judgment from me alone. Luton station is known as a category B railway station—it is the second busiest type of station, a national interchange seeing high levels of passenger traffic. All stations in the UK are categorised, from A, the busiest national hubs, right the way through down to F, which are unstaffed stations. Levels of passenger traffic increase up the categories. Sixty-six stations are classified as category B, accounting for 3% of the total number of stations in England and Wales.

That all seems logical. However, the criteria for category A and category B stations are broadly identical. Each station must witness more than 2 million trips a year and £20 million in annual revenue, meaning that a notoriously busy station such as Clapham Junction can fall into category B and be subject to far lower levels of investment than stations in category A. If we do have a classless society, it certainly is not currently witnessed on our tracks.

The 2009 independent report by Chris Green and Professor Sir Peter Hall, “Better Rail Stations”, highlighted category B stations as the category of station most in need of immediate investment—dire need, one might say. The report concluded that

“the National ‘B’ Interchange stations are not adequately funded to meet the Minimum Standards and represent the biggest ‘gap’ in station consistency.”

It later made a strong point:

“They tend to lie in the shadow of the high-earning ‘A’ stations and are under-invested for their daily role as major transport interchanges.”

Stations such as Luton and Clapham Junction are not receiving the investment they merit for their important roles in our national network. The report highlighted 10 category B stations deemed in need of immediate upgrade work and recommended the creation of a sinking fund to help those stations meet basic minimum standards. The previous Labour Government accepted those proposals, and Network Rail committed £5 million to the project in Luton alone. The rest of that funding was in place, and the people of Luton celebrated that. Retailers began to plan for the better shops and conveniences they could offer, offering additional revenue back into the network from increased rental spaces. However, on 25 June last year, the Government announced that the better stations scheme would be scrapped. Frankly, the cancellation of the programme was an utter sham. Network Rail rolled over far too easily and quickly on a well-considered scheme that was welcomed by many hon. Members. As yet, we have no answers as to how the improvements will now be done.

The Minister will undoubtedly be proud of the settlement her Department secured, which we all agree was far better than expected. However, her Department made a mistake in putting pressure on Network Rail to cave in and damaging regeneration across those 10 key areas, where we could make a real practical difference to stations.

As we look at ways that investment in our railways can be part of wider economic regeneration, let us not overlook our stations. As the “Better Rail Stations” report rightly points out:

“Stations cannot be seen in isolation—they are part of the total journey experience…Stations are deeply entwined with their local community and effectively act as the gateway to both town and railway. They leave passengers with their lasting impressions of both—a dilapidated station is bad business for both town and railway.”

Our category B stations have been left to rot away for far too long as energy has been focused on a handful of shiny new hubs. Those vital interchanges do not satisfy basic standards. The decision to scrap the upgrade scheme was hurried, short-sighted and counter-productive. As we reassess priorities for investment and review the findings of that finely worded report, let us not make the same mistake again.

16:30

[Andrea Leadsom (South Northamptonshire) (Con)]

I join other hon. Members in congratulating the Chair of the Transport Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman), on securing this debate about the priorities for rail investment. That is an important topic, as it involves the relative merits of what our money is spent on. Value for taxpayers’ money is a subject dear to my heart.

Almost a year ago, I was the unsuspecting candidate for South Northamptonshire. Suddenly, I heard Lord Adonis’s announcement about high-speed rail that was, quite literally, to change my life, and it hit me out of the blue that the line would go through the middle of South Northamptonshire. Within days, I held a public meeting that was attended by about 550 people. Of those, 400 were on two floors of a town hall in Brackley, and 150 were outside on the pavement trying to get in.

I do not want to focus on that today. Hon. Members from across the House have made accusations of nimbyism, noted that if we want to make an omelette a few eggs have to be cracked and made other helpful remarks. Therefore, I will not talk about the fact that I have had nigh on 1,000 pieces of correspondence. My right hon. Friend the Minister knows that only too well, as I am in regular correspondence with her and the Department for Transport.

There are real concerns. Some schools in my constituency may be unviable from now on because of the risk that high-speed rail will run so close to the school that in a few years’ time—within the time frame for parents to decide where to send their children to school—that school will be forced to close. If that threat exists, why would any sensible parent send their child to such a school? There are families who need to move but do not quite meet the criteria for the exceptional hardship scheme. They do not know when they will be able to move, if ever. There is a risk that the famous English battle site at Edgcote will be severely damaged by the proposed route. There are many small battles to fight in South Northamptonshire to protect ourselves in terms of mitigation. Again, I will not talk about that now, because I have been accused of nimbyism too many times. Instead, I will focus on my 23 years in banking and finance, and hope that that will give me the credibility to point out the issues about value for money and the choices that we need to make about our priorities for rail infrastructure.

We expect the High Speed 2 line from London to Birmingham to cost around £17 billion. That is largely a guess, as such major infrastructure projects often have big overruns. I know the Department for Transport is concerned about the fact that civil engineering in this country costs such a great deal. As a frequent user of the line from Euston to Milton Keynes, I accept that the west coast main line is at capacity. I have taken trains home at 8 pm, and still found myself standing shoulder to shoulder. It is a matter not of having a seat, but of having anywhere to stand. However, is that need for capacity best met through a brand new, 250 mph train line, or can we achieve something similar by providing additional capacity on existing railway lines, and using the change—a significant amount of money—to fulfil some of the other interesting and compelling projects that hon. Members have mentioned today?

As I have heard many times, because of the capacity issue there has to be a new train line, and if we are to have a new train line, it may as well be high speed. That is my first challenge. High-speed rail has massive implications in terms of engineering costs and the impact on the environment and the communities through which it passes. Does the line have to be high speed? Will it even reach 250 mph? Certain international rail consultants have challenged whether such a line in Britain—a small country with complications caused by the lie of the land, the wrong sort of leaves, the wrong sort of snow and probably the wrong sort of trespassers on the line—will actually ever reach 250 mph on a regular basis. If it does not, what on earth is the point of spending the money to go in a straight line? That is my first major question.

Secondly, I have seen evidence that suggests that a similar amount of capacity could be freed-up on the west coast main line by providing 12-coach trains, making adjustments to certain stations and carrying out other alterations that would not incur the type of disruption that we saw in previous upgrades to that line. Is this an issue of capacity, or is it a case of, “HS2 is the answer, what is the question?”? I am unconvinced that we have said, “There is £17 billion to be spent, how best can we spend it?” I did not give the Minister prior notice of that question, but I would appreciate it if she would indicate whether she will be willing to talk to me separately about it.

I am not a transport expert by any means. My favourite film as a child was “The Railway Children”, and my 15-year-old has told me excitedly about Maglev. That is the future, although not in our lifetime I have been told. Meanwhile, we are stuck with ancient 21st-century technology, and we have to look at what we can do now.

Hon. Members have spoken about the importance of the electrification of other lines. They have mentioned the northern hub and the east-west line. A number of colleagues who will not be affected at all by HS2 have said, “What about my line? My constituents want to get from the east coast to the west coast. What are we doing for them?”

[Mrs Villiers]

I hope that my hon. Friend appreciates that over the next five years, the coalition Government will be embarking on one of the most extensive upgrades of our existing network in modern history. There is no evidence to suggest that high-speed rail is going to squeeze out other important rail upgrades. Both are important, and both will be delivered on.

[Andrea Leadsom]

I am pleased and reassured to hear that; nevertheless, in this time of great financial constraint, there is no doubt that a £17 billion project will lead to other choices not being taken.

The hon. Member for Luton North (Kelvin Hopkins) made an excellent contribution—he is clearly an expert on this matter. He spoke about a dedicated freight line. I do not wish to be a nimby, but if such a line went through my constituency, I can see the obvious merits of a dedicated freight line that I cannot see having looking carefully at HS2.

[Kelvin Hopkins]

The hon. Lady made a good point about high-speed trains having to go in a straight line. That gives them certain rigidities that do not apply to normal passenger routes up to 130 mph, or to freight trains that can manoeuvre and take tighter curves. That cannot be the case with high-speed trains. They have to go in straight lines because of the speeds involved.

[Andrea Leadsom]

I am grateful to the hon. Gentleman for that point. He is right—high-speed rail has to go in a straight line and it is much more expensive to create that, which greatly limits the number of stops. I have heard it said that the line needs to go from London to Birmingham for the purpose of speed and to solve the north-south divide. I agree with those hon. Members who have said that that alone will not solve the north-south divide and that other decisions will need to be taken. We need to consider the whole of Britain. From the point of view of many constituencies along the way between London and Birmingham, if the line were to be made viable with interim stops, so that there were some sharing of the benefit, it would be more attractive.

[David Mowat (Warrington South) (Con)]

No one would claim that high-speed rail on its own could solve the north-south divide. I do not think that anyone in the Chamber, including my right hon. Friend the Minister, would attempt to do that. However, will my hon. Friend admit that the creation of 40,000 jobs—that is KPMG’s estimate—in the north-west, north-east and Yorkshire as a result of high-speed rail would contribute to it? She said that other projects could be equally effective in helping to solve the north-south divide. Perhaps she will say which of those she would put her money on. Finally, three or four hon. Members have made the point that incremental improvements in rail are very effective in the short term. That is correct, but we cannot just make incremental improvements for ever—at some point, the Government have to call it.

[Andrea Leadsom]

I thank my hon. Friend for his intervention. However, I am not of the old USSR view that we should just do public project after public project for the sake of creating jobs. There needs to be a clear rationale for having the high-speed line in the first place. Any project needs to stand on its own merits and not be done just because it creates jobs, so I do not agree with my hon. Friend in that respect.

I have seen evidence—I hope that the Minister will comment on it—that the west coast main line, through incremental improvements that would not cause disruption, could come very close to providing the same increase in capacity as HS2. My central point is that that would be a much cheaper and less disruptive alternative means of achieving the same improvements in our rail infrastructure.

16:42

[Julie Hilling (Bolton West) (Lab)]

It is a pleasure to see you in the Chair, Mr Owen. I congratulate my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) on securing a debate on this very important issue. I ought to declare an interest, in that my constituency party is supported by the Transport Salaried Staffs Association—one of the railway unions.

I want to cover a number of different areas, so I am afraid that my comments will jump around a little. I am concerned that if we talk simply about the economic benefits of investment in rail, that may well mean that the north is always disadvantaged. Because of the size of London’s economy, the benefits of investment in London and the south may always appear to be greater, but that should not be the only judgment. In the north, we have suggested that High Speed 2 should start in the north—we want it up there. We should start it up there and worry about the bottom bit afterwards. We have been told that that is not feasible because the economic benefit will come only if it is in the London area. However, if rail is not only public transport but a public service, why should someone in London receive three times as much public money as my constituents in Bolton? We need to consider more than just the economic benefit.

That takes me on to overcrowding on the trains. Pacers still run from my station in Atherton. I do not know whether everyone knows what Pacers are. They are like buses on rail. I do not know how Northern Rail engineers keep them going. They are rather decrepit rolling stock. The issue has to be quality as well as capacity. We may have to accept having second-hand stock in the north, but we need to ensure that it is not second rate.

Frequently, my constituents cannot get on the train services from Bolton. The situation is similar when they come home at night. The overcrowding is such that if they do not start off at Manchester but try to get on at one of the intermediate stations, they cannot get on the trains. We need urgent action, and I hope that the Minister will tell us when some of that action will take place.

We also need to consider the capacity of the infrastructure. When Virgin started to run three trains from Manchester to London every hour, trains going through my constituency reduced in number, and a number of those went to Manchester Victoria instead of Piccadilly. Of course, Piccadilly is our hub station, where we get through trains either to London or to other destinations. Piccadilly is at capacity. Simply, no more trains can run in and out of Piccadilly, so we urgently need the northern hub, which will free up routes and give us more trains to and through Manchester.

Similarly, the west coast main line is nearly at capacity. Trains cannot run 24 hours a day. There has to be time for maintenance and inspection. The assets are already sweating. Therefore it seems to me that we have no choice but an additional line. It could be a freight line, but why would we build for the last century rather than for this century and for the future? We need to use the best of our technology to ensure that we have a system that goes forward. That does not mean that I do not have sympathy—of course I do—for people who will be disadvantaged whatever line we build, but we need that additional capacity now. We cannot continue to put decisions off; we need to make the decision to go forward.

I agree with the hon. Member for Blackpool North and Cleveleys (Paul Maynard) that we need investment in rail across and within the north. When I started to work for the TSSA, I asked why the lines were called up and down lines. I was told, “Well, you go up to London and you go down to the provinces,” so I asked, “What do you call it when you go east and west and you don’t go anywhere near London?” I still do not have a good answer to that question. Sometimes we do have to cross that border—we do have to go into Yorkshire.

The current situation is ridiculous. We have two great cities in the north—Manchester and Leeds. They are so close to each other—only 40 miles apart—and are linked by a good service, but it has to travel so slowly because of the condition of the line. We desperately need investment in that route—investment in routes that do not just go to London. It is also incredibly difficult to travel within the region to other destinations—to get across the region. I am talking about people trying to go from York to Sheffield or other places. We need to consider how we can improve line speeds there and improve the service.

I welcome the commitment that the present Government have made to follow the previous Government’s plans for electrification, particularly as I should get electrification in my constituency, which will be a great joy for us. However, we cannot stop at that electrification. We have to consider whether we can have east-west electrification. Can we electrify other parts of the system? I would be interested to hear what the Minister has to say about our future plans for electrification. The reality is that electrification increases capacity and speed, reduces wear and is better for the environment.

The debate is about celebrating the success of our railways. The problem that we have arises because too many people want to use our trains. I look forward to more investment. I congratulate the Minister on securing the investment that we do have now, but we need to look to the future and see how we can develop our infrastructure and rolling stock. I look forward to a better service for passengers.

16:42

[Chris White (Warwick and Leamington) (Con)]

I add my congratulations to the Select Committee on Transport on its most excellent report. If I may say so, however, there is one area of the report that could have done with strengthening a bit—high-speed rail. I have already made my position clear: I do not support High Speed 2. As the report makes clear, the estimated cost of the London-west midlands line is about £11 billion, with the total cost rising to £69 billion for a full 1,500-mile network. High-speed rail is therefore a major part of the long-term investment in our railways, and I believe that it should be heavily scrutinised before we commit so much public money to it. I appreciate that the report mentions some of the arguments surrounding high-speed rail, but I believe that more time should have been given to it and it should have been studied in greater depth, given the potential cost to the country over the long term.

Given that in 2007 the Department for Transport broadly accepted the Eddington transport study, which concluded that high-speed-rail would be poor value for money in the UK, it is incumbent on Parliament to ask what has changed so much in the space of the last three years to reverse that conclusion.

[Mrs Villiers]

Apart from anything else, there has been a change of Government. We are taking a forward-looking approach, so as to address the transport needs of our country over the next century. We have to make this upgrade to deal with the massive growth of future years. It is the best way to deliver it in a sustainable way.

[Chris White]

I thank my right hon. Friend for her comments.

If I may pursue my argument further, there are still some questions to be asked—such as whether the assumption of background growth in demand of 133% is truly realistic; such as whether potential competition from conventional rail has been taken into consideration when calculating the returns to be generated by this investment; such as whether new developments in technology, including video conferencing, online communication and information sharing, will seriously reduce the need for travel.

Large countries such as China are considering whether there are clear benefits to high-speed rail. A report by The Economist only two weeks ago entitled “On the wrong track” highlighted the fact that many of the newly added lines are making hefty losses and are thought to be operating at under half capacity. The Chinese Academy of Sciences has asked the Chinese Government to reconsider the case for investment in high-speed rail.

[Paul Maynard]

Does my hon. Friend agree that there is a crucial difference in that we have freedom of movement, but China does not, which slightly adjusts market demand?

[Chris White]

I agree with that specific point. However, if China, which has an economy twice the size of ours, is considering whether high-speed rail gives value for money, despite the point made by hon. Friend we should think again.

As the Eddington transport study highlighted, it is not that Britain’s transport system is not quick enough, but rather that it is extremely dense and we need greater investment in capacity.

[Mr Tom Harris]

The hon. Gentleman advocates that we follow China’s example on high-speed rail. I presume that he is aware that when the Chinese want to build a high-speed line they demolish houses that get in the way. Planning arrangements there are rather less democratic than ours. I would be wary about following that example.

[Chris White]

Those last two interventions show the similarities and differences in how our two countries operate.

The Committee says that we are reaching full capacity and that we need to put extra capacity in place, and I respect that. However, high-speed rail is not the only answer, and I believe that that should be investigated. The Department for Transport’s report on alternatives to high-speed rail, rail package 2, was able to deliver the necessary capacity improvements at a superior rate of return, and it was costed at a mere £2 billion. We should be considering all these options rather than deciding on large-scale prestige projects. Further areas of concern could be highlighted, such as the potential economic disadvantage that may be caused to other areas of the country that do not have access to the high-speed network.

As I said, I am grateful that the Committee chose to consider the matter, and I believe that it will provide a platform for real debate on our rail investment priorities over the coming years. I hope that everyone will engage in it fully.

[Julie Hilling]

I keep hearing that there are alternatives. I wonder what alternative there is for land-based travel from Scotland and the north of England to London if it is not high-speed rail.

[Chris White]

I had come to the end of my speech, but I shall answer the hon. Lady’s question. We have heard much about north-south and east-west, but I have to admit that I am quite parochial about the matter. I am from the south midlands, and I believe that there are different options. We have good services now; what we need is greater capacity.

16:54

[Martin Horwood (Cheltenham) (LD)]

It is a pleasure to serve under your chairmanship, Mr Owen. I too congratulate the hon. Member for Liverpool, Riverside (Mrs Ellman) on her Committee’s report and on securing this important debate.

It is good that there has been a reasonable degree of consensus, perhaps not entirely on high-speed rail but on the need for investment in the railways in general and the importance of that to the economy, the environment and the country. That is just as well because, given the time scales involved, it would be a disaster if those policies were to be chopped and changed between Administrations.

It is right to give due credit to the previous Secretary of State, Lord Adonis, who planned much of the investment that is now going forward. The present Secretary of State had his eye on the post of Chief Secretary to the Treasury, and may have been a little disappointed not to have secured that position, but every cloud has a silver lining and the Treasury’s loss was certainly our gain—rather, it was the railway’s gain, because he has secured one of the most outstanding settlements, and that is a credit to him and his ministerial team, and to the Government, whose overall commitment to maintaining capital spending in these difficult times means that we have secured most of the investment originally planned for the railways. That includes core funding for control period 4, for the Thameslink upgrade and Crossrail, and for High Speed 2.

It was a little uncharacteristically partisan of the hon. Lady to suggest that there was a deliberate policy to price people off the railways. That is so obviously nonsense and not part of the Government’s strategy that it should not be repeated.

[Gavin Shuker]

I want to put on record the fact that I was pleased to receive from the Minister of State the information that, as a result of RPI plus 3%, growth in the railways will be diminished by 4%.

[Martin Horwood]

Supply and demand on the railways clearly do not work in favour of the customer. If the Government had not taken a realistic approach to fares, as well as to public support for the railways, some of that critical investment in the railway’s future would have been lost. That, too, would in the end have damaged the interests of customers.

It is obviously regrettable that any fares have to rise at all. We all want to see them fall. Indeed, that Liberal Democrat aspiration was included in our manifesto. However, we must recognise that the Labour party has left us with an annual overspend that would have swallowed the Department for Transport’s budget many times over. We have to be realistic about the need to invest in that kind of environment.

The Select Committee made some important points about the security of that investment programme. Some of those programmes have been maintained. The Minister will know that I am going to mention one project that I think she maintains was not agreed but which I consistently maintain had been agreed, which is the redoubling of the Swindon to Kemble line. It was given enormous support by the Welsh Assembly, local councils, Labour MPs from south Wales and Swindon, Tory MPs from the counties between, and Liberal Democrats from Cheltenham, Bristol and Cardiff—and probably Chippenham.

The redoubling of that short stretch of line would have an enormous impact on the reliability of all the routes that serve those areas and constituencies. It would also be important to the resilience of the network in the west of England, particularly in the event of interruptions to cross-Severn services. Once again, I urge the Minister to look down the departmental sofa to see if any pennies can be found to secure that one project. It is a shame, but it is virtually the only railway project that was agreed under the previous Government that is not going forward.

The Select Committee report rightly talked about the value of rail enhancements, including many local projects, and stressed that they were as important as many of the larger projects. The importance of the right decision-making methodology was also mentioned. My hon. Friend the Member for Chippenham (Duncan Hames) made some excellent points about the need for a long-term strategic view and for joined-up planning in that respect. However, environmental concerns now take an even greater part in that methodology.

Passenger experience, too, is important. When it comes to franchise reform, it is important that we do not use only the basic metrics, such as punctuality; we should also consider the quality of passenger experience on some of our railway services. I would nominate leg room as being one of the most important. Passenger experience should play a much greater part not only in the awarding of franchises but in their maintenance and, if necessary, their recall when services and standards fall. It is also important that regional balance is considered. Many Members have made similar points. Some of the specific medium to long-term priorities identified in the report were equally important, and the points were all well made. I am an unashamed supporter of high-speed rail as is the Liberal Democrat party. The time scales involved are quite mind boggling. We can reassure some hon. Members about the investment involved, because it is spread over a long period of time.

[Andrea Leadsom]

Is the hon. Gentleman an unashamed supporter of HS2, or is he an unashamed supporter of dramatically increasing the amount of capacity on the west coast main line?

[Martin Horwood]

Both actually. The importance of High Speed 2 is not simply related to the stretch to Birmingham. If we consider the ultimate plan, which is to link London and Scotland, and then Scotland and Europe, by high speed rail, with another link to Wales and the west, we can see that it will compete holistically with aviation—I have already mentioned that aviation traffic tends to drop by 80% on routes covered by high speed rail—and cars. As people shift from conventional rail to high-speed rail, which happens and is an environmental issue because high-speed rail is more energy intensive, the likelihood is that their places will be taken by people abandoning car journeys as traffic becomes more competitive.

[Andrea Leadsom]

rose—

[Martin Horwood]

I am a little wary of the time, so I will plough on. I endorse the view that we need a balance in railway investment between not only Manchester but the whole of the north of England and London and the south-east. I echo the comments of my hon. Friend the Member for Chippenham about the need for a rebalancing in favour of the west and Wales. When we enter the next control period, it is important that we bear in mind such balances.

Electrification, which was raised by the Select Committee, is an important issue, especially in the context of the Great Western main line. We need to be wary about presenting the commitment to electrify as far as Newbury and Oxford as any kind of cut. That project will continue until 2018, so to look beyond that is already well into the next Parliament. The Labour party committed itself to 20% cuts in its submissions to the comprehensive spending review across unprotected Departments, so if extra and faster investment in electrification were to happen, it would be interesting to see what cuts would be made to pay for it.

We must be wary of the perception that all the investment is working its way out from London. If I were to suggest that we face a rise in rail fares across the entire network, constituents living in Wales or Bristol would not see a great return on that rise. However, someone who is living in, say, Witney, would be closer to one of the stations that would be electrified—Didcot parkway or Oxford—and they might get a very real and rapid return on their increased rail fares. We have to be wary about the perception that all the benefits are being delivered first to London and the south-east.

The hon. Member for Luton North (Kelvin Hopkins) made some important points about signalling technology. My hon. Friend the Member for Chippenham mentioned the European rail and traffic management system, and I raise an alarm about that. I urge the Minister to examine the experience of Londoners when the ERTMS was introduced on the tube system. She should perhaps take some advice on how well the system works.

[Kelvin Hopkins]

There is a difference between signalling assistance in general and specific signalling assistance about which there may be some doubts.

[Martin Horwood]

That is absolutely correct. The Select Committee report also mentions the importance of investment in rolling stock. It is important for the Government to take their time to get that right. There have been delays under both Governments, so that is common ground. Rolling stock is a significant contributor to the general level of expense in our railways. If it takes time to consider how to deliver more competitive prices for rolling stock, it might be a delay worth considering.

Smart ticketing was raised in the report. It is important that we have better integration of ticketing. The current system is confusing and often unfair. Claire Cook, my fantastic PA in my constituency office, regularly books me a first-class ticket on a Gloucestershire to London train for £21.50. That horrifies many of my constituents who pay several times more for a standard ticket on the same train on the same route. They do not seem reassured when I tell them that because they have, in effect, paid for my ticket too, they are really saving money. That really does not seem to go down well. The risk is that there is an unnecessary perception of high cost, because people do not realise that cheaper fares are available. The ticketing system must be addressed. We should move towards a system that is a bit more like Oyster cards in London. When someone uses an Oyster card, they can be pretty sure that they are getting the cheapest fare available for that route. The application of such a system would be a good thing for the whole country. Obviously, though, that is a technical and organisational challenge.

Finally, everyone regrets increases in fares. Even when we accept that fares have to increase, there is a need to examine the sharp practices by train-operating companies, such as shifting the time boundary between peak and off-peak, so that there are suddenly more peak fares than before, even though, technically, the price has not been raised. That is a stealthy way of raising prices for customers. The use of averages was a point very well made. The Government must be on the ball about fare increases and make sure that train-operating companies are not taking advantage of customers.

In short, we should attack the fundamental causes of the high costs—the lack of capacity, the supply and demand problems and the cost base of the railways. The Office of Rail Regulation has said that Network Rail is up to 40% less efficient than its European counterparts, which means that we have some fundamental problems. With the inflated cost of rolling stock and so on, there is clearly potential for the Government to address the fundamental costs of our railways. If they do that effectively and protect investment, we will have a transport system that any Government could be proud to say is better value for money, better for the environment and better for the travelling public.

[Albert Owen (in the Chair)]

Before I call Mr Gwynne, I remind Members that Mrs Ellman, as Chair of the Select Committee, will be making a few comments at the end.

17:07

[Andrew Gwynne (Denton and Reddish) (Lab)]

I am pleased to contribute to this important debate. I congratulate the Transport Committee on its report and my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) on securing this debate. I am pleased to have had the opportunity to listen to the views and concerns of right hon. and hon. Members. There has been good, thoughtful and powerful debate from all parts of the Chamber. The Select Committee report posed a number of questions about the future of the rail industry that are relevant to our deliberations today. The report might be a year old, but it is very much a case of back to the future. Many of the challenges outlined in the report are still to be answered satisfactorily or properly addressed by the Government.

The report looked at a wide range of issues facing the rail industry. There are perhaps too many to cover adequately in the time that we have left. A key issue is how we deal with severe overcrowding on services and how we realign rail investment more equally across the whole country. The report considered ways in which we could increase electrification on the network and examined rail investments that could be shared with all parts of the country.

As you are no doubt aware, Mr Owen, Labour is currently undertaking a policy review. As part of that, the transport team is looking at the ways in which we can deliver improvements in our railways. With nothing ruled in or out at this stage and with all ideas on the table for further discussion and examination, these ongoing discussions will form the basis of Labour party policy on transport for the next general election. A number of the ideas that have been raised today will be considered seriously.

[Mrs Villiers]

Does the hon. Gentleman’s party still support high-speed rail or not?

[Andrew Gwynne]

The Minister pre-empts what I will come to later in my contribution, but we are in favour of faster trains and better connectivity, and high-speed rail will certainly form part of our policy review.

Returning to the Transport Committee’s report, there are a few issues that it addressed that I would like to revisit briefly. As the report clearly identified, it is likely that there will be serious capacity issues all over the rail network in the years to come, and the Labour party remains committed to addressing both overcrowding and capacity issues on the network. However, where a Government makes future investment in the rail network is clearly important and tough decisions have to be made about the future priorities of the network.

As the report also clearly identified, investment decisions will have a huge impact on regional growth, and those decisions can help to perpetuate a vicious cycle of increasing disparity of wealth between regions. They will be all the more important in light of the abolition of the regional development agencies, which was referred to by both my hon. Friend the Member for Liverpool, Riverside and the hon. Member for Blackpool North and Cleveleys (Paul Maynard). I myself represent a constituency in the north-west of England, so it is frustrating for me to see how rail congestion is having a real economic impact in areas such as Manchester and in the wider north-west, with knock-on effects on jobs and prosperity for my constituents and others.

The report rightly identified the northern hub as the key to improving rail services across the north of England. As we have already heard, it is an ambition of the northern hub project to increase train services in the north, including to cities such as Newcastle, Liverpool, Manchester, Leeds and Sheffield, by 40% during the next 20 years. That means 700 more trains a day, making it possible for 3.5 million more passengers to travel by train every year. The estimated wider economic impact of the project is also significant, with the creation of 23,000 new jobs and a return of £4 for every £1 that is spent. Of course, it has been frustrating for the northern hub project that there are no firm commitments about when work on that worthwhile and economically beneficial project will start. I want to take this opportunity to ask the Minister if she envisages that the project will be in the next Network Rail control period.

The report also examined the benefits of electrification, both for the environment and for improving the efficiency of our rail network. As we know, a number of regional schemes were announced by the previous Labour Government, and many of them were reconfirmed by the current Government through the comprehensive spending review. As yet, we are still awaiting a final decision on whether or not the Great Western main line electrification will extend all the way to Wales. People in Wales will feel pretty upset if that decision is delayed unduly, especially when the Conservative party manifesto itself said:

“We support…the electrification of the Great Western line to South Wales.”

I am not sure whether there were any Welsh MPs in the room during the coalition negotiations, because that commitment was subsequently downgraded to a general statement of support for

“further electrification of the rail network.”

It is crucial that the economic benefits of electrification extend to south Wales, and by that I mean that electrification should extend not only to Cardiff but Swansea.

Similarly, we wait with bated breath to see whether the newly electrified lines in the north-west, when they are eventually upgraded, will actually have electrified trains running on them from day one. Rightly there is a concern that, with delays to Thameslink, the carriage cascade to the north-west will be delayed. After all the internal investment to electrify the north-west part of the network, it would be a travesty if the old, overcrowded and slower diesel units continue to be used on the newly electrified lines.

I would warmly welcome any updates on these issues that the Minister can give us today. Can she let me know when there will be a decision on electrification to Wales? Likewise, can she outline the time scales that are in place for the replacement of Thameslink rolling stock and for cascading trains to the Great Western main line and the north-west?

The Transport Committee report also identified the importance of having new rolling stock on the network. Clearly, the delaying and reprofiling of some major schemes that had been announced by Labour is disappointing, especially as train fares were hiked up last month, but new carriages remain some years away for some commuters.

It is a similar story regarding the delivery of replacement stock for the outdated inter-city fleet. Clearly, the Government have delayed their decision on the inter-city express programme, with all the knock-on effects for cascading rolling stock. It is time that the Government ended the delays and allowed that project to proceed.

[Mrs Villiers]

I will not take any lectures from the hon. Gentleman—a Labour MP—about the IEP, given that his Government made little progress on it and spent £26 million on merely trying to procure the new trains.

[Andrew Gwynne]

I would welcome an update from the Minister about where that infrastructure project has got to and when we can expect to see new inter-city trains.

After rail fares increased last month by RPI plus 1%, as we have already heard, it is disappointing for commuters that the Secretary of State keeps claiming that fare increases across the CSR period will be only 10%. Is not the truth that RPI plus 3% will deliver a cumulative increase of more than 30% on the inflation forecasts by the Office for Budget Responsibility?

The Minister’s Department confirmed to me—it seems that it has also confirmed this to my hon. Friend the Member for Luton South (Gavin Shuker) in an answer to a written question—that it expects the effect of those rises to be rail passengers opting for other forms of transport. There is a concern, which the Minister used to share, that higher fares will price people off trains. That concern exists despite what the hon. Member for Cheltenham (Martin Horwood) has said. In turn, pricing people off trains will reduce people’s access to work and force them back on to the roads, generating more congestion, increasing carbon emissions and setting back our goal of achieving a sustainable transport system.

Briefly, I want to talk about high-speed rail, which was also mentioned in the Transport Committee’s report. As I have said in response to an intervention by the Minister, the Labour transport review will look at all areas of policy in detail, including high-speed rail. Clearly it is right that we should look in detail at the best way of delivering faster journey times between our core cities while increasing capacity.

The connectivity gains of high-speed rail arise not only from faster trains but from the new route alignments that comprise the proposed Y-shaped network of lines from London to Birmingham and—eventually—north to Manchester, Leeds and beyond. However, I have a real concern about the Government’s commitment to taking the planned high-speed line to the north. They have decided not to use the forthcoming high-speed legislation to secure the legal powers that would be needed to take the line beyond Birmingham, as Labour had planned to do. We will support the Government in taking the line beyond Birmingham, if that is what they choose to do. Perhaps the Minister can provide us with assurances that the Government will look again at seeking powers to extend the route beyond Birmingham.

It is also worth briefly mentioning freight on the rail network, which was an issue referred to both in the Transport Committee’s report and by my hon. Friend the Member for Luton North (Kelvin Hopkins). Freight operations play a big part in the economy, and we should look at ways of ensuring that freight capacity can continue to play a role in the rail network. Will the Minister outline how she sees rail freight being prioritised, especially with an eye on possible structural changes to Network Rail in the coming years? Indeed, is rail freight still a Government priority?

That brings me on to the McNulty review on value for money, which will have a real bearing on the future functioning of the rail network. I welcome that review of the rail industry, which was started by Labour when we were in government. When Sir Roy McNulty publishes his final report in April, we will consider any sensible proposals that would take costs out of the industry without reducing the quality of services for passengers. Does the Minister agree that, as the cost to the Government of running the railways comes down, the cost to the public of travelling by train should come down as well? Such a reduction would go some way towards helping hard-pressed commuters up and down the country, who are facing record fare rises of more than 30% in the next few years. The initial findings of the McNulty review have suggested that savings of £1 billion can be found without cutting services. Will the Minister now commit to sharing the benefits of those savings with passengers and to rethinking some of the fare rises that are due in future years?

In conclusion, as the Transport Committee report shows, the Government need a long-term vision for rail, and we need to deliver projects to build on our ambition to have a world-class rail service in this country. Where we agree with the Government, we will support them. The previous Labour Government left the rail network in a far better condition than the one in which we found it. Rail passenger numbers increased by 40% during the last decade, punctuality and quality of service also improved steadily in that time and consumer satisfaction with services increased. However, I recognise that there is still a huge amount to do, and this Transport Committee report is a good starting point for that future work.

17:19

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

It is a pleasure to serve under your chairmanship, Mr Owen, and I, like everyone else, congratulate the Chairman of the Select Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman), on securing this debate on such an important issue.

It has been a good debate, and we have at times been in danger of breaking out into a bit of cross-party consensus, which is extremely unusual on rail. It has been enlivened by references to Trotskyism and Leninism—the first time I have seen such elements enter into a debate on the railways. Everyone has recognised the crucial importance of our transport networks in general, and our rail network in particular, to our future economic prosperity, and to our ambition both to address environmental concerns, including those about climate change, and to deal with congestion on our roads by providing a viable alternative to the lorry and the car.

The coalition has pledged to cut the deficit and also recognises that securing growth is vital, which is why in the comprehensive spending review the Chancellor placed a priority on transport spending. As many Members, particularly the hon. Member for Luton South (Gavin Shuker), have acknowledged, transport projects can generate wider economic benefits many times their cost. I very much welcome the generous acknowledgement by my predecessor as rail Minister, the hon. Member for Glasgow South (Mr Harris), that the anxiety about a Conservative Government slashing spending on the railways has not materialised. Rail emerged from the spending review in a far stronger position than most people had expected, and that was acknowledged also by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard).

We have had to take a difficult decision on fares and I, of course, wish that that could have been avoided, but without the three years of RPI plus 3 increases, we simply would not be able to deliver the vital capacity improvements that passengers need. To make the sums add up, we had no choice but to ask passengers to pay more, but we are absolutely confident that passenger numbers will continue to grow. I was surprised that the Select Committee Chairman asked whether we were committed to new capacity and whether we expected growth to continue, because we are embarking on one of the most ambitious extra-capacity programmes in the history of the railways. That demonstrates our confidence that passenger numbers will grow, and our commitment to relieving overcrowding, which, as she rightly highlights, is a major concern.

[Mrs Ellman]

Do the right hon. Lady’s statements mean that she gives a categorical commitment to delivering the rolling stock as promised, and will she include in the conditions of future franchises a requirement to look at the health and safety implications of overcrowding?

[Mrs Villiers]

I will, in a moment, outline the Government’s commitments on extra rolling stock. Health and safety is a matter for the Office of Rail Regulation, which takes on board all such factors in its decisions on safety in the rail industry. There has been a significant improvement in safety on our railways over recent years, and we need to pay tribute to the fact that they are one of the safest forms of transport.

In response to the hon. Member for Glasgow South, we do not at the moment have any plans to reintroduce the flat cap. Affordability is the concern, but we will keep the matter under review, and see if it becomes more affordable in the future.

The improvements that we have promised are extensive, and over the next four years the Government propose to invest £30 billion in transport, £14 billion of which will support capital maintenance and investment in our railways. Major projects that we are funding include high-speed rail, Crossrail, Thameslink, Birmingham New Street and the tube upgrades. In answer to the question that the hon. Member for Liverpool, Riverside asked about carriages, we expect there to be about 2,100 new carriages on the rail network by 2019, of which about 1,850 will be additional capacity, and I shall go into a little more detail on carriages in a minute.

[Kelvin Hopkins]

Will the right hon. Lady look into the fact that more than 100 mark 3 carriages could be available immediately? We would only need to have new bogies to cope with the gauge difference with Ireland. The Irish need the money, I think.

[Mrs Villiers]

It is open to the train operators to lease additional capacity if they so wish, and they may well be interested in exploring the option that the hon. Gentleman outlines.

Substantial work is under way on the strategic freight network, and I have repeatedly paid tribute to the work done on that by the previous Administration. I emphasise that rail freight plays a really significant part in our strategy for reducing carbon emissions and relieving congestion, and that is why the coalition has prioritised investment in projects such as the Felixstowe-Nuneaton gauge clearance.

The hon. Gentleman would like to see a dedicated freight line. I know his enthusiasm for that project and am always happy to engage with him on it, but the freight industry as a whole prioritises the projects in the strategic freight network, rather than a dedicated line. If the hon. Gentleman can make the case for going ahead with something like that in the future, I and my colleagues will of course be prepared to listen.

On the regional balance, in making project funding decisions it is important to take account of the needs of different areas. Although the business case for rail investment in the south-east can often be stronger because of the sheer volumes of passengers, assessment of the business case is just one element in the decision-making process and we can, and do, have regard to other factors, including the appropriate balance of funding between different parts of the country. It is worth recognising that improvements in London and the south-east can yield benefits for the economy as a whole, but the north of England will benefit directly from a whole range of programmes that are under way, including faster journey times between Liverpool, Manchester and Leeds, additional carriages, electrification, station improvements and important upgrades on the east coast main line, as well as the extension of light rail in Manchester and Newcastle, and in the longer term the north will benefit massively from our high-speed rail plans. The tough decisions made in the spending review mean that we are able to provide more than £1.5 billion for local authority major schemes in the period up to 2014-15, and that is a larger amount than the average annual Department for Transport spend on such schemes over the past 10 years.

High-speed rail has been a big issue in the debate this afternoon, as ever. My hon. Friend the Member for South Northamptonshire (Andrea Leadsom) spoke with her usual passion and articulacy on her concerns about high-speed rail, and I welcome the input of all colleagues on this issue as it is one of the most important parts of the coalition’s programme to improve our railways. Very soon we will start a major consultation on our strategy for a Y-shaped High Speed 2 network, and I can assure the shadow rail Minister, the hon. Member for Denton and Reddish (Andrew Gwynne), that we are committed to taking this railway to the north of England, in two delivery phases. Opponents of HS2 say that it will not have a big impact on the north-south divide, the important response to which is that they should look at the extensive support for the project in the north of England, and also at the rest of Europe, where cities such as Lille have been transformed as a result of the connectivity that can come with a high-speed link to a capital city.

Demand for travel between our cities is expected to increase significantly, and there is an industry consensus that the west coast route will be full to capacity within little more than a decade. My hon. Friend the Member for Blackpool North and Cleveleys indicated that there was some contention about passenger growth figures, but everyone accepts that there will be significant growth on the west coast main line.

[Andrea Leadsom]

Will my right hon. Friend give way?

[Mrs Villiers]

I am afraid that I really cannot. I do apologise.

We will face severe congestion and overcrowding on those routes in years to come, unless we act now to begin the process of delivering that capacity.

On the alternatives, upgrades of an existing line, even extensive ones, could deliver only half a new line’s capacity benefit and would be more expensive. My hon. Friend the Member for South Northamptonshire asked whether 12-car trains would deliver the equivalent capacity: no, they absolutely would not. The hon. Member for Luton North asked whether new signalling would deliver it, and the answer is the same. We are already introducing new capacity on existing lines, and there comes a point at which incremental changes do not deliver the upgrade needed. Moreover, High Speed 2 will deliver the benefits of capacity released on the existing network, with major benefits for places such as Milton Keynes, Luton, Northampton and Peterborough, and also for freight operators.

I sincerely believe that careful mitigation can address many of the most serious local impacts, and I know that my hon. Friend will continue to fight hard for her constituents, who might be affected by the line. We welcome their involvement in the consultation process on which we are about to embark, to ensure that we get the right answers on high-speed rail and that we listen to the views of people affected by it.

After 20 years of discussion, Crossrail is finally going ahead. I hope that that answers those concerned that High Speed 2 will swallow up all the funding available for rail. The hon. Gentleman complained that the Hitchin flyover might not go ahead as a result of the funding pressure on high-speed rail. It is under way, or will be shortly, as it is in an investment programme to which the Government have committed. We have confirmed that the Thameslink programme will proceed in full, despite anxiety that it might not. Some 1,200 new carriages will be delivered, almost doubling the number of north-south trains through the capital at peak times.

On the Derby factory and the procurement of the Thameslink trains, the hon. Member for Glasgow South tempted me to depart from the EU’s procurement rules. I fear that I would find myself falling foul of the European Communities Act 1972 if I did, so I will not advocate failing to abide by our treaty obligations, but I can assure the House that bids from UK-based operators will be considered carefully and assessed fairly, objectively and equally.

The Government expect an additional 650 carriages in several of our major cities by 2014. We expect services to be strengthened into Leeds, Manchester, Sheffield, Liverpool, Newcastle, Birmingham, Bristol—to answer the concerns of the hon. Member for Chippenham (Duncan Hames)—London Paddington and London Waterloo. In addition, new Thameslink and Crossrail rolling stock will enable the redeployment of hundreds more existing electric carriages, strengthening the case for further electrification of our network. I hope that that responds to the concerns expressed about the quality of rolling stock in the north. The hon. Member for Bolton West (Julie Hilling) rightly raised concerns about the quality of that rolling stock and the notorious Pacer trains. We believe that our programme of new rolling stock will help address those concerns.

As the Chancellor confirmed in his Budget speech, lines between Liverpool, Manchester, Preston and Blackpool will be electrified. The redeployment of electric rolling stock to those routes will in turn free up hundreds of diesel units, which will be available for train operators to lease after 2015. In November, the Secretary of State announced that Network Rail will electrify routes on the Great Western main line from London to Didcot, Oxford and Newbury. We expect to make an announcement shortly on the further electrification of that line. We have decided to press ahead with plans to buy a new fleet of trains to replace most of the high-speed trains operating on the Great Western and east coast lines. We have narrowed down the options to two, and we hope to give the House more information in the near future.

The hon. Member for Luton South and others were concerned about stations. We are continuing with the £150 million national stations improvement programme and the £370 million access for all programme, including £2.3 million to be spent on a scheme at Luton.

[Gavin Shuker]

Will the Minister give way?

[Mrs Villiers]

I am afraid that I cannot. I have run out of time. Birmingham New Street will go ahead, hopefully delivering economic benefits of £2 billion. Improvements at Reading will address a long-standing bottleneck, benefiting people across the Great Western line.

The Chairman of the Select Committee and others are absolutely right to say that it is crucial to get better value for taxpayers’ and passengers’ funding of the railways. Reforming our railways and reducing their cost is essential. The Chairman of the Select Committee and the hon. Member for Cheltenham (Martin Horwood) rightly expressed concerns about the high cost of Network Rail compared with other operators in Europe. We recognise fully the concerns about rail fares. To answer the shadow Minister’s question, we believe that we should share the benefits of the reduction in railway running costs that we expect the McNulty review to deliver. They will be shared between fare payers and taxpayers. We are also clear that any changes suggested by the McNulty review must protect freight operators’ interests.

There is an important role for open access, as my hon. Friend the Member for Blackpool North and Cleveleys urged me to make clear, although open access is not necessarily his only hope of direct train services between Blackpool and London. No decisions have been made yet, but it is possible that that might form part of franchised operations.

We are working closely on the northern hub. I recognise that there is a lot of support for it. Dealing with the problems identified in the project would be of great benefit to the economy of the north of England. I cannot give any guarantees today, but it must be a strong candidate for funding in the next control period.

Hon. Members have supported a list of projects. On the Swindon-Kemble line, if there were any spare funding down the DFT’s sofa, as the hon. Member for Cheltenham asked, I am sure that Swindon-Kemble would be a good candidate. However, he will appreciate that our rail budgets are fully committed. He made a good point about the improvements to resilience that the project would deliver. The hon. Member for Liverpool, Riverside mentioned the midland main line. There is a strong business case for it, but again, affordability is a concern. I am always happy to talk about Kirkstall Forge, and I look forward to the revised bid, which I believe will be made in September. It is a good scheme with significant benefits, and I hope that one day it will proceed. We will have to see whether it proves affordable, given our budget constraints.

I am grateful for the time allowed me to speak in this debate.

17:36

[Mrs Ellman]

Thank you for chairing this important and interesting debate, Mr Owen. I thank the Minister for her response. I am pleased to see my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) acting so effectively in his new position. We have had a constructive debate, and I thank all hon. Members who have participated, including Select Committee members and others who find the issue important enough to have spent time and spoken here. The range of contributions underlines the importance of investment in our railways. Contributions have addressed the importance of investment in local stations, of local services and of developing capacity, whether in local, regional or high-speed rail services. I listened carefully to the Minister’s response. She has given some assurances. The Select Committee will be following up the promises and commitments that she made, and will take up the various points raised by hon. Members.

The report that we have been debating was concluded a year ago, but it is significant how highly relevant many of its recommendations and the issues that it raised are today. The Select Committee’s work is enhanced by the involvement of many Members. I assure all hon. Members here that we will be pursuing all the points that they have raised in our questions to Ministers and others responsible for delivering our services, and in new inquiries. I thank everybody for their constructive participation.

[John McDonnell (Hayes and Harlington) (Lab)]

I apologise for coming so late. We were engaged in debate in the main Chamber. When the McNulty report is published, I urge the Select Committee to consider it in detail and give us the opportunity for a further debate based on the Committee’s consideration of the recommendations.

[Mrs Ellman]

I thank my hon. Friend for his comments. The Select Committee takes rail investment extremely seriously and will give the McNulty report full consideration in due course, along with the Government’s White Paper on the future of rail. Value for money in our rail service is intrinsically linked to the structure of rail and is the best way to deliver an effective service in terms of passengers and freight.

Question put and agreed to.

17:39

Sitting adjourned.

Written Ministerial Statements

Thursday 17th February 2011 Written Statements

Thursday 17 February 2011

Financial Regulation

Thursday 17th February 2011 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The Government have today presented to Parliament a consultation document, “A new approach to financial regulation: building a stronger system” (Cm 8012), which provides further detail on the coalition Government’s proposals to reform the framework of financial regulation in the UK following the complete failure of the tripartite system over many years to identify or tackle the build up of risk in the financial system. That failure precipitated the biggest financial crisis for a generation, leading to a run on a major high-street bank and the part-nationalisation of two of the largest banks in the world. We need a wholly new approach. The reforms detailed today will address the fundamental weakness of the regulatory system, created in 1997. This document is available on the Treasury website.

This document expands and further consults on the Government’s proposals, set out last year, to disband the Financial Services Authority and establish a new system of more specialised and focused financial services regulators. The Government’s reforms focus on three key institutional changes: the creation of an independent Financial Policy Committee (FPC) in the Bank of England, the establishment of a new Prudential Regulation Authority (PRA) as a subsidiary of the bank, and the creation of an independent conduct of business regulator, the Financial Conduct Authority (FCA), which was formerly provisionally titled the consumer protection and markets authority. This corrects the failures of the past by creating regulators with clear objectives and the powers needed to deliver them.

“A new approach to financial regulation: building a stronger system” outlines the Government’s thinking on a range of issues, including: the objectives of the new regulatory bodies and the factors which they must consider in fulfilling their objectives; the levers and likely tools the FPC will have at its disposal to protect financial stability; the PRA’s judgment-led approach in regulating firms; the FCA’s more proactive and focused approach to regulating conduct in financial services and markets; accountability measures for the new regulatory bodies; and co-ordination mechanisms which will determine how the regulatory authorities will work together, and with regulated firms. Our reforms will create a stronger regulatory structure which reinforces stability in financial markets and helps deliver better outcomes for consumers.

Following the consultation, the Government will present a further White Paper including a draft Bill for pre-legislative scrutiny in the spring. The Government expect the new regulatory structure to be in place by the end of 2012.

Council Tax Benefit

Thursday 17th February 2011 Written Statements

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

The spending review 2010 announced that Government would localise council tax benefit from 2013-14, and reduce its costs by 10%. The Welfare Reform Bill, published today, took the first step in that direction by taking enabling powers to abolish council tax benefit. Further changes will follow to establish the new system from 2013-14.

I can confirm that the Government remain committed to retaining council tax support for the most vulnerable in society and that they will be taking forward plans for councils to develop local rebate schemes. This reform is part of the decentralisation agenda. It will create stronger incentives for councils to get people back into work and so support the positive work incentives that will be introduced through the Government’s plans on universal credit.

Full consultation on the system of local council tax rebate schemes will be undertaken in due course, led by the Department for Communities and Local Government. Parliament will have the final say on any new regime in England. The Government will discuss the devolved implications with the Scottish Government, the Welsh Assembly Government and the Northern Ireland Executive.

Combined with other incentives—such as the new homes bonus and our proposals for the local retention of business rates—these changes will give councils a greater stake in the economic future of their local area, so supporting the Government’s wider agenda to enable stronger, balanced economic growth across the country.

Decent Homes Programme

Thursday 17th February 2011 Written Statements

[The Minister for Housing and Local Government (Grant Shapps)]

In a difficult spending review the Government were pleased to announce that they will invest over £2.1 billion of capital funding over the next four years to help towards completing the decent homes programme, including £1.595 billion in the council housing sector. Some £0.5 billion will be allocated to continue to fund housing associations that have already taken on the ownership and management of ex-council housing stock. This reflects the Government’s commitment to fairness, protecting the most vulnerable people in our society and as far as possible protecting front line services. This funding will help to refurbish over 150,000 council homes, improving the lives of thousands of residents. It will also help ensure that all councils can deliver a sustainable 30-year business plan under self-financing.

I previously announced that the Government wanted to be fairer in their approach to all, by being less rigid about local structures that would be eligible for funding than the last Government. As a result the Homes and Communities Agency (HCA) published proposals for managing the funding allocation process in a consultation document. Following this the agency sent out an invitation to bid to all councils and ALMOs.

The HCA received bids from 70 authorities for a total of £2.7 billion. Therefore there has had to be a rigorous assessment process conducted by the HCA, in consultation with the Mayor for London, in order to live within the available budget.

Today, I am announcing jointly with the HCA the funding for 2011-12 and 2012-13 and indicative funding allocations for 2013-14 and 2014-15. Not all bids have been funded. Those that have not been funded are where the level of non-decency is not as great, is less long standing, or could potentially be funded by greater efficiency savings by the authority especially within the greater freedoms and flexibilities of the system of self-financing after April 2012. Some bids will be funded at a reduced level in line with the criteria in the invitation to bid and may be funded on a later time scale than bid for in order to live within the budget. Only those bids where the authority has made a strong case for investment need and already demonstrated significant cost reductions will receive levels of funding close to their bid. Although there will be more to do, today’s decent homes funding will go a long way to making all homes decent for their tenants.

A table showing the funding allocated has been placed in the Library of the House.

Local Enterprise Partnerships

Thursday 17th February 2011 Written Statements

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

I, together with the Secretary of State for Business, Innovation and Skills, would like to inform the House that, following the submission to form a local enterprise partnership, we have today written to the Mayor of London and to London councils inviting them to put their governance arrangements in place.

Local enterprise partnerships will be important drivers of growth in the future, bringing together local businesses and elected leaders to create the right conditions for growth. They see a real power shift away from central Government and quangos and towards local communities and the local businesses who really understand the barriers to enterprise in their areas. This announcement brings the total number of partnerships so far invited to put their governance arrangements in place to 31—nearly 90% of the country. We will continue to work with other areas with a view to establishing further local enterprise partnerships across England.

New Homes Bonus

Thursday 17th February 2011 Written Statements

[The Minister for Housing and Local Government (Grant Shapps)]

Today, I am announcing the final design of the new homes bonus. The new homes bonus will fulfil the Government’s coalition agreement commitment to provide local authorities with real incentives to deliver housing growth.

This is a key part of our ambition, set out in the “Local Growth” White Paper, to create a fairer and more balanced economy through encouraging growth. The role of local areas in this rebalancing of growth is crucial—localities are best placed to understand drivers and barriers to local growth and should lead their own development to release their economic potential. In so doing they should be able to benefit directly from the development they bring forward.

On 12 November I wrote to English MPs and local authority leaders announcing a consultation on implementation of this commitment through the proposals for the new homes bonus. The consultation closed on 24 December. We received some 470 responses from local authorities, representative groups, MPs and individuals. The responses gave widespread support to the principles of the scheme and the broad scheme design. After considering all responses I am announcing the final scheme design and implementation. Copies of the consultation response document and the final scheme design document have been placed in the Library of the House.

The new homes bonus is designed to address the disincentive within the local government finance system for local areas to welcome growth. Until now, increased housing in communities has meant increased strain on public services and reduced amenities. The new homes bonus will remove this disincentive by providing local authorities with the means to mitigate the strain the increased population causes. In addition, in doing so the new homes bonus should help engender a more positive attitude to growth, and create an environment in which new housing is more readily accepted.

The new homes bonus scheme will be a powerful, simple and transparent incentive. Commencing in April 2011, the bonus will match fund the additional council tax potential from increases in effective housing stock, with an additional amount for affordable homes, for the following six years. It will ensure that the economic benefits of housing growth are more visible to the local authorities and communities where growth takes place.

But housing growth is not just about new units. It is also about best use of existing stock. For this reason, we have designed new homes bonus to measure increases in effective stock—the change in total number of homes and change in empty homes. Empty homes contribute to blight, are a local eyesore and can be a source of local opposition to new homes. But they can also play an important role in increasing available housing—data suggest the average number of long-term privately owned empty homes over the past five years is around 300,000. Of these between 100,000 and 130,000 are in areas of strong housing demand.

The balance between market and affordable homes is crucial—therefore the bonus will provide an additional £350 for each affordable home for the following six years. This means that the bonus available for an affordable home will be up to 36% more than for a similar market home.

The new homes bonus will be unring-fenced. This flexible funding will allow the benefits of housing growth to be returned to those communities affected by growth in a way which best meets local need. Local authorities will need to lead the debate with their communities to determine local spending priorities.

The Department for Communities and Local Government has set aside almost £l billion over the spending review period for the scheme, including some £200 million in 2011-12 or year one. From year two, funding beyond these levels will come from formula grant.

These radical reforms demonstrate our commitment to seeing a major upswing in housing to meet Britain’s housing need and seeing more homes that people want in the places that people want them. We also want to see greater housing market stability, where house price rises are more in line with earnings growth. However, we will not impose this through top-down targets which attempt to dictate where growth happens, but too often produce little but hostility.

They will be complemented by reforms to the community infrastructure levy, which will incentivise growth by providing authorities with a powerful new tool to secure contributions from development to deliver the infrastructure that communities need to make that growth acceptable and sustainable. The local government resource review will consider how business growth can be incentivised. This framework will encourage local authorities and communities to increase their ambitions for housing and economic growth, and to take the lead in managing the way in which villages, towns and cities develop.

The new homes bonus also sits alongside the existing framework for making planning decisions. Responsibility will remain with local authorities to work within this framework to continue to ensure that development is suitable and sustainable by meeting local needs and national planning policy.

Further information on the new homes bonus final scheme design can be found at: http://www.communities. gov.uk/housing/housingsupply/newhomesbonus.

We will continue to provide advice on the scheme via the [e-mail] email account.

Offender Personality Disorder

Thursday 17th February 2011 Written Statements

[The Minister of State, Department of Health (Paul Burstow)]

I am publishing today a joint Department of Health and Ministry of Justice consultation document on an “Offender personality disorder pathway implementation plan”.

This document sets out the Government’s plans to reshape services, interventions and treatments for offenders with severe personality disorders. These plans would be implemented within the existing resources devoted to this area across the national health service and National Offender Management Service. The proposals take account of the learning from the dangerous and severe personality disorder programme, introduced by the previous Administration, and are aimed to improve identification and assessment, increase treatment capacity, provide additional psychological support in prisons, and strengthen oversight for those released from custody.

This consultation is an important opportunity for professional bodies, service providers in health and criminal justice, patients and the public to comment on how best to ensure continuity of care through the development of effective service pathways across custodial settings and in the community, to improve care, protect the public and make the best use possible of the available resources. This consultation sets out the Government’s initial thoughts and invites views from interested persons or organisations.

The consultation document has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.

Sickness Absence

Thursday 17th February 2011 Written Statements

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

I wish to inform the House that, today, the Department for Work and Pensions, together with the Department for Business, Innovation and Skills will be launching an independent review of sickness absence in Great Britain.

It is estimated that around 300,000 people (approximately 1% of the employed population) move on to sickness-related benefits (incapacity benefit or employment and support allowance) each year. These individuals make up a sizeable proportion of long-term sickness absences and around half of the total flow on to ESA every year. They constitute a significant cost to taxpayers, in addition to the costs incurred by employers covering absences, and the opportunity costs to the economy in missing out on the contribution of these individuals.

In conjunction with the Minister responsible for employment relations, consumer and postal affairs, the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), I have invited Dame Carol Black, the national director for health and work, and David Frost, current director general of the British Chambers of Commerce, to co-chair an independent review of sickness absence to establish how we can mitigate the economic losses, as well providing effective support for those who would benefit from our help. The report will be jointly sponsored by the Department for Business, Innovation and Skills and the Department for Work and Pensions. The review will explore how the current system could be changed to help more people stay in work, thereby reducing costs. In addition, the review will examine whether the balance of these costs are appropriately shared and make recommendations for reform.

The coalition Government are committed to reducing the burden of regulation of business in line with the objectives of the growth agenda. The sickness absence review will be conducted in this context, as well as informing the work of the existing employment law review. As such, the sickness absence review will complement the Government’s ongoing welfare reform agenda.