House of Commons

Tuesday 5th July 2011 Commons Chamber

Tuesday 5 July 2011

The House met at half-past Two o’clock

Prayers

Tuesday 5th July 2011 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 5th July 2011 Commons Chamber

The Deputy Prime Minister was asked—

[Penny Mordaunt (Portsmouth North) (Con)]

1. What recent discussions he has had with constitutional historians and experts on House of Lords reform; and if he will make a statement.

[Laura Sandys (South Thanet) (Con)]

4. What recent progress he has made on his plans for House of Lords reform; and if he will make a statement.

[Nicky Morgan (Loughborough) (Con)]

8. What recent representations he has received on House of Lords reform.

[Andrew George (St Ives) (LD)]

10. What assessment he has made of the recent debates in both Houses on his proposals for House of Lords reform.

[The Deputy Prime Minister (Mr Nick Clegg)]

The Government have received many representations on all aspects of House of Lords reform, including from constitutional experts. We recognise that a variety of views were expressed in recent debates in both Houses, and we are sure that the Joint Committee will take account of the debates when scrutinising the draft Bill and White Paper.

[Penny Mordaunt]

The elegance of our unwritten constitution allows it to adapt when necessary to meet a pressing need, but change for some other reason could be regarded as constitutional vandalism. Has the Deputy Prime Minister reflected on the fact that if a pressing need is not articulated, his plans for reform of the other place might fall into the latter category?

[The Deputy Prime Minister]

I do not think it is a new need, and in that sense it is not a pressing need, but there is an enduring need to make decisions in this place and the other House as accountable to the British people as possible. The simple principle that those who shape the laws of the land should be held to account by people who have to obey the laws of the land is a long-standing democratic principle.

[Laura Sandys (South Thanet) (Con)]

One matter of great concern in this Chamber is that the other place is most certainly secondary to it. Does my right hon. Friend see the opportunity to remove any ability for the other place to initiate legislation as a way to ensure the hierarchy between this place and the other place?

[The Deputy Prime Minister]

As we explained in our White Paper, we believe that the different mandates, electoral systems and terms of office, and of course the conventions enshrined in the Parliament Acts, will guarantee that although there will no doubt be an evolution in the relationship between the two Houses—that is bound to happen under any arrangement—the hierarchy between this place and the other place will remain intact.

[Nicky Morgan (Loughborough) (Con)]

The Deputy Prime Minister has just referred to the different mandates of Members of the other place, if it is reformed, and of this House. Does he not think, though, that the reforms would benefit from some clarification of those different mandates, so that the essential and long-standing relationship between MPs and constituents is not eroded?

[The Deputy Prime Minister]

We already have a system, of course, in which politicians are elected to different assemblies and Parliaments with different mandates, and as long as those mandates are clearly differentiated, as they would be under the proposed arrangements, there is no clash between them. Let us remember that what the Government suggest in the draft Bill is that elected Members of a reformed House of Lords would represent vastly larger areas than the smaller constituencies that we in this House represent.

[Andrew George (St Ives) (LD)]

Given that in our debates so far no one has rushed to the defence of the hereditary principle or patronage, does my right hon. Friend not agree that if we are to make haste in delivering the principles behind Lords reform, it would be best to get on with removing the hereditary principle and patronage now? No one disagrees with that.

[The Deputy Prime Minister]

I certainly agree that we aspire to create a reform that, although evolutionary in its implementation—it will take several years rather than happen overnight—will at least be comprehensive and create a reformed House of Lords with a far greater mandate and democratic legitimacy than is currently the case.

[Mr David Hanson (Delyn) (Lab)]

In the Deputy Prime Minister’s nirvana of 15-year terms, will he consider ruling out Members of the newly elected other place standing for this place, so that we do not have people roaming around one individual constituency trying to unseat the Member of Parliament by using their democratically elected 15-year position in the other place?

[The Deputy Prime Minister]

The right hon. Gentleman may have noticed that in the White Paper we suggest precisely that. We suggest that there should be a cooling-off period of at least one term, so that those who leave the other place cannot instantly stand for this place. That is precisely to avoid the clash that he rightly identifies.

[Sheila Gilmore (Edinburgh East) (Lab)]

Does the Deputy Prime Minister have a view on Lord Steel’s suggestion that a payment of £30,000 should be made to enable Lords to retire?

[The Deputy Prime Minister]

We are not in favour of that, but we are in favour of many provisions of Lord Steel’s private Member’s Bill and look forward to incorporating many of its transitional arrangements and so on into the Government Bill.

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

Does the Deputy Prime Minister not understand that even those of us who support Lords reform cannot help wondering whether he has masochistic tendencies in trying to win this fight with one hand tied behind his back, and with the Prime Minister simply holding his coat and egging him on from the sidelines? Does he believe that he has the overwhelming support of his coalition partners to steer the Bill through both Houses? If not, is he not just wasting—

[Mr Speaker]

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

[The Deputy Prime Minister]

I remind the hon. Gentleman that all parties went to the country in last year’s general election with a clear manifesto commitment to reform the House of Lords. As I have said, it does not strike most people as a radical suggestion that the democratic principle that operates in Parliaments around the world should gently and incrementally be applied to the other place.

[Ian Lucas (Wrexham) (Lab)]

Do the Government’s proposals for the House of Lords include excluding peers not from England on voting on matters solely related to England?

[The Deputy Prime Minister]

We have not addressed that in the White Paper. If people want to discuss it in the Joint Committee, they are free to do so.

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

Has my right hon. Friend read the debates in which the argument was advanced that the House of Lords does its job, and therefore should not be changed in any way? If so, did he think he was reading the right issue of Hansard, or the one dated 1911, or perhaps the one dated 1832?

[The Deputy Prime Minister]

Whatever their views about the proposals for House of Lords reform that the Government made in the White Paper and the draft Bill, I believe that everybody accepts that the House of Lords is not immune to reform or improvement. My view is that political institutions are always susceptible to some improvement over time, and I believe that that package of carefully considered reforms, which I hope, over time, will enjoy cross-party support, will finally allow us to make progress on something that has been debated for more than a century.

[Nic Dakin (Scunthorpe) (Lab)]

2. What recent representations he has received on the Government’s policy on the proposed length of fixed-term parliaments.

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

The Fixed-term Parliaments Bill has been debated almost fully in both Houses. We have received representations from the public, and I feel sure that, very shortly, another will emanate from the hon. Gentleman.

[Nic Dakin]

Leading constitutional expert Vernon Bogdanor said:

“If we are entering a world of hung parliaments, there is no reason for dissolutions to be made more difficult.”

Is the Fixed-term Parliaments Bill designed to serve short-term, coalition political interests rather than the long-term interests of the British people?

[Mr Harper]

Not at all. I know the opinions of Vernon Bogdanor very well, because he was my tutor. He and I disagreed while we were at university, and we continue to do so on many matters now. The Bill is very much in the interests of Parliament, and of having a stable situation in which the Prime Minister, for the first time, has given up the power to call an election to suit his political party. That is a huge constitutional improvement.

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

3. What steps he is taking to increase the completeness and accuracy of the electoral register.

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

My hon. Friend will know that last Thursday the Government published their White Paper and draft legislation on individual electoral registration, to improve both the accuracy of the electoral register and its completeness.

[Simon Kirby]

Does the Minister agree with me and the many people in Brighton Kemptown who believe that accuracy and completeness are very important if fraud and malpractice are to be avoided?

[Mr Harper]

I very much agree with my hon. Friend. We made it very clear in our proposals that we are interested in reducing the vulnerability of our electoral register to fraud and in ensuring its accuracy. We are also interested in ensuring that it is as easy as possible for anyone who is eligible to vote to get on the register. To that end, we are taking part in some data-matching pilots to improve that situation.

[Mr Graham Allen (Nottingham North) (Lab)]

Does the Minister accept that not only registration but counting the votes properly is important? Is he aware that in most constituencies there are a handful of spoilt papers, whereas in mayoral elections there are sometimes more than 1,000? On two occasions at least, the number of spoilt papers has been larger than the majority of the election winner. Will he take that up with the Electoral Commission?

[Mr Harper]

I am grateful to the hon. Gentleman, who chairs the Select Committee on Political and Constitutional Reform, which will look at our individual elector registration proposals and carry out pre-legislative scrutiny. He has raised that question with me before, and I can confirm that I will ask officials to look into that matter. I will come back to him and the House in due course.

[Priti Patel (Witham) (Con)]

Specific to the electoral register, will the Minister provide precise details on the Government’s plans to extend the franchise to prisoners? Will proposed legislation on that come to the House, or will he defy Europe and uphold the will of the House?

[Mr Harper]

I am grateful to my hon. Friend for her question—this is a subject on which she is pursuing Ministers relentlessly both in the House and in written questions. The Prime Minister was asked a similar question at Prime Minister’s questions, and I can do no better than to say that the Government do not want to enfranchise prisoners, but there has been a clear decision by a court to which we have signed up. The Prime Minister said that the Government will ensure that any legislative proposals are as close as possible to the House’s decision earlier this year.

[Chris Bryant (Rhondda) (Lab)]

On 26 October last year, I asked the Deputy Prime Minister how he was going to ensure that everyone forced to move out of central London because of the changes to housing benefit would be enfranchised and end up on the register. He pooh-poohed that at the time, saying it was not going to happen. Now we know that the Department for Communities and Local Government believes that up to 40,000 people are going to have to move. How are Ministers going to ensure that those people are enfranchised?

[Mr Harper]

The hon. Gentleman will know that the Department does not say that at all—it is not what is stated in the impact assessment that Ministers have signed up to. I do not believe either that that is what the article in the newspaper said. On enfranchisement, we are very clear: our proposals will make it easier for people who are entitled to be registered to be registered. He will know that we are carrying out data-matching pilots across the country, and we will take forward and roll out any lessons from that to make it easier for people who are eligible to be registered.

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

5. What recent progress he has made on the reform of party funding; and if he will make a statement.

[Duncan Hames (Chippenham) (LD)]

7. What recent assessment he has made of the timetable for the reform of party funding.

[The Deputy Prime Minister (Mr Nick Clegg)]

The Government are committed to work to reform party funding. The Committee on Standards in Public Life is conducting a review and the Government will consider its recommendations, alongside other relevant evidence before taking this forward.

[Greg Mulholland]

I thank my right hon. Friend for his answer. Does he agree that the unseemly spectacle last week of union leaders criticising the Labour leadership for not overtly supporting the strikes while the Labour leadership looked uncomfortably at the floor shows exactly why we need to get big money out of party funding and why we need real reform?

[The Deputy Prime Minister]

I agree that it cannot be healthy in a democracy if any political party is over-reliant on one source of funding to the exclusion of others. [Hon. Members: “Michael Brown!”] It is worth saying that the current situation is unsustainable and has done damage to all political parties, which is why it is something that we should look to reform on a cross-party basis.

[Duncan Hames]

If reforms to party funding are to have any meaningful effect they need to come into force at least 18 months before the next general election. Does the Deputy Prime Minister recognise that if his timetable cannot deliver, it might be overtaken by one that simply commands the support of a majority of the House?

[The Deputy Prime Minister]

We are first waiting to see the recommendations of the Committee on Standards in Public Life to consider whether they might kick-start a process of discussions between the parties, so that we can finally move beyond the shadow of the party funding scandals that have blighted all the political parties, and so that we can put the arrangements on a much more sustainable and transparent footing.

[John Cryer (Leyton and Wanstead) (Lab)]

Does the Deputy Prime Minister recognise the difference between 1 million trade union members donating £1 each to a political party and a wealthy individual writing out a cheque for a million quid?

[The Deputy Prime Minister]

As I said, I think that it is unhealthy if any political party is over-reliant on particular organisations, individuals or vested interests for their financial survival, and that is why I hope that all of us—given that all political parties have been affected by this in one way or another—can work together after the Committee on Standards in Public Life has produced its recommendations so that we can find a solution.

[Sadiq Khan (Tooting) (Lab)]

The Deputy Prime Minister is right that all three major political parties entered the election with a commitment to reform the way in which political parties are funded. Will he confirm that he will follow convention and seek cross-party agreement on the way forward? Will he also outline the timeline he has in mind? There has obviously been a delay in relation to the Committee on Standards in Public Life. When does he think we will be able to start the discussions to resolve this issue?

[The Deputy Prime Minister]

I agree that we should always seek to deal with this issue on a cross-party basis where possible. However, I cannot give the right hon. Gentleman a precise timetable because it is not within the gift of the Government to decide when Sir Christopher Kelly produces his committee’s report. As soon as he does, I hope that we can consider the recommendations together to see whether they provide a basis for cross-party discussions.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

6. What steps he is taking to increase voter registration.

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

The hon. Gentleman will know that it is the individual responsibility of electoral registration officers to improve registration rates, but the Government are committed to helping them. He will know that the local council in his area is taking part in one of our data-matching pilots. I hope that that will have a positive effect on driving up registration rates, and then we can see whether it has lessons for rolling out such a system across the country.

[Michael Connarty]

Although it gave me great pleasure that Iain McKenzie was elected comfortably as the Labour candidate in the Inverclyde by-election—I was doubly joyous that the Liberal Democrats lost their deposit—I was concerned by the number of people I met who did not have an electoral registration card and were somewhat confused. Will the Minister assure me that the data-matching that he mentioned will be followed up by the Government, so that the responsibility, and the blame, is not left to electoral registration officers? It is a Government responsibility, if they want equal votes of equal value, to ensure that everyone is on the register.

[Mr Harper]

I very much agree with the last sentiment that the hon. Gentleman expressed. My officials are working closely with all local authorities that are looking at matching electoral registers with other existing government databases, to see whether we can identify people who are eligible to vote, but not on the register, and to follow them up. The evidence from the pilots will be looked at not just by the Government but by the Electoral Commission, and if the pilots prove successful we will look at rolling them out across the country. I welcome the hon. Gentleman’s support for that initiative.

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

Given that a key issue in increasing voter registration is the performance of electoral registration officers in every locality, which we know can vary enormously, is it not time that the Government gave the Electoral Commission the power to direct, and not just to issue advice?

[Mr Harper]

My hon. Friend, who answers very ably for the Electoral Commission in this House, will know that it has made that point strongly to the Government. We will look at the analysis of the referendum this year, when the head of the Electoral Commission, as the chief counting officer, had that power of direction. We will look at how that worked in practice and then take a view on whether it makes sense to consider it for elections more widely.

[Penny Mordaunt (Portsmouth North) (Con)]

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

[The Deputy Prime Minister (Mr Nick Clegg)]

As Deputy Prime Minister, I support the Prime Minister on the full range of Government policy and initiatives, taking special responsibility for this Government’s programme of political and constitutional reform.

[Penny Mordaunt]

Which is the more pressing issue: the West Lothian question or House of Lords reform?

[The Deputy Prime Minister]

I do not think that it is an either/or choice. As the hon. Lady knows, there is a commitment in the coalition agreement to establish a commission to look into the West Lothian question, but I do not think that that precludes the Joint Committee looking at proposals for reform of the House of Lords at the same time.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

Will the Deputy Prime Minister join me in expressing heartfelt concern for the horrendous ordeal of Milly Dowler’s family? There are now allegations that even as the police searched for Milly Dowler and as her parents waited and hoped, the News of the World was hacking into her phone. Today the Leader of the Opposition has called for a full public inquiry into illegality in the newspaper industry. Will the Deputy Prime Minister say that the Government will back that call?

[The Deputy Prime Minister]

I entirely agree with the right hon. and learned Lady, and I am sure that we both speak on behalf of the whole House and the rest of the country in saying that if the allegations are true such behaviour is simply beneath contempt. To hack into the phone of a missing child is grotesque, and the suggestion that that might have given false hope to Milly’s parents that she might have been alive only makes it all the more heart-rending. The absolute priority now is to get to the bottom of what actually happened—what is the truth—and that requires, above and beyond everything else, a police investigation that pursues the evidence ruthlessly, wherever it leads.

[Ms Harman]

Of course, this time the police investigations must be thorough and rigorous, but there must also be a public inquiry. There has been widespread malpractice and criminality, and there is a stain on the whole system. We must protect people from this and clean up the British press. Is the Deputy Prime Minister going to act?

[The Deputy Prime Minister]

If there are wider issues that need to be looked at once the police investigation is complete, of course we can return to them. However, I am sure that the right hon. and learned Lady will agree that the key thing—this is what Milly Dowler’s family and families up and down the country want to know—is: who did what when, who knew what they were doing and who will be held to account? We will be able to get to the bottom of that only when the police ruthlessly pursue the evidence, wherever it leads.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

T3. A constituent of mine who wishes to remain nameless has contacted me because she believes that a “YES! To Fairer Votes” preaddressed postal vote form was fraudulently completed on her behalf. Can my right hon. Friend tell me what action my constituent can take to establish who might have signed the form on her behalf and what measures we can introduce to prevent this from happening again in future?

[The Deputy Prime Minister]

If my hon. Friend has evidence from his constituent of criminal or fraudulent behaviour, it should of course be referred to the police. I suggest that should be done as quickly as possible.

[Ian Murray (Edinburgh South) (Lab)]

T2. The NSPCC has announced the closure of ChildLine in Edinburgh, which will result in the loss of 14 staff and hundreds of volunteers. The thrust of the closure is to encourage children to use the internet, but there is concern that those who are most in need of ChildLine have the least access to the internet. Will the Deputy Prime Minister meet me, the NSPCC and the many hundreds of ChildLine volunteers in Edinburgh to see whether we can get this decision reversed?

[The Deputy Prime Minister]

I am sure that the hon. Gentleman is right to raise his concerns about the effect of that closure, given that ChildLine exists precisely to help the most vulnerable children. I am more than happy to establish meetings for him, and I would also suggest that meetings take place in Edinburgh with the Scottish Government, whose responsibilities have a bearing on this issue—[Interruption.] They might be able to help.

[Esther McVey (Wirral West) (Con)]

T4. Is it not about time that we introduced a British Bill of Rights to address ludicrous cases such as that of the convicted foreign killer Mohammed Ibrahim, who is avoiding deportation by claiming the right to family life, even though he killed Amy Houston, thereby denying all her relatives the right to family life?

[The Deputy Prime Minister]

I hear my hon. Friend’s concern about these matters, and she is quite right to raise them. The Government have established a commission to look into the case for a British Bill of Rights that will incorporate and build on the existing rights that we already enjoy and extend them further where we can.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

T6. The right to form coalitions is very much part of our constitution. In Sheffield recently, Lib Dem councillors have co-opted a United Kingdom Independence party candidate on to one of our local town councils in order to maintain their grip on power. Does not this show that the Lib Dems will do anything, and do deals with any party, to maintain their grip on power?

[The Deputy Prime Minister]

I am not sure what case the hon. Lady is referring to—[Interruption.]

[Mr Speaker]

Order. First, the House must show some courtesy to the Deputy Prime Minister as he responds to questions. Secondly, I want to hear from Mr Gordon Henderson.

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

T5. Does my right hon. Friend the Deputy Prime Minister understand the resentment felt by many taxpayers in my constituency when they see their taxes being used to help to provide a range of free services in Scotland that are not enjoyed by the English? When will the Government take action to bring that unfair subsidy to an end?

[The Deputy Prime Minister]

One of the reasons we are transferring a great deal of new fiscal freedom to the Scottish Administration through the Scotland Bill is to ensure not only that the Scottish Government enjoy greater freedom to raise and spend money but that they are held to account for it. That is exactly what we are seeking to achieve in the Scotland Bill.

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

T9. The Deputy Prime Minister has said on many occasions that if the House of Lords was reformed, this House would retain its primacy over the other place. In an article last week in The Times, his predecessor as leader of the Lib Dems, Lord Ashdown, said that if the House of Lords was reformed, it would have the right of veto over the decision to go to war. Who is right: the Deputy Prime Minister or his predecessor?

[The Deputy Prime Minister]

The House of Lords will clearly enjoy greater democratic legitimacy if it is wholly or largely elected, but that does not call into question the primacy of this House. Bicameral chambers all round the world manage this relationship perfectly adequately, with two directly elected chambers that have a relationship of subservience between the one and the other. That is precisely what will continue under the reforms that we have proposed.

[Peter Aldous (Waveney) (Con)]

T7. Later this week, I shall attend a meeting of Waveney youth council in my constituency. Given the declining proportion of young people voting at recent elections, I would welcome an update to pass on to the youth council on the steps that my right hon. Friend is taking to ensure the early registration of young people and their active engagement in the political process.

[The Deputy Prime Minister]

We hope that the process of individual electoral registration that we are pressing ahead with, and particularly the practice of comparing existing databases with the electoral register, will enable us to identify voters, old and young, who should be on the register but are not.

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

The finest databases in the country are run by Experian. I recently had a meeting with it to discuss the 3.5 million people who are not on the electoral register. It informed me that not 3.5 million but 6.5 million people are not on the electoral register. What steps is the Deputy Prime Minister taking to use the private sector—companies such as Experian and others—to increase the number of registered voters?

[The Deputy Prime Minister]

It is precisely to get to the bottom of exactly how many people who are not on the register but should be that we commissioned detailed research from the Electoral Commission to establish the facts. As I said earlier, we are running these projects so that we can have access to other publicly available databases to make sure that they are consistent with the electoral register.

[Mark Menzies (Fylde) (Con)]

T8. Does the Deputy Prime Minister agree that by delivering 103,000 more adult apprentices than were promised by the previous Government, this Government are delivering on their promise to rebuild the economy?

[The Deputy Prime Minister]

Yes, and I would add that those 103,000 apprenticeships are twice the target number that had originally been set for this year. In total, we will deliver 250,000 more apprenticeships during this Parliament than Labour would have delivered if they had been in power. We believe that apprenticeships are a tried, tested and successful way of getting people from full-time education into full-time work. That is what we are absolutely dedicated to deliver.

[Kelvin Hopkins (Luton North) (Lab)]

The recent referendum showed an enormous majority of the British people in favour of first past the post for British elections. May I suggest to the Deputy Prime Minister that a return to first past the post for European elections would be equally popular and that the Government should legislate accordingly?

[The Deputy Prime Minister]

We have probably had enough referendums on electoral systems for one Parliament. I, for one, will not be rushing to return to that issue any time soon.

[Paul Uppal (Wolverhampton South West) (Con)]

T10. Will the Deputy Prime Minister tell us what plans are in place to inform voters of the proposed changes to the House of Lords, particularly regarding an election in 2015—and how much will that cost?

[The Deputy Prime Minister]

The costs will, of course, be dependent on the final shape of the reforms—on exactly how large the House of Lords is and what proportion of its Members will be elected, and so forth. We have made suggestions on these issues, but we have been entirely open about wanting to listen to alternative suggestions with an open mind. That is why the Joint Committee process, which brings people together from both Houses to look at this in greater detail, is immensely important not only for improving the proposals but for giving the public a chance to scrutinise the proposals, as the hon. Gentleman suggests.

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

As police investigations into phone hacking have been going on for some considerable time, is there not now a strong case for having a public inquiry, as requested from the Front Bench by my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), particularly in view of the latest information about the hacking of a murdered person’s phone. That is so disgraceful that a public inquiry is absolutely essential.

[The Deputy Prime Minister]

I totally understand the instinct for wanting something more to be done than the current police investigations. If we want the truth established, however, and if we want to turn allegations into facts and then to hold people to account and, where necessary and justified, to see prosecutions delivered, I strongly suggest to the hon. Gentleman that it is in his interest and that of all who want to see the truth properly exposed that we allow the police to get on with the investigation and ruthlessly pursue the facts and the evidence, wherever they might lead.

[Mr David Amess (Southend West) (Con)]

T11. With the whole country gripped by Southend mania, in the knowledge that it is the finest seaside resort with a pier in the world and entirely deserving of city status, will the Minister tell us when local residents in Southend can expect the crowning to take place?

[The Deputy Prime Minister]

I recognise the enthusiasm for the Southend bid, which I know is shared by many other Members who come from other places applying for city status. This will work its way through in the normal way, and I know that the hon. Gentleman will be waiting for the results with bated breath.

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

What comparison has been made between the system of individual electoral registration operating in Northern Ireland and the one that operates in the rest of the United Kingdom?

[The Deputy Prime Minister]

We have learned all the lessons about the flaws in the electoral register here. That is exactly what we are seeking to address, not least by looking at the experience in Northern Ireland and elsewhere.

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

T12. I wish to place on record my admiration for the ambition shown by the Deputy Prime Minister, but does he not agree that if he sticks to his present programme and allows the first elections to the House of Lords to be held in 2015, it is over-ambitious—even according to his own test—to hold them in the same month and year as the next rural district elections and the next general election?

[The Deputy Prime Minister]

“Ambition” was clearly intended as faint praise, and I will take it in that spirit. I think we have shown in past elections that the problems involved in the principle of combined elections can be overcome, as long as there is a clear distinction between the mandates for the bodies that are being elected on the same day.

[Mr Ben Bradshaw (Exeter) (Lab)]

As the Deputy Prime Minister’s right hon. Friend the Business Secretary felt that there were clear grounds for a full referral of the BSkyB takeover to the competition authorities on the basis of plurality, will he tell the Prime Minister, in the light of the latest shocking developments, that it would be totally unacceptable to wave through that takeover, and that he should put a stop to the dirty deal being hatched by the Culture Secretary with News Corp?

[The Deputy Prime Minister]

The right hon. Gentleman will know, as he has followed events very closely, that the competition aspect was determined by the European Commission. It cleared the transaction on competition grounds. The decision will be made by the Secretary of State for Culture, Olympics, Media and Sport, acting in a quasi-judicial manner. He will not consult me, the Prime Minister or any other member of the Government while reaching his decision, and he is meticulously following the advice supplied to him by Ofcom and other regulators.

[Jo Swinson (East Dunbartonshire) (LD)]

The coalition agreement committed the Government to setting up a fund to support people with disabilities who wish to stand for election—a move that was also recommended by the cross-party Speaker’s Conference. Following the conclusion of the Government’s consultation on the matter, will the Deputy Prime Minister update the House on the progress being made towards that goal?

[The Deputy Prime Minister]

I pay tribute to my hon. Friend, who has taken a great interest in this matter and has been remorseless in asking the Government when they will deliver on their commitments. We are determined to do so. As my hon. Friend said, the consultation ended recently, and we are keen to make progress as soon as we can.

[Jack Dromey (Birmingham, Erdington) (Lab)]

In a leaked letter, Nico Heslop wrote:

“we are worried about the impact…to build social housing for families”

to rent, and added:

“23,000 could be lost…disproportionately impacting on families and…children.”

Why was that information not shared with Parliament? What else is the Secretary of State for Communities and Local Government holding back, and why should anyone ever again believe anything that this Government say about housing and benefits?

[The Deputy Prime Minister]

I remind the hon. Gentleman that the manifesto on which he fought the election last year advocated a housing benefit cap. I assume that, like us, he advocated the cap because it is fair to those who do not receive benefits that those who do receive them cannot do so to the tune that would require someone in work to earn £35,000 or more. It is a fair proposal. Notwithstanding the contents of that leaked letter—which, in any case, was written six months ago; things have moved on since then—we have made it clear that when people, especially large families, need help they will be given that help, and that we will introduce transitional arrangements to provide it.

[Harriett Baldwin (West Worcestershire) (Con)]

On 5 April the Deputy Prime Minister said there was “a need to ensure” that reform of the other place did not “overlap” with the establishment of the West Lothian commission. Given that reform of the other place may take some time, can the Deputy Prime Minister reassure us that the West Lothian commission will be in place by the time of the Report stage and Third Reading of my private Member’s Bill on 9 September?

[The Deputy Prime Minister]

I can confirm that the commission that will look into the West Lothian question will be established this year.

[Helen Goodman (Bishop Auckland) (Lab)]

Does the Deputy Prime Minister agree with the Secretary of State for Culture, Olympics, Media and Sport that the “fit and proper persons” test is irrelevant in the case of the merger between BSkyB and News International?

[The Deputy Prime Minister]

As I said earlier, the Culture Secretary is acting in a quasi-judicial role, he is doing so in line with advice that he has received from Ofcom and the Office of Fair Trading, and he is reflecting the legal position as it currently is. The hon. Lady may shake her head and wish that the law were different; she may wish that competition provisions could somehow be applied here, although the European Commission cleared the transaction on in competition grounds—but that is the legal position as we currently find it.

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

Sex discrimination and religious discrimination should have no place in our society, so I am pleased that the Government are bringing forward measures to reform the succession to the Crown. However, the discussions with other Commonwealth Governments do seem to be dragging on for a long time. What is my right hon. Friend doing to ensure that those discussions come to a speedy and successful conclusion?

[The Deputy Prime Minister]

As my hon. Friend knows, both the Prime Minister and I have made it clear that we think there is a strong case for looking at the rules of the succession, as they clearly need updating in this day and age, but it is not quite as simple as that, because this is subject to consultation with all Commonwealth Governments. Discussions at official level are taking place between this Government and Commonwealth Governments. I acknowledge that that is not a very rapid process, but it is right that we should deal with this sensitive topic as collaboratively as possible with other Commonwealth Governments.

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

At the recent British-Irish Council, which I understand the Deputy Prime Minister chaired, was there any discussion of the economic impact of different levels of aviation taxes, given that for a long-haul flight from the UK that is currently levied at £85 a head, whereas from Ireland the tax is just €3?

[The Deputy Prime Minister]

I am aware that the Treasury is undertaking a consultation on that subject, but it did not come up in discussions at the British-Irish Council.

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

Pursuant to the answer that the Deputy Prime Minister has just given to the hon. Member for Argyll and Bute (Mr Reid), does the Deputy Prime Minister not understand that his constant answer that negotiations with Commonwealth countries about reforming the Act of Settlement are ongoing sounds rather like an excuse for inaction, given that no Commonwealth country has shown anything but respect, reverence and adoration for our female monarch for the past half century?

[The Deputy Prime Minister]

I strongly share my hon. Friend’s—

[Chris Bryant (Rhondda) (Lab)]

Well, do something about it!

[The Deputy Prime Minister]

We cannot just do something about it. [Hon. Members: “He didn’t!”] No, the hon. Gentleman did not, for 13 years.

I totally accept—I have spoken publicly about this—that it seems a little anachronistic that we have rules of succession that appear to discriminate against women, and that clearly should be looked at, but as my hon. Friend the Member for Epping Forest (Mrs Laing) rightly pointed out, this affects many other Governments as well, and it would be wrong of us to act in haste when we need to act in a way that is open and following discussions—not negotiations, but discussions—between ourselves and other Commonwealth Governments.

The Attorney-General was asked—

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

1. What recent discussions he has had with the Director of Public Prosecutions on prosecution rates for cases involving allegations of trafficking of children.

[The Solicitor-General (Mr Edward Garnier)]

None recently, but I can assure the hon. Lady that the DPP, the Law Officers, the Home Office—which I believe she shadows—and the Foreign and Commonwealth Office take the crime of human trafficking extremely seriously.

[Diana Johnson]

Can the Solicitor-General explain to me exactly how merging the Child Exploitation and Online Protection Centre into the national crime agency, against the advice of all the specialists in the field, will improve prosecution rates and the support given to victims of trafficking?

[The Solicitor-General]

If Parliament permits its creation, the national crime agency will not come into operation until at least 2012-13. Meanwhile, CEOP and the other necessary agencies are working together to ensure that the crime of human trafficking, which the hon. Lady takes as seriously as we do, is properly borne down upon, and I can assure her that nothing will be done to impede the efforts of the prosecuting authorities in that regard.

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

Does the Solicitor-General agree that one way to improve prosecution rates would be to ensure that all resources are used to prosecute traffickers, rather than sometimes prosecuting the trafficked children?

[The Solicitor-General]

Of course I do, and it is imperative that trafficked children, who are the victims of this hideous crime, are not prosecuted but are treated as victims. Equally, it is imperative that adults under such duress, too, are not prosecuted but treated as victims. The Crown Prosecution Service recently published a public policy statement, which I am sure my hon. Friend has read, and the Home Office will shortly publish a human trafficking strategy that will deal very much with the points that he has made.

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

2. What plans he has to review the prosecution of rape cases by the Crown Prosecution Service.

[The Solicitor-General]

We have no such plans at the moment, but I assure my hon. Friend that the CPS and I take the prosecution of rape very seriously indeed, and that it is constantly under review.

[Miss McIntosh]

Does the Solicitor-General have any idea about the level of prosecution of rape cases in Scotland compared with that in England? Will he undertake to remove all barriers to prosecution? In particular, will he facilitate the reporting of rape cases, which will speed up the prosecution rate in due course?

[The Solicitor-General]

I am sure that what is similar in Scotland and in this jurisdiction is not only that rape is taken extremely seriously by the prosecuting authorities and the police, but that prosecution requires evidence. It is essential that victims of rape and sexual assault are enabled to give their evidence and to withstand the hideous stress that necessarily follows from being a witness in a rape or sexual assault case. I can assure my hon. Friend that the Director of Public Prosecutions has personally overseen the drive to improve the approach of the CPS to rape prosecutions.

[Fiona Mactaggart (Slough) (Lab)]

At present the CPS has 840 specialist rape prosecutors. Will there be the same number or more next year?

[The Solicitor-General]

That is a decision not only for the DPP but for the chief Crown prosecutors in the various areas throughout the jurisdiction. This will depend on business need, but I assure the hon. Lady that rape prosecutions will be pursued with the same vigour both now and in the future.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

3. What steps the Crown Prosecution Service is taking to support victims of human trafficking to participate in criminal proceedings.

[Susan Elan Jones (Clwyd South) (Lab)]

4. What steps the Crown Prosecution Service is taking to support victims of human trafficking to participate in criminal proceedings.

[The Solicitor-General]

The CPS is taking a number of steps to encourage victims of human trafficking to support criminal proceedings, including the publication of a new public policy statement setting out its prosecution policy and how it will support victims. As I said to my hon. Friend the Member for Carshalton and Wallington (Tom Brake) a moment ago, the Home Secretary will shortly publish her Department’s human trafficking strategy. The CPS is also working with non-governmental organisations to develop further measures to assist and support victims.

[Michael Connarty]

I am very heartened by the general replies and that specific reply from the Solicitor-General on this question, but we are aware of reported cases of magistrates saying to a 14-year-old girl who had been trafficked and found in a cannabis factory that she had clearly made a lifestyle choice. Did the Attorney-General give any evidence, or a submission, to the Home Secretary in the upcoming review? If not, why not? If so, will he place a copy of his contribution in the Library for us all to read?

[The Solicitor-General]

It would not be sensible for me to comment on unattributable, or unattributed, remarks by unidentified magistrates. If what the hon. Gentleman suggests was said in that case was said, it was clearly unwise. The Law Officers’ Department did make a contribution to the thinking behind the Home Secretary’s human trafficking strategy. The hon. Gentleman will be able to read the strategy in full when it is published next week, and it will doubtless refer to all sorts of sources.

[Susan Elan Jones]

The US State Department’s 2011 “Trafficking in Persons Report” contains many things about the UK that hon. Members would find alarming, including the following quotation:

“Some potential and confirmed trafficking victims, including children, were prosecuted and imprisoned for committing offenses as a direct result of being trafficked.”

What does the Solicitor-General propose to do to stop that happening?

[The Solicitor-General]

As I said in answer to the hon. Member for Linlithgow and East Falkirk (Michael Connarty), and in connection with an earlier question, the Crown Prosecution Service public policy statement makes it clear that those who are trafficked—those who are victims of the trafficking—should not be prosecuted.

[Mr Peter Bone (Wellingborough) (Con)]

We are having rather lovely weather at the moment, and this spring seems to be going on for a very long time. Did the Solicitor-General let it slip that spring was going to end next week, and are we actually going to see the trafficking policy next week? If so, can he confirm that an oral statement will be given, rather than a written one?

[The Solicitor-General]

On the latter point I cannot give a confirmation, but on the earlier point I think I can.

[Gavin Shuker (Luton South) (Lab/Co-op)]

Paying for sex with a trafficked woman is a criminal offence under section 14 of the Policing and Crime Act 2009. What steps are the Government taking to ensure that section 14 is fully used by the police and Crown Prosecution Service? Will the Solicitor-General confirm that he is considering a pause in issuing CPS guidance, which could be a wasted opportunity at this stage?

[The Solicitor-General]

The Crown Prosecution Service assesses the evidence given to it by the police. If that evidence passes the evidential test and it is in the public interest to prosecute, those who commit such crimes will be prosecuted. Beyond that, I am not sure that I can usefully help the hon. Gentleman other than by repeating myself.

[Mrs Siân C. James (Swansea East) (Lab)]

5. What recent assessment he has made of the role of specialist domestic and sexual violence services in supporting prosecutions in cases involving allegations of such offences.

[The Solicitor-General]

The evaluations of specialist domestic violence courts conducted between 2005 and 2008 demonstrated that specialist domestic violence support services contributed to improving prosecution rates as well as to the safety of domestic violence victims. More recent analysis, conducted on behalf of the Crown Prosecution Service, has also shown a significant reduction in domestic violence against supported victims. There has been no formal assessment of sexual violence services.

[Mrs Siân C. James]

The Swansea sexual assault referral centre, or SARC, is one of four across Wales run by the New Pathways organisation. I have been informed that the centre receives no statutory funding for any work that it undertakes with children and young people, who often suffer the worst types of sexual abuse and violence. The majority of its referrals come from the statutory sector. Will the Solicitor-General promise me that he will look at the issue and at the gap in the funding that the centre receives?

[The Solicitor-General]

I can certainly promise to look into that. This Government, including my Department, value the work that such agencies perform. As the hon. Lady will know, in her part of Wales there are two SDVCs—or specialist domestic violence courts—one in Neath and one in Swansea, as well as other necessary advisory services. I appreciate that we are in a time of great economic constraint, but we will do our best with the resources that we can make available to them.

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

One of the main challenges facing vulnerable complainants and their families is the sometimes lengthy time gap between the making of their complaint and their appearance in court. Does my hon. and learned Friend agree that the work of women’s refuges, such as the one in my constituency, and of police family liaison officers is vital if we are to maintain the confidence we need in complainants in order for them to follow their complaints through the criminal justice process?

[The Solicitor-General]

I know that that is true not only in my hon. Friend’s constituency but throughout the rest of the country. It is important that the advisory services and family liaison staff are there to help those affected by such crimes of violence, whether they involve sexual or non-sexual assault, so that they can bring their evidence to court and the perpetrators can be convicted.

[Ann Clwyd (Cynon Valley) (Lab)]

6. Whether the Government plan to make additional resources available to the Director of Public Prosecutions to enable him to discharge the new responsibilities contained in the Police Reform and Social Responsibility Bill to consider arrest warrants in war crimes cases.

[The Solicitor-General]

The Crown Prosecution Service currently anticipates that any additional responsibilities will be absorbed within current resources.

[Ann Clwyd]

The Solicitor-General will have read the report of the Joint Committee on Human Rights on this issue, which finds that the Government have not made their case and that they should think again. I find it particularly ironic that we are prepared to change the law to protect one Israeli opposition leader when another opposition leader, the Palestinian Sheikh Salah, comes here and is put straight in jail. Where is the justice in that?

[The Solicitor-General]

I appreciate the right hon. Lady’s interest in this aspect of public policy, and I also appreciate that she has firm opinions on the matter. She is fully entitled to those opinions. In short, the law was changed not in order to solve the problems of one individual but to deal with a public policy problem. She knows that really.

[Duncan Hames (Chippenham) (LD)]

On 11 January, in this House, a Justice Minister assured me that allegations under universal jurisdiction offences would be accorded the highest priority. Does the Solicitor-General accept the need for an out-of-hours response so that we can be confident that those suspected of such serious crimes will not evade arrest?

[The Solicitor-General]

The criminal justice system, as the hon. Gentleman knows, never rests. If someone is arrested or brought into custody, he will have available to him, or should have, not only the benefit of the attention of the police and the Crown Prosecution Service but also of his own defence lawyers.

[Kerry McCarthy (Bristol East) (Lab)]

7. What steps the Crown Prosecution Service is taking to bring prosecutions under the provisions of the Female Genital Mutilation Act 2003; and if he will make a statement.

[The Solicitor-General]

The Crown Prosecution Service is due to publish new legal guidance on female genital mutilation—FGM—later this summer as part of its commitment to the cross-Government strategy on the prevention of violence against women and girls. I know that the hon. Lady has done a good deal to draw attention to the issue of FGM in Bristol, not least through her work with the Bristol safeguarding children board, which has raised awareness of FGM among midwives and other health professionals, the police and social workers.

[Kerry McCarthy]

I thank the Solicitor-General for that response. He made reference to the safeguarding children board, which estimates that up to 2,000 girls in Bristol are at risk. Obviously, the summer holidays are a particular problem period. May I urge the hon. and learned Gentleman to do all he can to work with teachers in schools and through his colleagues at the Department for Education to make sure that girls at risk are identified and steps are taken to prevent FGM, rather than just prosecuting people when the offence has been committed?

[The Solicitor-General]

Yes, and I can tell the hon. Lady that the Home Office, the Metropolitan police and the Foreign and Commonwealth Office launched a DVD on the subject on 4 July—yesterday. It was produced by young people for young people, and seeks to raise awareness of FGM among potential victims. It will be distributed to all schools by September 2011, so I hope the hon. Lady is reassured by that.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

8. Whether he plans to take steps to reduce the likelihood of any future prosecutions for contempt of court arising from the use of social media.

[The Solicitor-General]

As guardians of the public interest, the Law Officers bring contempt of court proceedings when it is appropriate to do so. I did so in the case of Fraill and Sewart in the divisional court, in which the Lord Chief Justice presided on 14 and 16 June. It is for the trial court judge to warn parties, and the public, not to publish prejudicial reports, and when appropriate to impose reporting restrictions. Juries in particular are warned repeatedly by the court not to use the internet to research cases in which they are involved.

[Chi Onwurah]

I do not know whether the Solicitor-General is on Twitter, but I am concerned that not only he, but UK law, appears to be on the back foot when facing what is not even new technology. Twitter is five years old next month. Is it not time we demonstrated that UK law is as at home online as on the streets?

[The Solicitor-General]

Let me confess: I do not tweet, nor do I have a Facebook account; perhaps the hon. Lady is not terribly surprised by that. In the relationship between social media and the law of contempt, the principle and the issues are exactly the same. The means of communicating may have evolved, but the principles we need to apply to ensure that the due administration of justice is not impeded or prejudiced remain the same for talking over the garden fence as for exchanging information through modern internet and social media.

[Anna Soubry (Broxtowe) (Con)]

Would the Solicitor-General confirm that judges always give strict directions to juries that they must not access any form of internet or other information sources when considering their deliberations in a criminal trial?

[The Solicitor-General]

Yes they do, and I have done it myself when sitting as a judge. What one cannot guarantee, of course, is that members of juries will obey those instructions and directions when they get home—but we have to rely on the good sense and public duty of citizens whose public duty it is to serve on juries.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Public concern about the misuse of modern communication technology, including social media, is growing, particularly about its impact on the pursuit of justice. That was most recently highlighted by the truly sickening allegations of phone hacking in the Milly Dowler case. The CPS announced a review of hacking evidence almost six months ago. When will the public and victims receive an update? Will further criminal prosecutions be brought, and will the Solicitor-General confirm whether any criminal investigations may have been jeopardised by the behaviour of the press and the rest of the media?

[The Solicitor-General]

With the greatest respect, I think that if the hon. Lady had thought about it a little more, she would understand that I am not going to give a running commentary either on the police investigations or on the likely consequences of any police investigations. She may rest assured that investigations will continue, and they will continue to follow the evidence wherever it may be—and if the evidence warrants prosecutions, they will be brought. That is work that we need to do in future; it is not something that I need to make announcements about here in the absence of any direct or relevant information immediately to hand.

[Mr Graham Allen (Nottingham North) (Lab)]

9. What steps he is taking to ensure transparency in the arrangements for the provision of legal advice to the Cabinet on a declaration of war.

[The Solicitor-General]

The hon. Gentleman’s Political and Constitutional Reform Committee reported in May on Parliament’s role in conflict decisions, and the Government will respond to his report shortly. The Foreign Secretary told the House on 21 March in the Libya debate that the Cabinet had the Attorney-General’s advice before it when the decision was made to take action in Libya. A Government note on the legal basis was placed in the Library that day, and was available to right hon. and hon. Members for that debate.

[Mr Allen]

The Solicitor-General knows better than most of us that there is a separation of powers, at least theoretically, in our constitution, and that the problems that we had over legal advice in relation to the Iraq war centred on the legal advice given to the Government by their own Attorney-General. Will he also take into account that Parliament has no right whatever to consult and get its own legal advice? Will he discuss with the House authorities putting that right, so that on future occasions when there is a conflict, Members can get their own advice rather than relying on trying to wheedle the Attorney-General’s advice out of Government?

[The Solicitor-General]

It is not for me to stop Members of Parliament getting whatever advice they think it appropriate to have, but the decision that has to be considered and accounted for to Parliament is that of the Prime Minister and the Government. That can be debated here, irrespective of one’s access to legal advice.

Dismissal of Ian Faletto, Lymington Stationmaster

Tuesday 5th July 2011 Commons Chamber

Mr Desmond Swayne (New Forest West) (Con)

- Hansard - - Excerpts

The excellent and award-winning stationmaster of Lymington was sacked for removing a shopping trolley from the line before a train could collide with it. The vicar of Pennington collected 8,400 signatures and sought to deliver them to South West Trains, but in an act of shocking discourtesy to the travelling public, the company refused to take them. It is therefore my privilege to present to this House the petition of the vicar of Pennington, which calls on this honourable House to enlist the support of the Department of Transport to intercede with South West Trains to reconsider this shocking injustice.

Following is the full text of the Petition:

[The Humble Petition of Revd Alex Russell, Vicar of Pennington,

Sheweth that a great injustice has been done by the dismissal of Ian Faletto Stationmaster at Lymington.

Wherefore your Petitioner prays that your Honourable House calls upon the Government to request that South West Trains reconsider their decision in the light of his many years of exemplary service to the public

And your Petitioner, as in duty bound, will ever pray, &c.]

[P000928]

Redevelopment of Rushden Hospital Site

Mr Peter Bone (Wellingborough) (Con)

- Hansard - - Excerpts

To follow that is impossible, but my petition is of more importance to my constituents, because the hospital site, where there is of course no longer a hospital, has always been an area where it was planned that we should eventually have a hospital. Unfortunately, the NHS plans to sell it off and 270 local residents have signed a petition, led by Sheila Vickers. I shall read the petition where the point is well made:

The Humble Petition of residents of Rushden, Northamptonshire and the surrounding areas,

Sheweth,

that the proposed revised redevelopment of the Rushden Hospital site for housing is unpopular, ill-advised and detrimental to the residents of Rushden; that over 25% of the residents of Rushden petitioned the House of Commons for a new outpatient facility in the town, the majority wanting the new facility on the Rushden hospital site; that the proposal to build housing on the site instead of an NHS facility is unacceptable and the impact on the surrounding roads of a large housing development and the density of the development and the proposed cut-through to the Greenacre Drive Estate is wholly detrimental to local residents and notes that a similar proposal for housing development on this site was not approved by East Northamptonshire District Council.

Wherefore your Petitioners pray that your Honourable House urges the Secretary of State for Communities and Local Government to urge the Department of Health to withdraw the revised planning application and further urges him to request that the District Council of East Northamptonshire and the County Council and the Primary Care Trust work together to provide a suitable health facility on the site.

And your Petitioners, as in duty bound, will ever pray, &c.

[P000937]

New Member

Tuesday 5th July 2011 Commons Chamber

The following Member took and subscribed the Oath required by law:

Iain McKenzie, for Inverclyde.

Phone Hacking

Tuesday 5th July 2011 Commons Chamber

Application for emergency debate (Standing Order No. 24)

15:33

[Chris Bryant (Rhondda) (Lab)]

I rise to propose that the House should debate a specific and important matter that should have urgent consideration: whether there should be a public inquiry into phone hacking at the News of the World and the related conduct of the Metropolitan Police Service between 2006 and 2011.

There cannot be a single person in the land who is not sickened by the news that a private investigator working for the News of the World hacked the phone of the missing teenager, Milly Dowler, and deleted some of her messages, thereby leading the family to believe that she might still be alive. That is not just a paper out of control; that is not just a paper believing it is above the law. It is a national newspaper playing God with a family’s emotions. Those involved, those whose negligence allowed it to happen, and those who covered it up should be truly ashamed, and the paper cannot pretend that this comes as a massive surprise to it. The News of the World ran a story directly referring to one of the messages. Even more cynically, only last weekend it wrote that people should be rightly disgusted at the “courtroom torture” of Milly Dowler’s family. What about the newspaper torture as well?

This is not just about one incident, as hideous as it is. It is about systematic criminality that has perverted police investigations and seriously damaged the reputation of British journalism and of the Metropolitan police. It is about a pattern of lies and half truths told to Parliament by the News of the World—that there was just one lone reporter; that no senior managers knew anything about all of this.

What makes it really important and urgent, however, is that this is about the behaviour of the Metropolitan police, in whom we put our trust. They had all this information in their hands in 2006, and yet they did nothing with it. Why have they lied time and time again to Parliament, saying that a full investigation had been done and that all the victims had been informed when self-evidently they have not been? In the end, the problem and the scandal is that the Metropolitan police, as the Deputy Prime Minister mentioned earlier, did not pursue the evidence and it is only because of the current campaign that a full investigation is now going on.

The only way we can get to the full truth and to the heart of the cover-up is by having a public inquiry, led by a judge, in addition to the police investigation. This is urgent. The inquiry should start now while memories are fresh and before people leave the scene or shred the evidence. We should not be spineless. Warm words will make no odds. We must have an inquiry.

[Mr Speaker]

The hon. Gentleman seeks leave to move a motion relating to a public inquiry into phone hacking at the News of the World and the conduct of the Metropolitan Police Service between 2006 and 2011. I have listened carefully and am satisfied that the matter is proper to be debated under Standing Order No. 24. Does he have the leave of the House?

[Several hon. Members]

rose—

[Mr Speaker]

The hon. Gentleman—[Interruption.] Order. The hon. Gentleman has the leave of the House. Members may resume their seats. He has the leave of the House to move his motion. As required by the Standing Order, I announce—[Interruption.] Order. As required by the Standing Order, I announce that the debate will be held tomorrow at the commencement of public business and that it will last for up to three hours. I think that that is clear.

Points of Order

Tuesday 5th July 2011 Commons Chamber

15:37

[Caroline Flint (Don Valley) (Lab)]

On a point of order, Mr Speaker. The disclosure of a letter sent by the Secretary of State for Communities and Local Government’s private secretary to the Prime Minister’s Office has revealed that according to the Government’s own estimates the introduction of a benefits cap will lead to greater homelessness, higher costs for the taxpayer and fewer homes being built. The only answer the Deputy Prime Minister could muster this afternoon was that things have moved on. He had no answer on why this information was not made available to Parliament in the first place or why Ministers have denied that such an assessment has been made, and arrogantly dismissed out of hand questions about what else they might be hiding. I have raised the matter directly with the Secretary of State and asked him to come to the House to clarify how many families he believes will lose their homes and whether that information was shared with the Department for Work and Pensions. He has failed to reply. Will you advise me on whether you have received any indication from the Secretary of State that he intends to follow my suggestion by making a statement to the House?

[Mr Speaker]

I am grateful to the shadow Secretary of State for her point of order. As she will be aware, and as the House will appreciate, this matter was raised from the Opposition Front Bench yesterday. On that occasion I undertook to look into the matter, and I can assure her and the House that I am doing so. As and when there is anything further to report to the House—I recognise the premium on time—she may rest assured that I will do so without hesitation. I hope that that is clear.

[Kerry McCarthy (Bristol East) (Lab)]

On a point of order, Mr Speaker. Earlier this year the Prime Minister said to the House:

“I do not believe in making tax changes outside a Budget, which is the proper way we do things in this country.”—[Official Report, 26 January 2011; Vol. 522, c. 284.]

Yet today, the Chancellor has announced a decision on North sea oil and gas taxation which will cost the taxpayer £50 million a year. He did so not only outside a Budget, but outside this Chamber, despite the Government having an opportunity during yesterday’s Finance Bill debate, when the House discussed at some length an amendment on the North sea tax regime, to discuss the issue and to make the announcement then. Is it in order for the Chancellor to announce a tax decision in this way?

[Mr Speaker]

I am grateful to the hon. Lady for her point of order, of which on this occasion I did not have notice. She certainly raises a very serious concern that she and others feel. My initial response and advice is that she should look for other opportunities to debate the matter, possibly using the Order Paper. I do not know whether it would be in order to debate the matters within the context of consideration of the Finance Bill, because I have not looked at the groups of amendments. If that opportunity exists, I have a keen sense that the hon. Lady will be aware of it. If not, she will pursue it on other occasions. I hope that also is helpful.



Bill presented

Police (detention and bail) bill

Presentation and First Reading (Standing Order No. 57)

Mrs Secretary Theresa May, supported by the Prime Minister, the Deputy Prime Minister, Mr Chancellor of the Exchequer, Mr Secretary Kenneth Clarke, Mr Attorney-General and Nick Herbert, presented a Bill to make provision about the calculation of certain periods of time for the purposes of Part 4 of the Police and Criminal Evidence Act 1984, and for connected purposes.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 216) with explanatory notes (Bill 216-EN).

Electricity Transmission (Protection of Landscape)

Tuesday 5th July 2011 Commons Chamber

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

15:41

[Tessa Munt (Wells) (LD)]

rose—[Interruption.]

[Mr Speaker]

Order. Just before the hon. Lady gets under way, may I appeal to Members who are unaccountably leaving the Chamber, and not remaining to hear her, to do so quickly and quietly, so that we can afford the same courtesy to her that we would want extended to ourselves in such circumstances?

[Tessa Munt]

I beg to move,

That leave be given to bring in a Bill to make provision to require factors other than cost to be considered for schemes for the transmission of high voltage electricity where infrastructure would impact on the visual and other amenity of a landscape; to provide that in certain cases such infrastructure be installed by visually unobtrusive works; to require that public consultation be undertaken and inform the selection of the method and technology for the transmission infrastructures used; and for connected purposes.

The purpose of the Bill is simple. It seeks to update the Electricity Act 1989, which recognises the transmission of high-voltage electricity only on cables strung between transmission towers, which we all know as pylons. Concerns have been raised by thousands of people throughout the country, many of whom live in rural areas and do not have the protection afforded to those in urban or suburban communities, where power lines are automatically put underground.

People who live in towns and cities, however, often enjoy their leisure time and holidays in the countryside, and I draw attention particularly to the 26,000 people whose livelihoods are dependent on tourism in my constituency, just one of many that would be damaged beyond belief if new lines on 152 ft pylons were introduced. The Somerset levels were in contention to become the 17th world heritage site until the proposal was made.

There are such problems for rural communities all over the country, as new pylons are planned to bring new supplies of energy from whatever source, be it turbines, gas, coal, wind, nuclear or tidal. What happens when we want to install cable TV? Automatically, we dig up high streets and roads all over the place. What happens when we host the Olympics? Around the whole Olympic village, power cables have been put underground. We do not suspend blue water pipes or yellow gas pipes from transmission towers, so why do we do so for electricity power cables?

National Grid has drawn to my attention the fact that it is holding a competition on pylon design, but that is purely a diversion and certainly not the answer to the country’s questions about transmission. The county council, district councils and parish councils are all against the proposals, but all that National Grid, our monopoly supplier, does is hear; it does not listen. There are alternatives, and they are underground and undersea.

The Bill recognises several factors, including the voice of the public and the value of consultation, which should not just be done on the nod; it should be about listening, not just hearing. Consultation responses should inform the method and technology for the infrastructure used. This is also about being green. Losses during transmission are about 7% once one gets the power to the cables. It is clear that undergrounding or putting cables undersea would reduce those losses significantly.

There are health reasons why we should put cables underground. The Government continue to be very poorly advised on the adverse health effects associated with high-voltage overhead power lines. Extensive studies have established a clear correlation between increased risk of childhood leukaemia, adult leukaemia, adult brain tumours, motor neurone disease, miscarriage and Alzheimer’s disease and the electromagnetic fields associated with such lines. The risk to children and adults easily satisfies a cost-benefit analysis in favour of burying high-voltage power lines.

The UK Health Protection Agency considers only a fraction—typically less than 10%—of the available scientific evidence. Included in major studies showing increased risk of childhood leukaemia are the 2005 study by Dr Gerald Draper of Oxford university, published in the British Medical Journal, and studies in Tasmania and, particularly, in Iran, where all power lines go overground. One of the many studies showing increased risks of Alzheimer’s disease is the 2008 whole-population study by Dr Anke Huss of the university of Berne, which revealed particular risks in populations living near overhead power lines in Switzerland.

National Grid is not the National Gallery, the National Trust or the national health service, but it is a massive, monopoly, multinational provider with a primary aim—to seek the maximum return for its shareholders. We have no choice but to use this super-sized company to get our power from its source to the places where it can be distributed to us in our homes and businesses. In June 2009, National Grid’s own chief executive officer, Steve Holliday, went on the record to say that undergrounding transmission lines was a “ no-brainer”. Cost is not everything.

In October 2010, Sir Michael Pitt, the chief executive of the Infrastructure Planning Commission, requested an independent and authoritative evaluation of undergrounding. The Department of Energy and Climate Change sought the assistance of the Institution of Engineering and Technology as an independent assessor of that study by a company called KEMA. The study was to be funded by none other than National Grid. None the less, it went ahead, and the results were meant to be produced on 25 January. However, nothing happened. On 3 June, the IET issued a press release stating that KEMA had not been able to issue a report with which it was satisfied owing to a lack of data from National Grid, and so the IET could not endorse its work.

It is surely time to open up this debate—to put it right into the light and demand that all these figures be provided. I am calling for openness in deciding whether power cables should be put underground or undersea instead of overground. The costs are not an issue—we all pay them through our bills. In November 2009, National Grid admitted that the cost of undersea or undergrounding would put just 1% on our electricity bills. Siemens has produced figures showing that using gas-insulated lines would reduce the whole-life costs of underground cables to under half the costs of pylons.

I pay tribute to the work of my many colleagues across the House who are interested in this subject, particularly my right hon. Friend the Member for North Somerset (Dr Fox) and my hon. Friends the Members for Weston-super-Mare (John Penrose), for South Suffolk (Mr Yeo) and for Suffolk Coastal (Dr Coffey), as well as many others. There have been objections to pylons in Wales, Scotland, the north-east, the south-west and throughout East Anglia. I understand that there is a statement on record from Carwyn Jones, the First Minister in the Welsh Assembly Government in Cardiff, who said no to pylons too.

I also recognise the work of the many pressure groups. I am grateful to some of them for information, in particular Pylon Moor Pressure, No Moor Pylons, Save Our Valley, REVOLT, Bury Not Blight, Highlands before Pylons, North East Pylon Pressure, Montgomeryshire Against Pylons and Stour Valley Underground.

It is time to consider the impact of what we are doing to our countryside, our tourism, our health and our environment. We know the cost of everything, but this matter indicates that we might not spot the value of what we have. Changing the law would at least give us the opportunity to get it right for everyone’s sake. I am delighted to introduce this measure to the House.

Question put and agreed to.

Ordered,

That Tessa Munt, Martin Horwood, Roger Williams, Sir Robert Smith, Tim Farron, Mr Tim Yeo, Dr Thérèse Coffey, Glyn Davies, Natascha Engel, Dr Alan Whitehead, Mrs Anne McGuire and Caroline Lucas present the Bill.

Tessa Munt accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 25 November, and to be printed (Bill 215).

[The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)]

On a point of order, Mr Speaker. Earlier, you heard a point of order from the hon. Member for Bristol East (Kerry McCarthy), which suggested that the Government had not made Parliament aware of fundamental changes in tax policy by a statement in the House. I believe that that was incorrect. I think that she was referring to the ring fence expenditure supplement for the North sea fiscal regime. I am sure you will recall, Mr Speaker, that that was presaged in the March Budget. Further to that, a very detailed written ministerial statement was issued by the Treasury this morning and was available in the House of Commons Library at 10 o’clock. Indeed, had the hon. Lady taken the trouble to look at the Order Paper, she would have found it at No. 3 on the list of today’s written ministerial statements. I just wanted to put the record straight.

[Mr Speaker]

We are grateful to the Deputy Leader of the House for doing so. The point is on the record and is very clear.

[Mr David Hanson (Delyn) (Lab)]

Further to that point of order, Mr Speaker.

[Mr Speaker]

Very briefly. We are not having a general debate about taxation.

[Mr Hanson]

I am grateful, Mr Speaker. In defence of my hon. Friend the Member for Bristol East (Kerry McCarthy), she was referring to the fact that there was a debate on this very issue last night in the Commons and the Exchequer Secretary made no reference to the statement being due the following day.

[Mr Speaker]

That is noted, but procedural propriety has been observed. That is all that the Chair needs to observe.

Finance (No. 3) Bill

Tuesday 5th July 2011 Commons Chamber

Further consideration of Bill, as amended in the Committee and the Public Bill Committee

Clause 73

The bank levy

15:53

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

I beg to move amendment 13, page 42, line 30, at end insert—

‘(2) The Chancellor of the Exchequer shall review the possibility of incorporating a bank payroll tax within the bank levy and publish a report, within six months of the passing of this Act, on how the additional revenue raised would be invested to create new jobs and tackle unemployment.’.

[Mr Speaker]

With this it will be convenient to discuss the following:

Amendment 31, page 42, line 30, at end insert—

‘(2) The Chancellor of the Exchequer shall review the possibility of incorporating a bank financial transaction tax within the bank levy, levied on trading in financial products including stocks, bonds, currencies, commodities, futures and options and publish a report within six months of the passing of this Act, on how the additional revenue raised would be invested to tackle unemployment and reduce poverty in the United Kingdom and to assist in tackling deprivation in the developing world.’.

Government amendments 32 to 50.

[Chris Leslie]

We now come to our general debate on taxation in respect of the Finance Bill. Clearly, one of the major omissions from the Bill is a repeat of the bank payroll levy or bonus tax that the previous Labour Administration implemented in 2009. It is not only a matter of fairness that bankers should pay some of their substantial bonuses to support people far less fortunate than them and to rebuild public trust; it makes economic sense too. I hope that our amendment 13 will persuade the Government of the merits of a review of how the bank bonus arrangement could be incorporated into the bank levy. A fair tax on bank bonuses would help to get people off the dole and into work, and it is the best way to get the deficit down and stop Britain’s talent going to waste.

Youth unemployment rose sharply in the recession, as we know, but a year ago it was starting to fall steadily thanks in part to the youth jobs programme and the future jobs fund advocated by the previous Administration. One of the first things that the current Chancellor of the Exchequer did was to scrap that successful programme. Before the election the leader of the Liberal Democrats, now the Deputy Prime Minister, said:

“Parents used to worry about whether their children could get onto the housing ladder, now the concern has spread to whether they can even get a job…We must provide a lifeboat to this lost generation.”

Well, he and the Prime Minister have sunk that lifeboat.

In the 1980s, youth unemployment continued to rise for four years after the recession was over, and whole communities were scarred as a result. Many of the effects can still be seen and felt in places across the country. That is why we believe we need to act urgently to prevent disastrous mistakes from being repeated. There are now 31,000 more young people unemployed than there were last summer, and one in five 16 to 24-year-olds is now out of work. Although there has been a welcome fall in unemployment in the past two months, the claimant count is still rising, vacancies are down and job creation has slowed in the six months since the spending review. Unemployment is set to be 200,000 higher over the coming years than was expected just a few months ago, and the Office for Budget Responsibility keeps revising the figure upwards, just as it keeps revising the growth figures downwards.

We believe that a repeat of the bank bonus tax could be used to create more than 100,000 jobs, build 25,000 affordable homes, rescue construction apprenticeships and of course boost investment in businesses. Putting young people on the dole is not just a waste of talent but a waste of money, and failing to get Britain back to work fast enough is helping to push the benefits bill and welfare costs up by more than £12 billion, or more than £500 a household. It is not rocket science—more young people out of work means more money spent on benefits and less money coming in through tax receipts to pay down the deficit.

Considering how the future jobs fund and the bank bonus levy worked, we believe that sufficient revenue could be raised to invest the money in creating 90,000 good jobs to get young people into work and ensure that we do not make the mistakes of the past. It could also be used to build 25,000 homes to support people as they get back to work. Our plan could generate more than 20,000 jobs in that sector and save several times more jobs in the supply chain and as many as 1,500 construction apprenticeships. That would leave sufficient resources to boost the regional growth fund by £200 million, to support companies that want to start projects that will create more jobs, meaning more help for small businesses in regions up and down our country.

Our amendment is pretty straightforward and, I hope, fairly unobjectionable. It asks the Chancellor of the Exchequer to review the possibility of incorporating a bank payroll tax within the bank levy, and to publish within six months of the passing of the Finance Bill a report on how the additional revenue would be used.

[Mr Chuka Umunna (Streatham) (Lab)]

One of the objections that has been raised to reintroducing the bank bonus tax is that it would lead to a flight of talent abroad. We have often been told that a number of people would go from the City to Switzerland, for example. Has my hon. Friend noticed that in 2011, just under 400 of the 330,000 people working in banking and financial services in the City went to Switzerland, and that the year before the number going there fell by 7%?

[Chris Leslie]

An excellent statistic from my hon. Friend. We are often told that the reason we cannot take any action is that complex descriptor “regulatory arbitrage”. It is a term that belies what it actually means—people fleeing the country, usually because they want to pay lower taxes. Actually, there are good reasons for the financial services sector to stay and thrive in this country, and they are not just about tax and regulation. They are not always financial reasons. We have Greenwich mean time, and we have a great rule of law that can ensure that businesses succeed and thrive. I believe that that is ample for our financial services sector to be rejuvenated and sustainable. The talk of “regulatory arbitrage” is in many cases the last refuge of the scoundrel.

The Government are letting the banks off the hook. They are taking a light-touch approach on taxing the banks by failing to repeat the banker bonus tax that the previous Labour Government levied, which brought in £3.5 billion.

[David Rutley (Macclesfield) (Con)]

Is the hon. Gentleman not aware that this Government’s banking levy raises £2.5 billion, compared with the £2.3 billion one-off net yield of the bonus tax that the previous Government levied? The bank levy is a proactive statement by this Government—action that will lead to the raising of more than £10 billion over the course of this Parliament.

[Chris Leslie]

The problem is that we should have not either/or, but both. The bank levy and the banker bonus tax would be a fair contribution from the banking sector—[Interruption.] The Minister disagrees, but that is his opinion. The OBR says that the yield of a bonus tax could be £3.5 billion, but even a conservative estimate of, say, £2 billion would mean significant money that could eat into youth unemployment.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

rose—

[Chris Leslie]

Will the Minister say why he disagrees with the bank bonus tax?

[Mr Hoban]

I will make my remarks in my own time, but I remind the hon. Gentleman that he and his colleagues stood on a manifesto that rejected the bank levy. It is a bit rich for him now to talk of having both a bank levy and a bonus tax, because at the last election he and his colleagues rejected both ideas.

[Chris Leslie]

Let us assume that the Minister is mistaken in his understanding of the Labour manifesto; I certainly would not accuse him of twisting our hope of an international agreement on a bank levy. Many countries are adopting the bank levy idea, and it is often much higher than the one we are pursuing. The Opposition believe that the bank levy is important, and we support it as it is, but—

[Mr Hoban]

rose—

[Chris Leslie]

The question the Minister must answer is this: why is he taking no action at all on banker bonuses, and specifically on repeating the previous Government’s banker bonus? Why does he refuse to do that?

[Mr Hoban]

May I just remind the hon. Gentleman what the Labour party said on the bank levy when it was in government? It said that it should be

“coordinated internationally to avoid jeopardizing the UK’s competitiveness”.

The previous Government were not even thinking about a bank levy—they ruled it out. They said that we should not set the tone of the international debate. This Government have had the courage to do so. It is about time that the hon. Gentleman recognised our willingness to take that tough decision to raise more money from the banks than the previous Government raised from their bank payroll tax.

[Chris Leslie]

I am sorry that the Minister repeats the point he made earlier. Of course, if the previous Government could have got international agreement writ large on a bank levy, so much the better, but this Government have introduced their bank levy at a puny level. It is a shame that the Minister refuses to repeat the bonus tax on senior executive bankers who take home obscene amounts of money, when that revenue could be used to help to get young people off benefit and into work. It is a shame that he turns his face against that idea. He thinks that the revenue raised by the levy is adequate, but the Opposition do not. We believe that it is necessary for the banks to do more to pay their fair share.

[Bill Esterson (Sefton Central) (Lab)]

My hon. Friend is right. Does he agree that the Government’s arguments on the levy would be more credible if their corporation tax cuts did not substantially benefit the banks? It would be better if they supported amendment 13.

[Chris Leslie]

Indeed. Sometimes Government Members protest too much. The Opposition simply want a review of what the bank levy combined with the bonus tax could yield. My hon. Friend is right about the corporation tax cuts from which the financial sector will benefit. The sector will have a tax cut of £100 million in 2011-12, £200 million in 2012-13, £300 million in 2013-14, and £400 million in 2014-15. That is a £1 billion corporation tax cut over this Parliament. The Treasury ought to supplement its very modest bank levy plan with the bank bonus tax because it is only fair that those who played such a central role in the global economic downturn make a greater contribution to help to secure the economic recovery by supporting jobs and growth.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I agree with the thrust of the hon. Gentleman’s argument—the bankers are getting off far too lightly—but rather than introducing a payroll tax, as he suggests in the amendment, would it not be better to increase the corporate levy? Would that not deal with the bonuses issue?

[Chris Leslie]

We discussed in Committee how the bank levy might be altered, and I will come in a moment to my own criticisms of how the Government have framed the bank levy. Their original plans would have brought in far more revenue, but the banks started complaining so the levy was shrunk back to a level that the banks felt was acceptable, not to a level the taxpayer felt was acceptable.

[Frank Dobson (Holborn and St Pancras) (Lab)]

Will my hon. Friend confirm that in order to pay for the corporation tax reduction, which has greatly benefited the banks, the Government withdrew quite a bit of the special funding that had previously been provided for investment in industrial activity? So much for their claim to be promoting British manufacturing! In fact, their taxation policies continue to over-promote the banks.

[Chris Leslie]

Indeed, they have imposed stealth tax after stealth tax on ordinary working people and small—and larger—businesses in this country. For some reason—we know not why—they have sought to give help and support to the banks at a time when they ought to be paying their fair share.

[Stephen Williams (Bristol West) (LD)]

I thank the hon. Gentleman for giving way three times on the same point. My recollection of the Committee stage upstairs was that he and his colleagues did not oppose the Government’s reduction in corporation tax and actually thought it a good thing. Perhaps he will recall that the reason the bank levy was increased was to take account of the fact that some banks might benefit from that reduction.

[Frank Dobson]

They “might” benefit?

[Chris Leslie]

I agree with my right hon. Friend—they definitely will benefit from the reduction. I am not sure that the counteracting change—the tweak to the bank levy—goes far enough to counteract that corporation tax change. There are ways in which the bank levy could be amended further, but in general we support the principle; it is the design and the level at which it is set that we object to.

Amendment 31, tabled by my hon. Friend the Member for Hayes and Harlington (John McDonnell), relates to a financial transaction tax, for which a strong and impressive case can be made. Many of us, on both sides of the House, will have received letters and e-mails from constituents through the Robin Hood Tax campaign, which many charities have advocated. I pay tribute to the technical work that they have done on that issue. What may well be very minor changes to transaction levies could, according to many of these designs, generate significant and useful resources. Clearly, though, we need a design that does not jeopardise the rejuvenation of a stable and well-balanced financial services sector, so we would need an honest assessment of the impact of such a tax.

I am appalled that the Government have for now ruled out a financial transaction tax. It should not only stay on the table, but be actively examined and reviewed. Government Members might say that they are pursuing a financial activities tax—a slight variant in this policy area—instead, but the Chancellor, having talked about that last June, has made absolutely no progress with international jurisdictions in advocating or gaining support for it. We see no action by Ministers on what were ultimately G20 discussions about a financial transaction tax. We have not seen them explore either that possibility or a financial activities tax. The only qualm I have with my hon. Friend’s amendment is whether it stresses sufficiently the need for international agreement and discussion. Nevertheless, it is certainly something that, in broad terms, we think needs to stay on the table to be examined further.

[Alison McGovern (Wirral South) (Lab)]

That is a crucial point, because moving ahead on this suggestion will take leadership from the very top of all Governments around the world, yet that is the very thing that seems to be lacking in Britain at the moment.

[Chris Leslie]

It is a shame that the leadership we need—not just at the G20, but at the European level and elsewhere—on the financial transaction tax and in a number of other areas is lacking. The Chancellor of the Exchequer has not reported any progress on the financial activities tax, for example. Perhaps the Minister would care to tell us today what progress he has made with other Heads of Government and Finance Ministers on the financial activities tax.

[David Rutley]

Might not the Government’s position have something to do with the fact that the International Monetary Fund does not endorse a financial transaction tax and that there is a stronger case for an activities tax? Should the hon. Gentleman not consider that more fully?

[Chris Leslie]

I know that the Government have such a close relationship with the IMF that they take their policy lead from it on almost every issue, but I am sure that they can think for themselves on this issue. Given that there was discussion at the G20 about exploring many of those things, I would have thought that the Government ought to keep the issue on the table and under review because it has potential, as most hon. Members seem to recognise.

[Mr Umunna]

I think the Minister was seeking to raise the IMF earlier, but the IMF has argued—I am sure that my hon. Friend knows this—that the Government should be looking to raise a lot more from the bank levy than they are currently.

[Chris Leslie]

Indeed, and there are ways the bank levy could be improved. It might be appropriate at this point to refer to the Government amendments 32 to 50, which are technical amendments. It would be useful if the Minister said whether the bank levy’s yield will be affected by those technical changes. Generally speaking, although the bank levy is a fine idea in theory, the way the Government are implementing it in practice is inadequate. It has been designed around a fixed yield of £2.5 billion to £2.6 billion, but when the Treasury originally published its design for the bank levy last June the banks complained that it would cost them £3.9 billion. The Chancellor listened to their complaints and, as a result, watered down his original plans. Indeed, he gave the banks a £20 billion tax-free allowance before they start paying the bank levy, thus bringing the yield back down to £2.5 billion to £2.6 billion.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

Does my hon. Friend agree that the Government’s bank levy was watered down as part of an agreement in their Project Merlin to secure a wider arrangement for lending by the banks into the economy, which we desperately need? Merlin has turned out to be an absolute flop: the first quarter figures for private sector lending to small and medium-sized businesses show that they are £2 billion short already. What a deal!

[Chris Leslie]

It is difficult to see how the Government thought that that would be the moment of catharsis—the moment when everybody said, “Yes, aren’t the banks doing their just bit? They’re now completely free from their obligations to the taxpayer.” Project Merlin clearly did not achieve that. The Chancellor made some tweaks to the negotiations on the Project Merlin arrangements—he did so in February, on the day of Treasury questions—and he then tweaked the rate again in the March Budget, after criticisms of the big corporation tax cut that the banks will enjoy. However, the bank levy is set at a relatively low rate, especially when we look at what is happening in France, Hungary, Portugal or Austria. Indeed, we even read in today’s Financial Times about the quasi-bank levy arrangements pursued by the Dutch Government.

In future years, the Government should increase the bank levy to ensure that the banks continue to pay their fair share of tax and so that taxpayers are not left picking up the bill for the crisis caused by the irresponsible actions that the banks pursued. That is why in May we called for the Government to review the bank levy and to publish a report of the analysis behind the rates that they had set and the thresholds that they had chosen. They refused to do that; however, as we have seen, they are now refusing even to review the possibility of repeating the bank bonus tax.

Why has the Chancellor failed to take action on excessive executive banker bonuses? At first, the coalition agreement suggested that the Government might well do something about this. It promised to

“bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector; in developing these proposals, we will ensure they are effective in reducing risk.”

That is on page 9; it is one of the first things that the coalition put into its agreement. The Business Secretary recently described the bankers’ bonuses paid for this year as “offensive”, yet the Government could not even promote proper transparency on bonuses and remuneration, never mind taking action to ensure that they were fair and reasonable. The most that the Government could extract voluntarily from the banks was an agreement in Project Merlin to report anonymously on the total remuneration of the five highest-paid bank senior executives outside the board. The Government are not even forcing the banks to disclose all the bonuses over £1 million, which was a key recommendation of the Walker review. That would have been easy to implement, given that it was part of Labour’s own legislation. The provision is on the statute book, ready to be triggered.

16:15

The Government’s excuse for inaction is apparently that they are trying to get other countries to sign up to the transparency arrangements, but we have seen absolutely no evidence of any attempt to secure such an agreement. In a written parliamentary question in June, I asked the Minister

“what meetings he has had with his EU counterparts to discuss disclosure by banks of the number of employees paid salary and bonuses of more than £1 million per year.”

He replied:

“Treasury Ministers and officials have meetings with a wide variety of organisations in the public and private sectors as part of the process of policy development and delivery.”—[Official Report, 15 June 2011; Vol. 529, c. 801W.]

My hon. Friends will be used to getting that kind of answer to written questions. We must therefore take it that there have been no meetings whatever with the Minister’s European counterparts to get agreement on transparency on bonuses—[Interruption.] If he has had such meetings, I would be delighted if he informed the House of the progress that has been made. It does not sound as though he has talked to a single one of his counterparts about this issue, however. Bonuses remain staggeringly high, and the Government must say why they are scared of transparency.

[Bill Esterson]

Does my hon. Friend remember hon. Members talking in Committee about the large-scale donations that bankers had made to the Conservative party? Has he had cause to reflect on whether that might be the reason for the Government being so reluctant to act on this matter?

[Chris Leslie]

I cannot answer for the motivations of Ministers. It is difficult to know what motivates them. Is this a question of omissions? Is it incompetence? Is there some other devious motivation, or malice for those who might benefit from the proceeds of these revenues? We do not know, but we look forward to hearing the Minister’s justification for failing to get transparency and failing to repeat the bonus levy.

Recent figures suggest that some of the largest investment banks are actually increasing the slice of their revenues that they pay to their staff. The ratio between remuneration and revenues is known as the compensation ratio, and it is interesting to note from the detailed figures that even the Royal Bank of Scotland’s global banking and markets division paid 34% of its net revenues in remuneration in the first nine months of 2010, compared with just 27% of net revenues in the full year of 2009. The amount of compensation, in the form of salaries and bonuses, is therefore going up as a proportion of revenues. That was also the case for J. P. Morgan, which paid 39% of its net revenues in the first nine months of 2010, compared with 33% in the full year of 2009. Barclays paid 43% of its net revenues compared with 38% over the same periods. Compensations are strong and still growing.

[Frank Dobson]

Does my hon. Friend agree that the Orwellian use of the term “compensation” in relation to working for a bank suggests an effort to increase public sympathy for some of the greediest and most stupid business people this country has ever seen?

[Chris Leslie]

It is very easy to find oneself tied into the lexicon used by the financial services sector. My right hon. Friend calls a spade a spade, and it is sometimes important to do just that.

The bonuses that I have described are really excessive. For example, we know from the limited disclosures that we have seen that John Varley, the former chief executive of Barclays, received a £2.2 million bonus in 2010 and that, between them, the top five earners at Barclays, excluding executive directors, received more than £38 million in salary and bonuses in 2010 alone. That amount was shared between five individuals. Bob Diamond, the chief executive of Barclays, has received £6.5 million in bonuses for 2010 since January. As many will know, Mr Diamond lost out in the bonanza compared to his two senior managers at Barclays, with Tom Kalaris receiving a cool £10.9 million in salary and bonuses, and the other top manager, Rich Ricci—my hon. Friends might remember his name—receiving a cool £10.6 million. Those two individuals earned enough money—£17 million—in 2010 to pay the wages of more than 500 qualified nurses.

[Alison McGovern]

My hon. Friend is pointing out some of the excesses at the top of the financial services sector, but does he agree that it is also a matter of concern to those at the bottom end of the pay scales in the financial services sector to see such inequality in the organisations they work in, just as it is to workers in other sectors?

[Chris Leslie]

Indeed. That is precisely why the bonus payroll levy arrangements that we advocated excluded bonuses of up to £25,000 going to those working on the front line in the banks. We thought that those working at that level should not be affected by that particular payroll tax. What we are talking about now are senior executives. Stuart Gulliver, chief executive of HSBC, gained a £5.2 million bonus while Eric Daniels, the former chief executive of Lloyds, secured £1.45 million.

[Mr Robinson]

Does it occur to my hon. Friend, as it does to me from time to time, to ask what sort of activity these bankers engage in that can generate such enormous profits? Anybody who has worked in any competitive commercial sector in the UK, let alone the manufacturing sector, operating in the international economy, knows that those sorts of margins and returns cannot be generated in the real world. Are we heading back to the same sort of distortions that led to the previous crash?

[Chris Leslie]

There are serious issues about the balance of power between management and ownership. Many shareholders are also very exercised about excessive remuneration, compensation pay or call it what we will, and I believe that the balance of power needs addressing in the longer term. It is interesting to note how banks have tried to shift their remuneration approaches according to the political and tax arrangements of the day. While the Minister will no doubt tell us that bonus payouts for the City in 2010-11 were predicted to come down by 8% in comparison with 2009-10, what he will not tell us is that that apparent fall in bonuses was largely offset by a 7% increase in salaries for senior banking executives. The roundabout continues, but some people never lose out when it comes to this particular game.

Analysis of official earning figures by pay research specialists Income Data Services showed that large payouts in the financial sector during February and March this year helped to maintain payments during the 2011 bonus season at a similarly high level to that recorded in 2010. Not enough has changed; Ministers are not exercised or angry enough about this particular scandal, and action is necessary.

The fact is that banks are now more likely to pay discretionary bonuses, which would be captured by our proposed bonus tax, instead of paying the guaranteed bonuses that they used to get away with—the multi-year contractual bonuses that looked to the rest of us like salaries but that they called bonuses, which would not be caught. If the guaranteed bonuses become the exception and not the rule, as the Chancellor says, it might provide us with an opportunity to capture more of the discretionary bonuses through our bank bonus tax. As I said, we estimate the yield to be £2 billion.

We have to resolve the sense of anger felt by UK taxpayers towards the banking institutions that they had to bail out. The public are still rightly angry about the greed and irresponsibility of some of the senior executives at our largest banks and about the size of the bonuses. There is simmering anger out there still about the bonuses that continue to be paid when austerity is biting very hard for many of our constituents. Real and visible action is needed on bonuses, not secret voluntary arrangements behind closed doors between the big banks—as with Project Merlin, which the Chancellor pursued before. As my hon. Friend the Member for Coventry North West (Mr Robinson) described it, it was little more than a damp squib.

The banks provide an important utility in our society. They are a key part of our economy, and a strong banking sector is in all our interests. However, by talking tough and acting weak the Government are fuelling public anger while doing little to address the issues. They should stop treating people like fools, and do far more to ensure that the banks and senor banking executives are paying back their fair share—a fair share that could generate money to repair some of the damage to jobs and the economy, and help tens of thousands of young people to secure a decent start in employment.

We are not asking very much. We just want a review of whether the bank levy could be augmented with a repeat of the bonus tax. We want the taxpayer to be given a fair deal in return for rescuing the banks, and we want the Government to take seriously the threat of a lost generation of young people struggling to find work. A fair tax on banker bonuses to help people off the dole and into work is the best way to get the deficit down and stop Britain’s talent going to waste.

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

Amendment 31, which stands in my name, proposes a report reviewing the possibility of incorporating a financial transaction tax within the Government’s proposed bank levy, which would also examine ways in which any funds raised through such a tax could be invested in tackling not just unemployment and poverty in this country, but deprivation in the developing world. Many will remember the financial transaction tax in its former life as the Tobin tax; last year it was relaunched as the Robin Hood tax, focusing largely on the campaign to tackle poverty in the developing world.

I can think of no better day on which to debate this issue, having seen the pictures shown on our television screens last night and today of the tragedy that is taking place in the horn of Africa. This morning, Radio 4 broadcast the story of a family—parents with one child—who had walked for miles to the aid station, only to find that the one-year-old child had died as a result of suffering the drought and famine. I also commend last night’s “Dispatches” programme, presented by Jon Snow, which identified the activities of Rachmanite landlords in west London. Some of those landlords operate in my constituency, and the matter has been raised in the Chamber in the past. It demonstrates the poverty that still exists in this country.

On a personal note, let me say that this morning I received letters from children at Cherry Lane primary school in my constituency as part of their campaign to encourage politicians to think about how we can fund education in the developing world so that children there can go to school. That is what my proposal is all about.

When the transaction tax was relaunched last year as the Robin Hood tax, it was supported by a wide range of churches and religious organisations. I will not name them all, but let me give Members a flavour of them. They included the Trades Union Congress, Crisis, Action Aid, Article 12 in Scotland, Barnardo’s, the Catholic Fund for Overseas Development, Christian Aid, Church Action on Poverty, Comic Relief, the Church of Scotland’s Church and Society Council, the Christian Socialist Movement, the Disability Alliance, the Ecumenical Council for Corporate Responsibility, EveryChild, Family Action, Faith2Share, Friends of the Earth, the General Assembly of Unitarian and Free Christian Churches, Greenpeace, Oxfam, Quaker Peace and Social Witness, Save the Children, Tearfund and the Salvation Army.

That was the largest alliance of civil society organisations that we have seen in generations campaigning on a single issue, and, as you know, Mr Speaker, they came here last month. Twelve hundred people came to Parliament, and met us in Central Hall over a cup of tea. The event was organised in particular by Oxfam, Action Aid, Save the Children, Tearfund, CAFOD and Christian Aid, and their message was simple: 1 billion people have no access to clean water and 2.5 billion lack basic sanitation, and it is time for change and action.

Those organisations pointed out that—as we have seen in the horn of Africa—the situation is dramatically worsening as a result of drought and famine. They raised three issues with us: the need to ensure that all Governments commit themselves to devoting 0.7% of gross national income to aid, the need to tackle tax evasion and avoidance, and—this was their key demand—the need for a Robin Hood transaction tax on banks. The amendment does not ask the Government to make an instant decision; it simply asks them to help us move the debate on. It is an attempt at a bipartisan—or whatever the correct term is as so many parties are represented in the Chamber—or consensual approach to enable us to move forward. I am not asking for its immediate adoption, although I would like that; rather, it specifically asks for a report to be prepared so that we can be convinced about the way forward both in principle and in respect of the practical arrangements, to ensure that whatever Government introduce this tax, it proves to be successful. It simply asks the Government to review and report.

16:30

There is now a sense of urgency, as the problems are escalating in the developing world. That is why I have set a six-month deadline for the report. It is not an unrealistic time scale given the work that has already been undertaken by the past and present Governments. It is not only our Government who are being lobbied about this matter; this is happening across the world, from New Zealand to New York.

Let me run through the proposal and what I would like the Government to examine and report upon. Most Members know the details following last month’s lobby. The proposal is for a small tax to be included in the bank levy. The sum proposed is 0.05%, which is 5p in every £1,000, which would be levied on financial transactions including in stocks, bonds, foreign currencies and derivatives. There are already some transaction taxes in place in this country, such as the stamp duty of 0.5%, but this proposed tax is nowhere near that level; it is a relatively trivial sum for an overall tax. However, it is estimated that if that trivial sum were introduced globally, it would raise £250 billion, and in the UK alone it would raise about £20 billion. It is argued that it could reduce speculation, and certainly some of the riskiest speculation that caused the last financial crisis.

The Robin Hood tax campaign lobbied us saying that it would like 50% of the income from this tax to be spent on fighting poverty in the UK, 25% to be spent on tackling poverty in developing countries and a further 25% to be spent on tackling climate change.

[Andrew Gwynne (Denton and Reddish) (Lab)]

My hon. Friend is setting out his case very well. In recent years, there has been an ever-speedier move towards the globalisation of our economies, and he is absolutely right that this assessment and review is needed in respect of our obligations to global society. My hon. Friend has set out that case perfectly. Does he agree that it is crucial that we do not overlook some of the global challenges in tackling poverty and climate change?

[John McDonnell]

Yes, and when the various groups lobbied us last month it was interesting to note how the debate had progressed since the original discussions about the Tobin tax. The debate had become much more refined and concretely related to the global needs that my hon. Friend mentioned. There has been a debate about how we allocate these resources and what the greatest priorities are, and so far it has been about poverty in this country so that we do not in any way undermine support for such taxation among people in the UK, but we must balance that with support for efforts in the developing world. The climate change issue has also come on to the agenda since the Tobin tax was first proposed.

One question that arose in the discussions in Central Hall was what the effect would be if we did raise, for example, £20 billion in this country. It was said that if we spent £4 billion, we could halve child poverty in this country overnight, and if we spent £5 billion, we could insulate every home and therefore take people out of fuel poverty. Such examples bring home the reality of what could be done through such a tax.

It is not a tax on normal retail banking or on savings or mortgages. It does not hit the ordinary saver. It is a micro-tax, and in some ways a tax on short-term speculation banking. It does not fall on UK banks alone either, as foreign banks operate in the City. I would take particular delight in taxing Goldman Sachs in this way—that is a personal grudge—but there are also other hedge funds operating in the City of London. A strong argument, which we have heard today, has been made for seeking international agreement. Negotiations are taking place and there is consensus, even within the European Parliament, on introducing a European-wide financial transaction tax. My concern about that is that the European discussions were about using that tax to fund the European Commission—I might have more than reservations about that proposal.

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

The idea of a Robin Hood tax is noble, but does the hon. Gentleman not agree that without international agreement across all countries, it is very unlikely to get off the ground?

[John McDonnell]

No. If that was the case, we would not have introduced a stamp tax on transactions. It brings in £5 billion and has been an incredibly successful tax. The concern has been expressed that this country would be disadvantaged if it acted unilaterally, but the International Monetary Fund’s study does not say that. It cites the stamp duty as an example of a transaction tax that has not affected UK business and states that financial transaction taxes

“do not automatically drive out financial activity to an unacceptable extent”.

Banks do not leave, because they know that they are secure in this country—in fact, they know that if they get into trouble we bail them out.

The argument that London’s advantages would evaporate overnight as a result of this sort of tax are just not accurate. The reason this country has these advantages, apart from the experience in dealing with financial transactions that we have built up over generations and centuries, is that it is time zone-critical—it is located between the Asian and New York markets—so it is ideally placed to ensure that financial operations are carried out in London. If companies were to move elsewhere in Europe, where would they go? Germany, our main competitor in the European time zone, is already committed, under Chancellor Merkel, to implementing a financial transaction tax.

The argument that is made now about needing some form of global international agreement is exactly the same one that was used to say that we should not introduce any form of taxation on bank bonuses. When we introduced the one-off tax on bonuses in 2010 we were told of fears that there would be a mass exodus of bankers leaving the country. In fact, the recruitment of bankers has increased—perhaps that is a debate for another day.

[Alison McGovern]

On the argument that my hon. Friend has just made about whether or not people would leave as a result of such a tax, does he agree that we should support what J. K. Rowling said in 2010 about people who might leave this country because of taxation? She said:

“I cannot help feeling…that it would have been contemptible to scarper…at the first sniff of a seven-figure…cheque.”

Ought we not to support her on this?

[John McDonnell]

There is a spell, is there not—[Interruption.] The new sequel film is coming out soon, so we will see what spell there is to retain bankers in this country, if we need them.

I do not take this issue about international agreement lightly. That is why I am calling for a report, as any report would examine that issue. We are going back to the point that my hon. Friend the Member for Wirral South (Alison McGovern) made earlier, because this country is best placed to take the lead in trying to secure some of these agreements and such a report could address how we could do that. However, it certainly should not hold us back from taking unilateral action.

The other matter that has been raised in this debate previously is the concern about avoidance, but we can design out any avoidance measures. We can design this tax to make it difficult to avoid, just as we did with stamp duty.

[Andrew Gwynne]

My hon. Friend rightly talks about taking the lead. Are we not hearing exactly the same arguments as the ones used against my private Member’s Bill to tackle vulture funds in the previous Parliament? Thankfully, the Bill was pushed through by the previous Government using the wash-up procedure and it has been made permanent by this Government. Were not exactly the same arguments employed during the debate on that Bill? Is it not sometimes right that we do take the lead?

[John McDonnell]

Yes, I had forgotten that example. It is a good example of how unilateral action can raise the standard overall across Europe and globally.

Another issue raised in our debate on the Tobin tax a number of years ago concerned whether it would be practical. Things have moved on since then and the system for undertaking financial transactions is highly automated and centralised. New systems have been put in place, and I refer Members to the study by the Institute of Development Studies that identified how the system now operates:

“The Continuous Linked Settlement Bank, launched in 2002, now settles more than half of all foreign exchange transactions, with the remainder processed through national real-time gross settlements systems.”

Now we have the systems in place, through advances in new technology, to monitor the process and thereby ensure that tax is collected easily and that avoidance can be prevented.

[Bill Esterson]

My hon. Friend just mentioned avoidance and the problems that it causes. Does he agree that if avoidance was the reason for not doing what he proposes, the Government would give up on collecting any taxes? Avoidance of tax is a far greater problem than any to do with claiming benefits, yet the Government focus their energy on benefits and not on tax.

[John McDonnell]

The main argument on the Tobin tax involved the inability mechanically to identify the transactions and therefore levy the tax. I think that that has been overcome with the new systems.

The avoidance issues will concern migration to tax havens and elsewhere and the report on this tax would have to address them, but we must also attack them more generally. That is why I was so disappointed that my amendment on that subject was not called for debate. That is another issue, however, that I shall raise at another time.

Financial transaction taxes have been introduced elsewhere in the world. In fact, they have been identified in about 40 countries—including ours, with stamp duty. Another question that was raised concerned whether, if we introduced this tax, it would be passed on to the customers. That is a concern, but the report we receive from the Government can consider how to design the tax so that it is targeted at the casino banking that has resulted in this crisis and so that we can protect ordinary people and businesses.

The key point about this tax is that, as the IMF study said, it is “highly progressive”. It falls on the richest institutions and individuals in a very similar manner to capital gains tax. As for the competition element and whether the cost will be passed on to customers, thereby hitting individuals harder, the finance sector is competitive and institutions that try to pass on the cost of the tax to customers will find themselves attacked through a shortage of business.

Another argument that has been made more recently is that this tax could help to assist in addressing high-frequency trading, where transactions happen every few seconds. There has been a huge increase in the number of transactions to do with derivatives. The volume of such financial transactions is now 70 times the size of the world economy and commentators have argued that that is dangerously large and destabilising. Lord Turner, the chair of the Financial Services Authority, said that many such speculative transactions are socially useless. Many of them are based on extremely small profit margins, so even a low rate financial transaction tax of 0.05% would reduce the size of the market by reducing the profitability of these risky transactions. In that way, it would contribute to stabilising the economy overall.

I do not want to delay the House. Many Members have considered the issue in some depth as a result of the lobbying, but for all the reasons I have given I agree with the 1,000 economists who wrote to the G20 summit. This is an idea whose time has come. Issues still need to be addressed, which were set out by Neil McCulloch in the IDS study, but the principal issue is political will. I hope that we can display political will across the parties and across the House to move on this matter.

I finish by quoting from the letter from the 1,000 economists to the G20:

“The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society.”

The letter says that a Robin Hood tax is not only “technically feasible”, but “morally right.” That is why I invite the House to support my amendment.

16:45

[Stephen Williams]

I want to make some brief remarks on the amendments. The hon. Member for Nottingham East (Chris Leslie), who leads for the Labour party, mentioned that youth unemployment has grown to roughly a fifth of 16 to 24-year-olds. Of course we all deeply regret the wasted talent that that represents, whether of young people who have qualified at school or college or have left university with a degree and cannot find jobs or those who have not acquired any training or education—the so-called NEETs, those not in education, employment or training. Over the years, I have worked with many charities, such as Fairbridge and the Prince’s Trust, which try to help such people in my constituency. I must gently tell the hon. Gentleman that many of his points were made in the previous Parliament when I used to sit where his hon. Friend the Member for Leyton and Wanstead (John Cryer) is sitting now and I spoke for the Liberal Democrats on skills and higher education. The number of NEETs and the rate of youth unemployment increased year on year throughout the previous Parliament; the number just about touched 1 million before the general election.

I am sure the hon. Member for Nottingham East was not trying to give the impression that youth unemployment had reached 1 million purely because of the actions of the Government. It has been a problem in some cohorts of young people for a long time and has seemed intractable for Administrations of many parties, but the Government are trying to do some good things to tackle it, such as investment in apprenticeships and in the Work programme that will come in shortly.

[Bill Esterson]

I am glad the hon. Gentleman has given way, because I cannot believe he has the nerve to say what he has just said. One of the first actions of the incoming Government was to scrap the successful future jobs fund, which was bringing down youth unemployment. If he reads Professor Wolf’s report, he will see that her worry is about what is happening to 16 to 18-year-olds. We are in danger of repeating the mistakes of the ’80s when youth unemployment peaked four years after the middle of the recession.

[Stephen Williams]

I have spoken on platforms with Alison Wolf, and indeed launched a book with her during the previous Parliament. I think she would be surprised to hear the Labour Opposition citing her in support. Yes, the Government are phasing out some of the previous Government’s programmes, but they are being replaced by the Work programme, which brings together many people who can work with the long-term unemployed or unemployed young people. They have a holistic approach and are bringing social enterprises into the programme, which may be more successful than the many initiatives that took place under the previous Government. I repeat: youth unemployment just about reached 1 million just before the previous Government left office. It is not a new problem created by the present Government.

[Chris Williamson (Derby North) (Lab)]

But does the hon. Gentleman at least acknowledge that as a result of the measures brought in by the previous Government, through the future jobs fund, youth unemployment was falling? Surely, that is something we should celebrate, so was it not a mistake for Government Members to support the move that got rid of the future jobs fund, which was having such a positive impact on youth unemployment?

[Stephen Williams]

As I understand it, the future jobs fund was a temporary measure and it has now stopped. It is being replaced first by the Work programme, which will come in shortly, and by the Government’s investment to create hundreds of thousands of new youth apprenticeships. I hope that the hon. Gentleman has visited in his constituency, as I have in mine, the many employers—including, in my constituency, the city council—who are taking on apprentices for the first time to give those young people a chance. Indeed, the Government have increased the minimum wage some of those people receive; they have also increased the apprentice wage, which the previous Government did not do.

[Chris Williamson]

Of course we all celebrate the fact that some young people are getting apprenticeships. We obviously support anything that helps young people get into employment, because it is a waste of talent for people to languish on the dole, but as my hon. Friend the Member for Sefton Central (Bill Esterson) pointed out, the Government’s Wolf review said that those apprenticeships are not going to the youngest school leavers; they are going to an older cohort, so clearly the Government need to take additional measures to ensure that we do not have a whole generation of 16 and 17-year-olds who are simply thrown on the scrap heap.

[Stephen Williams]

I thank the hon. Gentleman for his rather long intervention. As well as the Work programme and investment in apprenticeships, the Government have a growth strategy to develop the new jobs of the future—into which, incidentally, the future jobs fund was not necessarily placing people. For instance, there are many initiatives in the green economy, with the green deal that has come along as well, that will help the young unemployed. I mentioned the situation to emphasise that the problem is not new. The previous Government struggled hard with it as well, as I pointed out in the previous Parliament. I have been consistent in what I have said across both Administrations.

The purpose of amendment 13 is to reintroduce, or at least to examine the case for reintroducing, the bonus tax that the Labour Chancellor introduced in 2009. As I recall, the purpose of that bonus tax was not to raise revenue, but to change behaviour. It was an attempt to persuade the banks that they should not be introducing bonuses at that time, when many of them were dependent on state funds to continue in existence. I also recall that the anticipated proceeds of that bonus tax were about £500 million. In fact, as we have heard on many occasions, it raised in gross terms more than six times that amount, so it did not change behaviour at all. It seems that the Labour party in opposition has switched the underlying purpose of a bonus tax.

I share the moral outrage that many people feel about the level of bonuses being paid by some institutions. I am a free market liberal, so I believe it is up to a company to decide its own remuneration package and justify it to its shareholders, but in the current climate, when many families around the country are facing difficulty, some of the decisions taken by remuneration committees in the City cross the threshold at which it is right that some of us in this place express moral outrage at what they have been doing.

The culture of people paying huge amounts of money to themselves is not a new phenomenon in this Parliament. I remember Lord Mandelson, before he became the Trade Secretary in the previous Parliament, saying that new Labour was “intensely relaxed” about people becoming filthy rich. The hon. Member for Nottingham East looks faintly embarrassed at my reminding him of that phrase, but when the Labour party was in government it encouraged that culture. We should not let Opposition Members forget that.

[Frank Dobson]

I cannot help myself, in these very unusual circumstances, leaping to the defence of Lord Mandelson. If the hon. Gentleman had continued quoting from the sentence, Lord Mandelson went on to say “provided they pay their fair share of tax.”

[Stephen Williams]

I was not aware of the continuation of that quote. However—[Hon. Members: “Withdraw!”] Rather than withdraw, I shall expand on my point and make it more strongly. The previous Government engendered the culture of get rich quick by slashing the rates of capital gains tax and making a virtue of cutting income tax and holding down higher rate taxation. Ironically, it is under the Conservative-Liberal Democrat coalition that capital gains tax has gone up and the 50p top tax rate has been levied in this Parliament.

[Bill Esterson]

The hon. Gentleman called himself a free market liberal. Another Member of the House who described himself as a free market liberal is the right hon. Member for Haltemprice and Howden (Mr Davis), who describes the current arrangements in this country and the way in which capitalism operates as wealth extraction, rather than wealth creation. Does the hon. Gentleman agree with that assessment when it comes to bankers’ bonuses, and will he support the amendment on the reasonable grounds that my hon. Friend the Member for Nottingham East (Chris Leslie) set out?

[Stephen Williams]

I thank the hon. Gentleman for his intervention, but I have already stated clearly for the record that I share the moral and ethical outrage at the level of bonuses being paid by certain firms in the City and elsewhere. The question is whether reintroducing the bonus tax designed by the Labour Government would make any difference, because the evidence suggests that it made absolutely no difference to the bonus culture. It was a handy device for raising rather more than the expected revenue, but it certainly did not change behaviour.

As a free market liberal, I think that companies should be free to decide their remuneration policies, but they must justify them to their shareholders. One way that behaviour might change would be if shareholders took a more active interest in the bonuses that the remuneration committees award within their companies, whether they are banks or not. As was mentioned in yesterday’s debate, the people on those committees are often executive directors of other companies and so have a vested interest in the magic circle of super bonuses being justified in other companies. If the shareholders of the banks that we own, Lloyds Banking Group and Royal Bank of Scotland, were able to express a view, that would introduce a new dynamic into capitalism.

I hope that the Government will seriously consider giving each citizen a share in RBS and Lloyds Banking Group when the time comes for both banks to be divested from the state—this is another plug for the pamphlet I published in March, “Getting your share of the banks: giving the banks back to the people”. I had an interesting meeting with officials from UK Financial Investments last Wednesday in the Treasury in order to discuss that.

Amendment 31, tabled by the hon. Member for Hayes and Harlington (John McDonnell), proposes a Robin Hood tax. I fully support such a tax, as I have mentioned in many debates in the House. I have spoken with many non-governmental organisations in my constituency and at lobbying events, such as the one that took place last week and has already been mentioned. A Robin Hood tax has three elements. The first is a levy on banks’ balance sheets, and the Government introduced that in the form of a bank levy. We might disagree about the level of the levy, but the important fact is that the coalition Government have legislated for it to exist and said that it will be permanent, in the sense that it will last for the lifetime of this Parliament. The rate has been changed once, as I mentioned in an intervention, and I hope that it might be increased again.

The second element of a Robin Hood tax is a financial activities tax—FAT, as opposed to VAT, which the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) might have phonetic difficulty with when speaking in Welsh, in distinguishing between an F and a V. I hope that the Minister can update us on what discussions are taking place on that between Finance Ministers across the European Union and what progress has been made on the introduction of such a tax, which is a tax on certain profits of the banks.

The third element of a Robin Hood tax is a financial transactions tax, which is the subject of the amendment. As the hon. Member for Hayes and Harlington said, that has traditionally been called a Tobin tax. It would be the most problematic component of a Robin Hood tax to introduce. It might impede liquidity, which is not necessarily a good thing, and the other barriers he mentioned would be difficult to surmount without international agreement between the major trading nations.

Another problem with a Robin Hood tax is the question of how much it would raise, as I have heard a wide variety of figures for that which are in the billions. The hon. Gentleman referred to the great coalition of NGOs that support such a tax, and many of us support them, but I wish that they would agree a figure for what the different components of the tax could reasonably be expected to raise.

[Mark Durkan (Foyle) (SDLP)]

Does amendment 31 not afford the Government the possibility of coming up with such a figure? They could do the very scoping work that the hon. Gentleman says is needed, and surely that is the Government’s job, not the job of all those NGOs.

17:00

[Stephen Williams]

The hon. Gentleman makes a reasonable point, and I am sure that the Minister will tell us what work has been done in the Treasury and his estimate of what the proposal from the hon. Member for Hayes and Harlington might raise.

My point is that it is not helpful to present MPs or our constituents with such a range of sums—from the low billions to in excess of £100 billion—that the Robin Hood tax could raise, because they raise false expectations of what it might actually achieve.

[John McDonnell]

I was encouraged by the hon. Gentleman’s earlier statements, but I was waiting for the “but” and it has come. Amendment 31 simply asks for a report to be prepared exploring all the issues that he has quite rightly and properly set out, so I see no reason why he cannot support it in order, as I said earlier, to move the debate on.

[Stephen Williams]

I have not said, and I hope that the hon. Gentleman does not think, that I do not support what he is trying to achieve. We will have to hear from the Minister what work the Treasury is doing, or may have already done, to produce the facts and figures that we all want.

My final point on the amount that a Robin Hood tax could raise is about what it should be spent on. I have heard about a range of problems at home and abroad that could be solved by such a tax, but I entirely agree with the way in which the hon. Gentleman has refined those objectives down to dealing with poverty at home and abroad. I think we can agree at least on that.

[Mr Robinson]

It is interesting—if not more than that—to follow the hon. Member for Bristol West (Stephen Williams), who calls himself a free-trade liberal, or words to that effect. He is a “good doer”, in other words, and he means that he is in favour of every good sentiment expressed in this House but believes that neither he nor any Government can do anything at all about this issue, other than consult the shareholders. If the shareholders—the electorate—were consulted at the moment, his party might not be as pleased with the idea as it seems to be.

Nothing can be done, it is said, and the hon. Gentleman, while agreeing with every sentiment, will not even vote for amendment 31, spoken to by my hon. Friend the Member for Hayes and Harlington (John McDonnell), who I think is going to press it to a vote if he can catch your eye, Mr Deputy Speaker. It calls for exactly what the hon. Member for Bristol West wants, and he would not have to listen to his new masters in the Treasury, because we would be able to have an independent inquiry.

I had the luck to study with Tobin at Yale university when he first advanced these ideas, and they generated a lot more attention and interest in those days, but if the hon. Gentleman is serious about his wishes, and about the good will that he bears towards every serious intent to put things right, including bankers’ bonuses—which we are discussing in relation to amendment 13, of which I am speaking in support—he should vote with us, and also for amendment 31, in the name of my hon. Friend the Member for Hayes and Harlington.

The strange thing about this debate is that before the election, and even during it, the current Financial Secretary to the Treasury and the current Chancellor spoke with great vehemence and passion about how offensive the whole banking culture was and how, once they were in office, they were going to get tough with the bankers.

As in other matters, however, the Chancellor talks a good talk but does not walk a good walk: one puff of wind from the Governor of the Bank of England and the Chancellor gives in on regulation. One meeting with the bankers and he says, “Okay, we’ll do Merlin, but meanwhile we’ll agree with you on the level of bonuses: I won’t tax your bonuses; we’ll go for a corporate bonus tax instead.”

Of course, we wholly endorse the effect of that tax and fully support the bank levy, but it has an impact on banks’ balance sheets, because as we are asking them to build themselves up, we are taxing them, quite rightly. We can achieve both, however, given the unusual and inexplicable profitability in the banking sector. The joy of what we would do, through amendment 13, is that we would tax the bankers—and so we should—but not impact on the business per se.

My hon. Friend the Member for Nottingham East (Chris Leslie), who introduced amendment 13, said that under this Government about £40 million had been paid in net remuneration—or it may be even gross, I am not sure—to the top five employees of Barclays bank. Some £40 million has been paid in bonuses alone. If anything is offensive, that is, and yet the Government refuse to do anything about it. What they should do is staring them in the face. We are not, in the amendment, asking them to agree with every single purpose to which we would dedicate the use of the funds. They may disagree with us on regional development or on the growth fund for new jobs; they can disagree on any number of items. However, surely no one in this House who is serious about tackling the bonus culture that has become so poisonous in the banking industry, and is spreading increasingly to the rest of the commercial and private sector, can disagree with the need to tackle those bonuses.

We heard the hon. Member for Bristol West speak for the Liberals, but it is interesting to note that there is not another Government Back Bencher anywhere in the House. When my hon. Friend the Member for Nottingham East spoke to the amendment, not a single Government Member, Liberal or Conservative, rose to oppose it. Not only have the Chancellor and his Financial Secretary caved in to the banks, but the whole coalition has fled the Chamber in fear and trembling of saying something that will offend the bankers. There is not one Member there—where have they all gone? What has happened? Are they, like the Chancellor and his Financial Secretary, afraid of offending the banks? I do not know; all I can see is that the serried ranks have fled and the Financial Secretary is left on his own to defend the indefensible—of which he is no doubt perfectly capable.

[Frank Dobson]

They’re collecting their bonuses.

[Mr Robinson]

They are hoping to collect them, I imagine, when they lose the next election.

What I do not understand about this whole debate is how the banks can make so much money. The retail sector is usually profitable. It is like a utility: there is a regular amount of income, those involved have a fairly nice oligopoly between them, and it works quite well. I do not think anybody is complaining about that, apart from the fact that every time the investment sector does badly, the poor retail customer gets it in the neck—the small companies and others—when the banks immediately try to recoup their losses by increasing fees and charges. While all is going well, we have one rule for the investment banks and one rule for the rest of the world. The investment banks continue to coin it in and take every penny they can in bonuses, and the rest are left with the remaining share of profitability, which is diminished by the excess amounts that the investment side is taking.

The first thing that I would recommend the Government to do is look at the spread of profitability throughout the economy. If we are serious about rebalancing the economy, the first thing that has to be rebalanced is the power differential between the banking sector and manufacturing—and, equally, the share of profitability as between the banking sector and the rest of the economy. It cannot be possible for those in the banking sector—RBS, Barclays and others—to go from a position of massive losses one year to huge profits on their investment trade in the next. In six months RBS made £5 billion profit. We are pleased to receive our share of that, but how can it be making such disproportionate profits compared with the rest of the economy? That does not quite stand up. Either they are real profits, in which case there is clearly a dysfunction in the economy as regards competitiveness that needs to be investigated and addressed, or the bank is creating fictitious profits, taking the bonuses while it can, and leaving the taxpayer to bail it out later. I do not know the answer to that question, but I put it to the Financial Secretary that it needs to be looked into. The profits are unreasonably high. He should forget about whether they are offensive or poisonous and address this as a purely economic phenomenon. How can the banking sector make those profits without sucking profitability out of the rest of the economy, particularly the manufacturing sector?

That brings me to the Government’s policy on rebalancing the economy. We all agree with that, but why do they not address the problem by taxing bonuses through the levy—and, for that matter, through the bonus tax that we propose? Unless we do something about that, the banking sector’s preponderance in being the master and not the servant of industry will continue, and for as long as it does, any talk about rebalancing the economy and the rebirth of manufacturing is make-believe. Nowhere can we see that better than in Derby, with yet another death of one of the few remaining conventional manufacturing industries in the UK. We are all in favour of advanced manufacturing and high-tech industries, but the German success has been based on superb engineering in the traditional conventional industries, which we—particularly those on the Treasury Bench, under both the Conservative and Labour parties—have tended to look down on.

If the Government are serious about rebalancing the economy in favour of manufacturing—we must all be serious about that—they will have to do better than saying that the market and the banks are the master. I am pleased that the Transport Secretary announced an investigation this morning—on the “Today” programme, as usual. The next instalment of the growth plan must consider how the Government can use their purchasing power to the benefit of this country, as is done superbly well in Germany and France.

We should look back. I have not made a study in advance of this speech and it would take us too long to go through everything. The death of the telecoms industry was down to a Government purchasing decision that ditched GPT. Ericsson came in with a great fanfare, then closed the whole of its works in Coventry and pulled its horns back to Sweden. We also pulled our support from the motor car industry. Years ago, people thought it was great because we would move into high-tech manufacturing. What happened? One industry after another closed in the wake of the car industry, including the machine tools industry and the capital goods industry in general. Throughout the history of post-war British manufacturing there has been a progressive loss of self-confidence and self-belief in British manufacturing throughout the country. That has to be addressed, and I put it to the Financial Secretary that it needs to be done now.

[Alison McGovern]

Does my hon. Friend agree that one moment in history when the British Government did not act in that way, which I raise because it was important to my constituents, was when the Labour Government stood behind General Motors at Ellesmere Port to maintain that industry in my area at a time of deep economic troubles in this country?

[Mr Robinson]

That is right, and I supported that entirely. I support any large manufacturing company with a base in the UK that we are seeking not to protect, but to develop and expand. I have stressed the progressive loss of self-confidence in British manufacturing across the nation. That example involves a large American company. Although it had got into a much worse mess than the old British motor industry ever got into, because it was American it had a naive faith that it would be able to pull itself, and us, out of that situation.

There has been a loss of confidence in our industries. I will not delay the House by giving example after example, but the view of the Treasury, the old Board of Trade and the old Department for Industry—unbelievably misnamed—has always prevailed: that the Government can do nothing, and market forces must prevail. That is despite the fact that every country that was a real competitor of ours took exactly the opposite view, and ensured that their industries thrived and prospered. They were not protected, but they were supported. We have so many latent advantages that we simply ignored, to the advantage of others and to our own continuing and cumulative disadvantage. That is the point that I am trying to make.

This is by no means a digression from the debate, Mr Deputy Speaker. This is why the tax on the banks should be increased. The banking sector’s preponderance in the economy has to be reduced if we are to survive as a manufacturing and balanced economy in the future. In one way or another, that has to be done. What we have seen from the Government is a pathetic capitulation to the banks. It was difficult enough for us when we were trying to save the banking industry in the crisis, when it was in a bad state. When the banking industry is clearly on the way to recovery, there is absolutely no reason not to proceed with the bonus tax.

The only reason—with which I disagree—is that if we dare tax the banks, they will go abroad because they are being taxed too highly in the UK. This is another area where I would like a study to be done. To what extent is that really a risk? If it were a risk that major bankers would leave the UK in droves and we would have a denuded financial sector over night, it would have some benefits and a lot of disadvantages, but to what extent is it a risk? That could be studied. There are some hard-headed people in the Treasury who would certainly not agree with the banking point of view.

What is so special about the bankers that they can generate these huge profits and bonuses? I do not think that anybody knows. Anybody who thinks about it objectively thinks, “How can that be done?” The manufacturing industries in Germany and France, such as the telecoms sector and the car and lorry manufacturers, are sweating it out in their export markets. They are rebuilding the east of Germany and eastern Europe, and are now helping to industrialise China with massive exports of huge engineering resources. How can it be that they struggle to make 10% on turnover, but bankers can come in and generate huge profits—unrelated, as far as one can see, to any meaningful or socially useful activity, as Lord Turner said in another place?

17:15

We need to consider how much real danger there is of bankers leaving the UK. Is it a real threat? I do not believe it is, to be quite honest, or at least it is nothing like what the Government fear. We also need to consider how to redress the apparently inherent profitability of the banking sector compared with the rest of the economy. We must get those two pieces of work under way.

The Government should find enough nerve to stand up for what they and the whole country said when the ordinary taxpayer had to go to the rescue of investment banks that had brought the economy of the country, and the world, to the verge of collapse. They need to see that there is no inherent danger in saying to the banks, “You’re going too far, with too much support from the taxpayer. You’ve got to be reined in.” They must have the courage, determination and good sense to do that. It is not a question of market forces prevailing, as the Liberal party would have us believe. Instead, the Government must take a sensible view.

Labour has admitted that we were not tough enough on regulation. Of course we were not. However, the current Government have been far too lax in their attitude to banking, and particularly to bank bonuses. We were weak, but this Government have been dreadfully weak, just as they were on regulation. If we were weak on regulation, the Conservatives were hopeless: they did not want any regulation. In their pamphlet on it they said not “Let’s have more,” but “Let’s have less.” That was their only contribution to that debate.

Instead of always saying what we did wrong, why do the Government not learn from it and do now what we should have done then, with the benefit of having seen our failure? They have fudged this coalition together one way or another, so why can they not see where we went wrong? Why can they not see that we were weak with the banks, and they should be strong? Why can they not be as strong as they said they would be during and before the election campaign? The Financial Secretary has gone to great lengths to tell us what we said during the election. We do not want to repeat what the Conservatives said, but they were right then and they are wrong now. Can he not see that? The Government should do something about this now, and that is why I and my hon. Friends will vote for amendment 13. I hope that we will also vote for amendment 31, if my hon. Friend the Member for Hayes and Harlington (John McDonnell) presses it.

I am pleased that I caught your eye, Mr Deputy Speaker, and I hope that there is still time for many other Members to speak on this important issue. We only wish that the Government would find some guts.

[Stephen Timms (East Ham) (Lab)]

I very much welcome the telling case made by my hon. Friend the Member for Hayes and Harlington (John McDonnell) for a bank financial transaction tax, but I wish to focus my remarks on how the proceeds from the bank payroll tax suggested in amendment 13 should be used to create new jobs and tackle unemployment.

We have argued that £600 million of the proceeds should be used to establish a fund to create 90,000 good jobs for young people. That would not be identical to the future jobs fund, but it would certainly have striking similarities to it, so it is important to consider the lessons from the future jobs fund.

As my hon. Friends have pointed out, the scrapping of the future jobs fund was announced in the emergency Budget just after the general election. In opposition, the then shadow Secretary of State for Work and Pensions, the current Home Secretary, whose assurances ought to carry some weight, promised that it would not be scrapped. She wrote to the chief executive of the Association of Chief Executives of Voluntary Organisations on 28 April, just a few days before the general election, to say that the future jobs fund would be reviewed to ensure that it delivered long-term, sustainable work. She stated:

“I welcome this opportunity to clarify the Conservative position on the Future Jobs Fund, which I feel has been misrepresented by certain groups in the media.”

Unfortunately, far from misrepresenting the position, those certain groups in the media were right. The fund was scrapped, without even the pretence of a review, which was a terrible mistake.

The future jobs fund was a £1 billion fund, set up to get 100,000 18 to 24-year-olds into work. It was set up quickly—certainly—to minimise the scarring of long-term worklessness on young people in the wake of the global crisis. We saw serious scarring during the recession of the 1980s, and we are still paying the price for that in today’s labour market, almost 30 years later. Rightly, the previous Government wanted to ensure that there was no repeat.

It is worth reflecting on anecdotal evidence on the future jobs fund. A strikingly large number of people, with a lot of experience in such matters, have made the point that in their view the future jobs fund was the most successful welfare-to-work programme in which they had ever been involved. I noticed the remarks made about the programme to the Select Committee on Work and Pensions by Jackie Mould of Birmingham city council. She said:

“The benefits that they have identified are about the fact that they’ve had a job. I can’t say that enough; it’s come out in every interview that we’ve done, with every single person. Some of them didn’t even know they were on a programme; they just thought they’d got a job. The other benefits have been the confidence and self-esteem that people get from having a job, from feeling valued—that they’ve got something to offer and that they can do it.”

We can all understand how big a breakthrough it is for a young person who has been out of work for some time to get a job. The price of keeping that young person out of work for a long period is huge. It is in that context that the costs of the fund proposed in amendment 13 need to be assessed.

The future jobs fund provided proper jobs when they would otherwise not have been available. My right hon. Friend the Member for Birkenhead (Mr Field), who is currently the Government’s adviser on child poverty, said that the future jobs fund was

“one of the most precious things the last government was involved in, a lifeline”.

Ministers in the present Government have criticised the future jobs fund essentially on two grounds. In considering amendment 13, their criticisms need to be addressed. The first ground is value for money, and the second is that the jobs created were largely in the public sector.

First, on value for money, the maximum price per job offered to bidders to the future jobs fund was £6,500. That is a higher cost per job than most welfare-to-work schemes, but—this crucial difference is often overlooked—unlike other schemes, participants in the future jobs fund came off benefits and were paid a wage. We therefore no longer incurred the cost of benefits to support them. That is not always reflected in cost comparisons, but once it is taken into account, the difference between the Work programme approach and the future jobs fund is much less than is frequently stated.

The Department for Work and Pensions produced statistics showing that of the people starting the future jobs fund between October and November 2009, just over 50% were not claiming benefits one year later—well after their placement on the future jobs fund had finished. The Prime Minister used that figure to criticise the future jobs fund, saying that 50% is not a large proportion, but that comparison is not a valid one, because the young people whom the future jobs fund helped were precisely those who were furthest from the labour market, and therefore most in need of support to get back into work.

In evidence to the Work and Pensions Committee, Tracy Fishwick of the Centre for Economic and Social Inclusion described participants in the future jobs in this way:

“the vast majority of people who are coming forward for Future Jobs Fund are the young people who have less than an NVQ level 2, and sometimes no formal qualification at all.”

In that context, having more than half of such people still in work a year after their placement with the future jobs fund ended is no mean feat. I think that the assessment we are expecting of the fund will show that it provided good value for money by avoiding unemployment.

The second criticism is that none of the jobs created were in the private sector. In fact, that was not the case. It is true that only a small proportion of the jobs were in the private sector. There was an issue about the state aid rules making it harder for private firms to benefit, but with a little more time to plan next time and with the benefit of the report proposed by my right hon. Friend the Member for Morley and Outwood (Ed Balls) in amendment 13, we could increase that proportion. I noticed that Neil Carberry from the CBI told the Work and Pensions Committee:

“I suspect that the speed of the timetable greatly restricted the number of private sector companies that could get involved”.

I think that he was probably right. This was an emergency response to avoid what otherwise would have been a rapid escalation in youth unemployment.

Having said that, there were examples of private firms benefiting from the fund. In Oxfordshire, 33% of the jobs under the county council’s future jobs fund programme were in the private sector, and the council pointed out in its evidence to the Select Committee that it had been disadvantaged by the loss of the future jobs fund—that is the county council for the Prime Minister’s constituency. Other councils reported a smaller but nevertheless still significant proportion of jobs in the private sector. The Select Committee is right that this issue needs to be tackled in the report. Amendment 13 proposes that care should be taken next time to ensure that private firms can benefit from the new programme when it is introduced.

It is not the case, as Ministers have sometimes carelessly asserted, that all the jobs were in the public sector—many were in the voluntary sector—so when the Secretary of State for Work and Pensions appeared on the “Today” programme on 12 May to claim that the

“Future Jobs Scheme created only jobs in the public sector and once the money ended those poor young people crashed out of work straight away”,

it was clearly untrue. Indeed, Dr Peter Kyle, the acting chief executive of the Association of Chief Executives of Voluntary Organisations, which represents more than 2,000 third sector organisations, wrote to the Secretary of State that day to reply:

“I feel obliged to point out that within the voluntary sector it has been widely perceived as a success in delivering vital vocational skills to potentially vulnerable people whilst unlocking potential within non-governmental organisations.”

Later that same day, the Secretary of State claimed:

“The Future Jobs Fund was six times more expensive than anything else that they were doing and actually created jobs only in the public sector”.

That was simply untrue, as Martin Sime, the chief executive of the Scottish Council for Voluntary Organisations, pointed out. There are lessons to be learned from the future jobs fund about how to ensure maximum private sector participation from this approach to creating jobs for young people at a time when those jobs are desperately needed, which they most certainly are at the moment. The value of voluntary sector participation—the contribution and enthusiastic support of those whom Ministers want to be their partners in the big society—must not be overlooked.

The Opposition’s amendment would put back in place the support that the future jobs fund provided with lessons learned through the proposed report to improve the programme further. It is important that Ministers, when evaluating the proposal in amendment 13, reflect on what people have widely said about the future jobs fund and on the enthusiastic response from local authorities, businesses and participants. A young woman from Rochdale told the Select Committee how her time with the future jobs fund opened up many avenues for her, boosting her confidence in the workplace, providing her with training and supporting her with her interviews. She said that being in employment with the future jobs fund helped to get her full-time employment subsequently.

As the hon. Member for Bristol West (Stephen Williams) acknowledged, youth unemployment remains unacceptably high. The Government cannot simply point to the Work programme. We wish it every success of course, but the future jobs fund created jobs where none would otherwise have existed. Given the long-term damage of extended youth unemployment, for both young jobseekers and the economy more widely, it was undoubtedly an investment worth making. Indeed, it is an investment that we should make again. I hope that the House will agree to amendment 13, as moved by my hon. Friend the Member for Nottingham East (Chris Leslie).

17:30

[Alison McGovern]

I want to say a few words in addition to those made so far about amendment 13. The amendment is crucial, and it matters because at its heart it concerns inequality. I want to say something that I take to be uncontroversial across the House: inequality is a problem for us all, no matter what our place in society—it is even a problem for the bankers receiving the bonuses that we have heard about so far. We know that more equal societies do better. I take that statement to be uncontroversial, because we have had many recent discussions both inside and outside this House about why equality matters and why it is important to deal with wide income gaps between the top and bottom in our society.

On that basis, amendment 13 is highly relevant to one of the biggest problems that we have been trying to grapple with. As I said in an earlier intervention, this is not merely about inequality across society, from the very top earners to those receiving the minimum wage; it is about an imbalance in the financial services sector. Many people in my constituency, across Merseyside and in the rest of the UK work in the financial services sector, and not all of them are well paid. Inequality matters not just within those companies, but for those working for companies that service banks—I am thinking about those in occupations such as cleaning or looking after the children of those working in the financial services sector. They face steep income inequality; therefore, it matters that we address this issue. Income inequality has a huge impact on our society—I take that fact to be uncontroversial—and therefore the amendment is important.

The hon. Member for Bristol West (Stephen Williams) described himself as a free-market liberal; I would not go that far, but I would describe myself as somebody who has tried to think about how the economy works.

[Stephen Williams]

I am quite proud to call myself a free-market liberal, but just to make it clear and to differentiate myself from the right hon. Member for Haltemprice and Howden (Mr Davis), who was mentioned earlier, I am also a social liberal. I wonder what label the hon. Lady would apply to herself. Is she a socialist, a democratic socialist or perhaps a social democrat?

[Alison McGovern]

That is probably the easiest intervention that I will ever get. In so far as I believe in the needs of society above the needs of capital, I am a socialist. However, as a socialist, I think that it is important to consider how the economy actually works, because unless we understand the functioning of the economy and what makes our society work well, we will not be able to live up to the needs of society or the demands of our fellow people. As my hon. Friend the Member for Coventry North West (Mr Robinson) mentioned earlier, something has gone wrong when we see such large bonuses and when a small group of people in the City of London can arrange extremely high salaries for themselves.

However, this is not just a market imbalance; it is a power imbalance too. Something is going on that enables a small group of people to argue for a much higher salary than anyone else in society. As someone who cares about how the economy works, I call that market failure. Something is going on, and the situation needs to be questioned, thought through and rebalanced. That needs Government intervention. There could be an insider-outsider problem, in which some people are outside the small group who are able to arrange bonuses for themselves in this way and use their position as insiders to argue powerfully for the maintenance of their position, while others remain unable to enter the market. That is what makes me think that Government action is important in this regard.

My hon. Friend the Member for Nottingham East (Chris Leslie) said that there was also a failure of transparency. Markets work well only in conditions of perfect information, but we do not have perfect information, and we have seen the lengths to which some people have gone in order to prevent transparency over pay and bonuses. The case for Government action on bonuses has been well made today by other hon. Members. I would argue that that, too, is politically uncontroversial. In fact, the Secretary of State for Business, Innovation and Skills told the BBC earlier this year that the coalition Government were “fully signed up” to “robust action” on curbing bonuses. Well, that is great. Our amendment should therefore be pretty uncontroversial, and I hope that hon. Members on both sides of the House will support the principle of what we are trying to do.

My worry is that the Government have just not done enough. They have straightforwardly not lived up to the public’s expectations on bankers’ bonuses. I am also worried that the corporation tax cut that they have introduced will effectively hand money back to the profitable banks, and that not enough action is being taken to rebalance our economy. I could talk for many hours about manufacturing and the fact that the financial service sector should serve the productive economy, rather than the other way round, but my hon. Friends have already done that subject justice, so I will not detain the House further on that.

[David Mowat (Warrington South) (Con)]

The hon. Lady is making a case for the higher taxation of banking bonuses and salaries. Does she think that high salaries in other professions such as the oil industry, financial services, insurance—

[David Rutley]

And football.

[David Mowat]

Indeed. Does she think that higher salaries in all those professions should be taxed more? If that is the case, the most logical option would be to have higher income tax.

[Alison McGovern]

As I said earlier, I think we all agree that inequality is a problem. We have tabled an amendment that deals with a specific problem. Do not we all agree that inequality in this country is a problem that needs to be tackled? I thought that that was politically pretty uncontroversial these days.

[David Mowat]

Will the hon. Lady give way again?

[Alison McGovern]

Many people wish to speak, so perhaps it would be better if I did not take any more interventions. I am assuming that the hon. Gentleman was not about to tell me that inequality is not a problem.

I want to outline what we could do with the extra income that could be generated if our amendment were accepted. I also want to build on the remarks made by my right hon. Friend the Member for East Ham (Stephen Timms). His analysis of the future jobs fund was thorough and it accords with my research on that subject. I pay tribute to him as one of the House’s experts on youth unemployment. His constituency is in the London borough of Newham, which has done extensive research into that issue and probably knows more than many places in this country about what can best be done to tackle it.

I want to make a further point. In January, I asked the Minister for Employment whether he could provide business planning projections of how much the Department for Work and Pensions expected to have to pay for 16 to 24-year-olds on jobseeker’s allowance for each year of this Parliament’s life. I was told that by the end of this Parliament the Department expected to pay jobseeker’s allowance to 279,000 16 to 24-year-olds. It thought that just under 280,000 young people would be on the dole. To check what had happened as a result of the Government’s economic policies coming into force, I asked that self same question in June, when the Minister for Employment was forced to tell me that his Department projected having to pay 303,000 such young people on the dole. The DWP has had to up by 24,000 its own forecast of the number of young people on the dole by the end of this Parliament. Nobody can say that this problem does not need to be dealt with. The Government know from their own DWP projections that this problem has to be dealt with—and it has got worse, not better, over the last six months.

I applaud the Government’s approach to apprenticeships and many other things, but the fact is that we had a programme and a set of policies that were working well for young people. The future jobs fund will be much debated and there is more research to come on the subject, yet the DWP’s own research provides evidence of how that particular scheme worked. The best way to get a job is to have a job; we demonstrated that basic fact through the future jobs fund.

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

I agree with every word that my hon. Friend says. Does she agree that one crucial value of the future jobs fund intervention was that it broke the trend into long-term youth unemployment—a trend about which we should be particularly concerned? The lesson of the 1980s recession was that if young people did not get a start in the labour market at the very beginning of their working lives, they never really got themselves established. That is what the future jobs fund successfully intervened to disrupt.

[Alison McGovern]

I thank my hon. Friend for her intervention. Having grown up on Merseyside in the 1980s, I know it was only when I studied economics later in my life that I found out that there was a word for the thing I always knew happened—that people got punished throughout their lives for being unemployed when they were young. The economic word for that is hysteresis. The labour market has memory: if someone fails to get a job early in life, it stays with them, scarring not only the person’s career prospects, but the economic prospects of the locality. We know all about that and the previous Government worked to stop it happening when the economic crisis hit. I would like to see this Government take that problem seriously, introduce measures that will bring real work to young people and deal with some of the problems we face, which are getting worse.

[Bill Esterson]

Let me draw Members’ attention to the proposals of the Opposition Front-Bench team. Amendment 13 states:

“The Chancellor…shall review the possibility of incorporating a bank payroll tax within the bank levy and publish a report”—

not an unreasonable request, but a very sensible and measured one. Yet we have heard from Conservative Members and from the Minister in an intervention that they are reluctant to take that action. I guess that the Minister will take the same attitude towards the amendment proposed by my hon. Friend the Member for Hayes and Harlington (John McDonnell), which similarly calls for a review. Neither of these measures calls for the City of London to be disbanded or for bankers to be put in the stocks and pilloried by the public—much as many members of the public might wish to do just that! However, given that many members of the public may have recently wished to do the same to Members of Parliament, perhaps we should not pursue that line too far.

17:45

The amendments simply request a review, which is surely reasonable. I should be interested to hear from the Minister what is so wrong with a review or, indeed, with the idea of a bankers’ bonus tax. When the Minister wound up our debate on 3 May, he declined to deal with the many good points made by Members about the value of such a tax. I think that that demonstrated a desire to avoid discussing the success of the approach taken by the Labour Government last year, which raised £3.5 billion for the Exchequer—far more than the Government’s banking levy. I hope that the Minister will not ignore what has been said when he winds up today’s debate.

The Government’s failure to repeat last year’s bankers’ bonus tax, combined with cuts in corporation tax which helped the financial services industry, amounted to a cut in tax rates for the banks. Meanwhile, those on the lowest incomes—families and other particularly vulnerable members of society—are being made to pay for the mistakes of the banking sector. The excessive behaviour of bankers, of which excessive bonuses were a symptom, caused a crisis that nearly brought down the entire financial system not just of this country but of the world.

Amendment 13 states that the money raised by the tax

“would be invested to create new jobs and tackle unemployment.”

Members—including me, in interventions—have mentioned the importance of the future jobs fund and how well it was performing in bringing down youth unemployment until the Chancellor scrapped it in last year’s emergency Budget. The fact that youth unemployment was approaching 1 million has sad echoes of what happened in the 1980s, particularly in the part of the world that my hon. Friend the Member for Wirral South (Alison McGovern) and I represent.

People on Merseyside have long memories when it comes to the damage inflicted by youth unemployment, which peaked in 1985, four years after the middle of the 1980s recession. This year, activities are being organised to mark the 30th anniversary of the Toxteth riots, the appalling scenes in Liverpool during the summer of 1981, and the despair and misery that provoked that action. There are lessons to be learned from what happened in the 1980s. We know from that time what goes wrong if we do not tackle unemployment, particularly among young people.

Some members of my generation, and slightly older people, have never found long-term work. As young people they were never able to enter the jobs market owing to the difficulties facing those in their cohort: the lack of jobs that resulted from the policies of the Government of the day, and the way in which unemployment was allowed to rise to over 3 million. There are people, now in their late forties, who have never experienced secure employment. They have never established proper careers, and they and their families have never recovered from the experience of 30 years ago. That is why it is so important for us to find a mechanism that will help people to find secure employment now.

My hon. Friend the Member for Wirral South rightly said that having a job was the best way of finding a job. I know of a number of people who were able to enter full-time employment as a result of the future jobs fund, because, thanks to the previous Government’s successful approach, they were able to demonstrate to other employers how successful they could be in employment.

In an intervention on the Liberal Democrat spokesman, the hon. Member for Bristol West (Stephen Williams), I mentioned Professor Wolf’s comments on apprenticeships. In her evidence to the Select Committee on Education, she made clear her worries about 16, 17 and 18-year-olds currently being most at risk of not participating in education, training and apprenticeships and about the long-term prospects of their finding work as a consequence of that. That is why it is important to have a strong and well-structured approach to employment for 16 to 18-year-olds. The evidence suggests that apprenticeships are largely being taken by 19 to 24-year-olds, and that there is a lag in respect of younger people taking them up. We must address that; we need to focus our efforts on younger people leaving school.

We need to grow the economy and to ensure that there is a proper growth strategy. The Chancellor talked about the Budget being a Budget for growth, yet the latest figures show that the economy has flatlined for six months and there has not been sustained growth. Borrowing has increased by £46 billion, and the Government have resisted using fair measures, such as the bankers’ bonus tax, to help to encourage job creation and to help the construction industry in house building and other activities that stimulate growth.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

One of the benefits of this tax is that a considerable sum would be put into building 25,000 new homes for affordable social renting. Does my hon. Friend agree that through investing in housing we invest in apprenticeships and jobs and we get a higher tax take because people are working?

[Bill Esterson]

My hon. Friend is right: a virtuous circle is created by investment, and especially investment in construction. It is one of the most efficient ways of putting money into the economy, and there is clear evidence that in periods of recession and downturn the role of the public sector should be to put money into the economy until such time as the private sector is strong enough to take up the slack and create jobs and continue to grow the economy. I fear that stage of the economic cycle has not yet been reached, which is why we need measures such as a bankers’ bonus tax to enable money to come into the economy.

Those 25,000 affordable homes would only be a start, but it would be a very important start. We have a housing crisis in this country, and it will be made worse by the benefits cap the Government are introducing, as revealed by the evidence from the private secretary of the Secretary of State for Communities and Local Government that the cap could result in 40,000 families losing their homes. We certainly need activities such as those mentioned by my hon. Friend to make up for Government problems being caused by activities elsewhere.

I hope the Government will read carefully the two Labour amendments, and acknowledge that, as they merely call for a review and are very reasoned, they are worthy of support. I therefore hope that we will hear later that they accept both amendments.

[Frank Dobson]

I should begin by saying that I support the Robin Hood tax, and it therefore follows that I am opposed to the Sheriff of Nottingham, who in this context is the British banking industry. The sheriff was known for robbing the people and feathering his own nest, which is a characteristic of our banking industry. When the bankers start squealing and the City journalists start repeating their squeals and appearing on radio and television saying how terrible it would be to impose further taxation on the bankers, it is worth remembering the scale of the banking industry, and the scale of the damage the banking crisis did to this country.

It is estimated—I think this estimate is generally accepted—that the effect of the banking crisis on Britain has been to reduce our output of goods and services by more than £300 billion. In other words, had that recession caused by the bankers not taken place the country would be £300 billion better off than we are now, and, with a normal tax take, the Treasury would have been about £120 billion better off than now. In other words, a large slice of the famous deficit would have been wiped out, and a large slice of that deficit has been caused by the incompetence, stupidity and greed of the bankers.

When the bankers say they cannot afford to pay any more, it is worth looking at the sums Britain’s leading banks lost in the crisis while still managing to survive—and most of them survived only by being either taken over or backed up by the taxpayer. HSBC lost $27 billion in the crisis; Morgan Stanley lost $15.7 billion in the crisis; Royal Bank of Scotland lost $14 billion in the crisis; Barclays lost $7.6 billion in the crisis; HBOS lost $6.8 billion in the crisis; and Lloyds TSB lost $4.7 billion in the crisis. Yet all of them have paid bonuses to management who presided over those losses. In the case of Barclays, as I understand it even the shareholders have been doing rather badly and have been treated unfairly, because the Barclays leadership has been paying bonuses while the bank’s share value has been halved in the last 10 years. These are therefore undeserved bonuses not only from the point of view of the rest of us, but even from the point of view of the banks’ shareholders. There is a lot of scope for getting some money out of these banks because they are rolling in money, and we should spend it in ways such as those mentioned in amendment 13, tabled by my party’s Front-Bench team, and amendment 31, tabled by my hon. Friend the Member for Hayes and Harlington (John McDonnell).

To put matters in perspective, this year—a frugal, austere year in the City, we understand—City bonuses amounted to more than £6 billion, yet we are told that the Government may not be able to accept the Dilnot report recommendations because they would cost the taxpayer £2 billion. That means that the Dilnot recommendations, which would help all the people who look with fear to the future and to getting older, could be implemented at an annual cost of one third of the bonuses being paid in the City of London. If that does not demonstrate how ridiculous the remuneration in the City of London is, I cannot imagine what does.

As I said in an intervention on my Front-Bench colleague, my hon. Friend the Member for Nottingham East (Chris Leslie), these people in the City have now started to refer to their pay as “compensation”. They apparently need to be compensated to turn up at work, and apparently their normal compensation is not sufficiently high, so they have to get a bonus on top of that to compensate them for going to work and turning up at their office—and then, as we know from the crisis, losing money. It is about time these bankers started compensating the rest of us and doing what my hon. Friend the Member for Coventry North West (Mr Robinson) discussed: making more of the undeserved wealth splashing around in the banking industry available to those who are providing useful goods and services to people in this country and the rest of the world, and getting us to a fairer and better situation.

18:00

If people want to know why it might be a good idea to put more money into industry and a bit less into banking, they should look at the example of the most prosperous country in the European Union—Germany. Its manufacturing sector comprises roughly twice as big a proportion of its economy as ours does and as nearly every country in Europe’s sector does. That is because, over the years, the Germans have invested a lot more in the manufacturing of goods and the provision of high-tech services; they have not just let their banking industry run away with all the money.

I am strongly in favour of a Robin Hood tax. It is time that the Government really took on the Sheriff of Nottingham and made sure that Robin Hood, Maid Marian and the rest of us win.

[Chris Williamson]

May I begin by entirely agreeing with what my hon. Friend the Member for Sefton Central (Bill Esterson) said about the amendment being wholly reasonable? It ought to command the support of Members on both sides of this Chamber. I hope that at least some Government Members will find it within themselves to support an amendment that will make a significant contribution to addressing the real challenges facing this country. My right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) just referred to the eye-wateringly high bonuses that the City of London has enjoyed in what he described as an “austere” year. It is incredible to think that the City of London bankers’ bonuses amounted to £6 billion.

[Alison Seabeck]

May I, first, draw the House’s attention to my entry in the Register of Members’ Financial Interests in relation to an indirect interest of my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), as I should have done that earlier? My hon. Friend the Member for Derby North (Chris Williamson) mentions some enormous sums. Does he share my concern, and that of enough people around the country, about the huge contrast between those figures and the people who are desperate to find a home? The homelessness figures are rising, as we have learned from the Secretary of State for Communities and Local Government.

[Chris Williamson]

My hon. Friend makes an apposite point and she has done some excellent work to highlight the plight of people in our country who are struggling as a result of homelessness and having inadequate access to decent housing. It is a stain on our national character that in the 21st century, in one of the richest nations on earth, there can be the huge disparity to which she referred.

My first point relates to apprenticeships, the waste of talent in our country and the level of youth unemployment, which is still unacceptably high. I wish to discuss some personal experience and my concern that Bombardier, the last train-building company in our country, has today announced 1,429 redundancies at its Derby plant. It also made the point that its ability to provide apprenticeships for young people in the city of Derby has been considerably diminished. My real fear is that before the end of this year, unless the Government are persuaded to review things and to revise their decision in favour of the British train-building industry, the last remaining company that manufactures trains in our country will pull out of Great Britain altogether. The company will certainly be a shadow of its former self and its ability to provide apprenticeships will be almost completely eliminated.

It is, therefore, absolutely essential that hon. Members support the amendment proposing a tax on bankers’ bonuses, because it would enable the Government to earmark a proportion of that money to create job opportunities. My Front-Bench colleagues suggest that if £600 million of that £2 billion bonus money were used, almost 100,000 opportunities for getting young people into work could be created. Surely that ought to unite all of us. One would hope that even the bankers might consider that to be a reasonable use of the eye-wateringly high bonuses that they have enjoyed in this austere year.

The Government are under a moral obligation to support the amendment. I look directly at the Minister when I make that point, because he is under a moral obligation. I say that because one of the first decisions taken by those on the Government Benches was to scrap the future jobs fund. I can see him mouthing things because he knows what I am about to say. That fund did provide opportunities for our young people and it was making genuine inroads into youth unemployment in our country. The Government’s ability to tackle that is stuttering as a consequence of removing the future jobs fund.

This tax would make a mere pinprick on the standard of living of the bankers affected by it. The Government keep saying that we are all in it together, but if they genuinely believed that, surely those with the greatest resources should be giving a bigger contribution to those with almost no resources. As my hon. Friend the Member for Wirral South (Alison McGovern) said, if young people are unable to get a job at the start of their career, this follows them throughout their life. The Government have it within their gift to support the amendment, which would go some way to addressing that real concern, and I hope that they will take on board their moral obligation to support it.

My hon. Friend the Member for Sefton Central also mentioned that the Wolf review pointed out that some of the youngest of the unemployed in our country—the 16 to 18-year-olds—are struggling to find alternative employment. Although I applaud the Government’s attempts to deal with youth unemployment and their efforts on apprenticeships, their actions are clearly missing out a significant cohort and they should do more to address that situation. One of the other ways in which they could make a significant contribution would be by earmarking a proportion of this bonus tax for the building of 25,000 affordable homes. That would be a modest contribution, but we know that there is a huge demand for affordable housing in our country. Far too many people are living in inadequate accommodation, and there was an excellent exposé on Channel 4 last night about the growth in the number of Rachman-style landlords, who are afflicting parts of our country again.

In my view, we certainly need to do more to tackle that problem and one of the best ways to do that would be to build more decent affordable homes for people to live in. That would have not only the social benefit of providing good-quality homes for people who desperately need them but the added benefit of creating job opportunities and, dare I say, more apprenticeships for younger people, stimulating the economy. If young people are living in better, decent accommodation, their educational and health outcomes are beneficially affected. Whichever way one looks at such investment in affordable housing, through a modest tax on bankers’ bonuses, one can see that it would bring huge benefits to society. I hope that Members will find it within themselves to consider that and to support the amendment.

There is a great need to stimulate and support manufacturing industry and businesses across the piece. They are struggling: we know that the economy is flatlining, that the Government’s attempts at growing the economy are failing and that there is a need for a plan B.

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

I have listened carefully to the hon. Gentleman’s points about apprenticeships and youth unemployment. In my constituency, youth unemployment has fallen by 14%. For a similar reason, the aerospace industry and associated apprenticeships in his constituency are doing rather well under this Government. That is especially the case as regards foreign orders, such as those from China for Rolls-Royce engines and, in a case that affects my constituency, the expansion of British Aerospace abroad. That is the best way to create futures for young people. We should give them proper jobs through long-term investment in intellectual property and research and development tax credit, which the Government have expanded in the recent Budget. Does the hon. Gentleman not think that that is the best way to do it and should he not therefore support the Budget tonight?

[Chris Williamson]

I certainly do not support the Budget. Although I acknowledge that Rolls-Royce does some excellent work—we are fortunate, in that it is the largest employer in my constituency and provides huge opportunities for young people—the hon. Gentleman would do well to remember the support given by the previous Government to the aerospace industry. He would also do well to remember that one of this Government’s first decisions was to scrap the loan to Sheffield Forgemasters. I can see that he is screwing up his face and rolling his eyes—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I know that the hon. Gentleman was tempted down this line of argument by the intervention, but we are discussing the bank levy.

[Chris Williamson]

Thank you for your guidance, Madam Deputy Speaker. The point I am trying to make is that the resources realised as a consequence of supporting the amendment and introducing such a tax within the bank levy—or at least exploring the possibility and reporting back on how it might be used—could be used to support opportunities to create new employment for people in Sheffield through Sheffield Forgemasters and to generate more apprenticeships and opportunities for young people. I hope that the hon. Member for Wyre and Preston North (Mr Wallace) will reflect on those comments and join us in supporting the proposal made by my hon. Friends on the Front Bench about considering a tax on bankers’ bonuses.

I was going to talk about the fact that we know that the Government’s economic policies are failing and that the economy is flatlining. Opportunities are not being realised because of the Government’s blinkered approach, if I may put it that way. I ask Ministers to consider this proposal as an additional opportunity to support business and young people and to create opportunities in our country. Realising such aims has been made very difficult for Ministers because of the policies they have pursued.

We hear all the time from Government Members, particularly the Chancellor of the Exchequer, that we are living in austere times, that we all must tighten our belts and that we are all in it together. As I have said, the amendment provides an ideal opportunity for the Minister and for Government Members to demonstrate that they mean what they say when they make comments about all being in it together.

18:15

I urge, beg and plead with Government Members to consider the modest proposal that is being made this evening and to join us in the Division Lobby so that we can give the Government an additional funding stream, which could do so much good in our country to tackle youth unemployment, to provide decent homes and to provide additional support for businesses through the regional growth fund. The regional growth fund was massively oversubscribed, and in my county of Derbyshire, not one single bid was successful—not one. Clearly, more resources are desperately needed and I would therefore have thought that this was a free hit for the Government. It would certainly be popular with the general public and the Government might even gain some additional popularity if they support this reasonable proposal. I urge all Members to join us tonight to take the proposition forward and to take some positive steps to address some of the concerns that we all share about youth unemployment, inadequate housing and difficulties with the flatlining economy.

[Mr Hoban]

The Finance Bill introduces the bank levy, a permanent tax on banks’ balance sheets that will raise more than £2.5 billion each year. Amendment 13 seeks to reintroduce the one-off bank payroll tax introduced in the previous Parliament, but that would be unnecessary and counterproductive. Amendment 31 seeks to introduce a financial transaction tax, but such a tax would need to be applied globally to prevent the relocation of financial services.

The Government have already set out far-reaching plans for banking reform on regulation, lending, remuneration and tax. That includes the introduction of the bank levy. Both amendments would also place an obligation on the Government to produce a report on how any additional revenues from each tax could be spent and we have already heard many ideas during the debate.

Before I talk about the amendments in detail, we should remind ourselves of the significant contribution to the economy and public finances made by banks operating in the UK. Many hundreds of thousands of jobs across the whole United Kingdom—not just here in London—depend on Britain being a competitive place for financial services. It has been said:

“While the success of the financial sectors in New York and Tokyo has been built largely on supplying large domestic economies, with a smaller domestic economy the success of London has increasingly depended on its global role…The Government recognises that it must ensure that the UK’s tax regime remains competitive”.

The hon. Member for Nottingham East (Chris Leslie) described such an approach as the last refuge of the scoundrel, but the “scoundrel” who made that statement was not me, my right hon. Friend the Chancellor, or the Prime Minister; it was the right hon. Member for Morley and Outwood (Ed Balls), when he was the Treasury Minister responsible for financial services. It is clear that in a short space of time, the Labour party has decided it is no longer important to be globally competitive. That is yet another nail in the coffin of the economic credibility of that party, which voted this morning to scrap the deal obtained by the previous Prime Minister at the G20 summit to increase resources for the IMF.

The financial crisis demonstrated that fundamental reform was needed and that is what the Government are delivering. The Government firmly believe that banks should make a fair contribution to the public finances. In particular, banks should make an additional contribution in respect of the potential risks they pose to the UK financial system and wider economy. Last year, we announced a permanent levy on bank balance sheets, which was implemented from the beginning of this year.

[Mr Umunna]

rose—

[Mr Hoban]

Let me make my point and then perhaps the hon. Gentleman can explain the position of his party when it was in government.

In opposition, we made it clear that the UK should introduce, unilaterally if necessary, such a levy, but just weeks before the general election, the previous Government told us that a bank levy would have to be

“coordinated internationally to avoid jeopardising the UK’s competitiveness.”

Where we and our coalition partners have sought to lead international debate, Labour would hang back and let others make up their mind for them.

[Mr Umunna]

The Minister is extremely fond of harking back to what the previous Government did, but he is in government now and has failed so far to give a single convincing reason to support his position of not adding a bank bonus tax to the levy. Reuters is predicting profits this year of about £51 billion in the sector and there is still an implicit taxpayer subsidy of the sector, so in that context why is it so unreasonable to support the amendment? It simply asks for a review, which is a very reasonable suggestion.

[Mr Hoban]

The hon. Gentleman should be patient. I am just warming to my topic. I have much more to say about the bank levy and about amendment 31 on the Robin Hood tax. There is an issue about the need to reform the banking sector and the coalition Government decided to look at the structure of banking, which the previous Government failed to do. We want to tackle issues around the resolvability of banks and to look at how we can make the banking system much more stable. The measures we are taking forward will tackle some of the issues.

[Chris Leslie]

rose—

[Mr Hoban]

I think I am being tempted away from the bank levy, but I happily give way to the hon. Gentleman, who might just come back to the topic.

[Chris Leslie]

It is very gracious of the Minister to give way.

On the so-called progress the Minister is making on banking reform, can he tell us what progress he has made on the transparency of banker bonuses? That is a critical point. How many other Finance Ministers, worldwide or in Europe, has he spoken to and when will the transparency element of the legislation be triggered?

[Mr Hoban]

We have one of the most transparent disclosure regimes for banking salaries anywhere in the world. The measures we introduced as part of Project Merlin were more transparent and provide more information than in any comparable regime across the world. The Government have made real progress on tackling that issue.

We decided that we would lead the international debate and act unilaterally if necessary on the bank levy. Since we made our announcement, France and Germany have joined us in announcing such levies, and others have followed, including Hungary, Austria and Portugal. The hon. Gentleman made reference to the fact that the Dutch had announced a similar thing. Apparently, they believe that our design for a levy should be followed.

The hon. Gentleman talked about international comparisons. Even allowing for the larger size of the UK banking sector, the UK levy is larger than that of France or Germany. Different levies cannot be compared by looking just at headline rates; for example, the UK levy is focused on balance sheet liabilities, while the French levy is on risk-weighted assets. Furthermore, unlike the UK levy, the French levy does not apply to branches of foreign banks. Consequently, the French levy is expected to raise between €500 million to €1 billion a year, much less than the £2.5 billion we shall raise in the UK, a difference that cannot simply be explained away by the different sizes of our banking sectors. Moreover, unlike the UK, the French levy is deductable from their corporation tax liability. The hon. Gentleman said that the Government will not review the banking levy. If he looks carefully at the documentation, he will see that we are committed to reviewing it in 2013.

The levy is not the only tough action we have taken to ensure that banks pay their fair share of tax. The right hon. Member for East Ham (Stephen Timms) was a member of the Treasury team when the previous Government introduced the code of practice on taxation for banks, but they utterly failed to get all the banks to sign up to it; only four of the big 15 banks had signed up to it by the time they left office.

While the previous Government talked a good story about tackling tax evasion and avoidance, we acted. By the end of November, all the top banks had adopted the code and by the time of the March Budget this year, 200 banks had adopted it. We have taken tough action to tackle tax planning issues and to ensure that banks pay a fair share in taxes to recognise the contribution they should make, given the risk they pose to the UK economy.

With amendment 13, tabled by the shadow Chancellor, the Opposition seek to reintroduce the bank payroll tax, which was introduced in the previous Parliament as a one-off interim measure ahead of changes in remuneration practices from corporate governance and regulatory reforms, and the previous Chancellor conceded that it could not be repeated. The net yield for the tax, accounting for the impact it would have had on income tax and national insurance contribution receipts, was £2.3 billion, which is less than we will raise from the bank levy this year, and less than we will raise from it next year, the year after and the year after that.

[Andrea Leadsom (South Northamptonshire) (Con)]

Does my hon. Friend agree that the unintended consequence of the payroll tax was to push up salaries versus bonuses in the City, which is something that no Member wants to see?

[Mr Hoban]

My hon. Friend points out some of the behavioural impacts of the tax. A Labour Member pointed out earlier the reduction in the proportion of remuneration from bonuses and the increased amount from salaries. That is the kind of behavioural change that happens. Those responses are important. Banks and bankers respond to such changes, but the world has moved on. Unlike when the payroll tax applied, the top rate of income tax is now 50p in the pound. The previous Government told us that they would apply the bonus tax only until changes in remuneration practices were in place, and this Government have taken firm action in that regard.

The Financial Services Authority revised remuneration code of practice sets out detailed rules for pay for firms in the financial services sector. The code ensures that bonuses paid to significant risk-takers are deferred over a number of years and are linked to the performance of the employee and the firm. In addition, significant portions of any bonus will be paid in shares or securities. Those revised rules came into force on 1 January 2011. Let us not forget that under the previous Government, bankers could walk away with the cash in their pocket as soon as the bonus was declared. The rules on bonuses have been toughened up: bonuses are deferred and are paid in shares. The previous Government let the bonus culture rip and taxpayers paid the consequences.

[Mr Umunna]

I am grateful to the Minister for giving way a second time. Does he acknowledge that the toughening up of the FSA code resulted from moves in Europe that were opposed tooth and nail by Tory MEPs?

[Mr Hoban]

At times, I wonder what Opposition Members read; we were clear from the outset that we wanted to toughen up the rules on remuneration. [Interruption.] We were very clear about what we wanted to do. The Opposition should hang their heads in shame about the bonus culture they allowed to perpetuate when they were in government. I remind them that Labour gave Fred Goodwin a knighthood for his services to banking.

We do not need a bank payroll tax. We have demonstrated that the bank levy we have introduced will ensure that banks pay a fair share in relation to the risk they pose to the wider economy. The right actions have been taken.

Amendment 31 was tabled by the hon. Member for Hayes and Harlington (John McDonnell). He is right to highlight the importance of funding international development, on which there is cross-party consensus. The Government agree that we should move to ensure that 0.7% of gross national income should be for aid. The hon. Gentleman is also right to highlight the importance of achieving the millennium development goals. He mentioned talking about education in a school in his constituency. On Friday, I met a group of pupils from Portchester community school who were very much behind the “Send my sister to school” campaign. These are important issues, but we need some discussion about whether the financial transaction tax model offers a stable and efficient mechanism to raise revenue. Such taxes remain the subject of ongoing debate at international level, and the UK continues to take an active role in the discussions.

18:29

The hon. Gentleman called for a review. There is no shortage of reviews on the issue. The IMF has had a review and the EU has had reviews, but they all come back to the fundamental problem with the proposal: a tax would need to be applied globally to prevent the relocation of financial services. If implemented only at UK or EU level, the tax would simply prompt the relocation of financial services, and so fail to deliver the desired outcome in terms of revenue. In doing so, it would have significant adverse impacts on employment and the wider economy.

The Government are willing to engage in further international discussions of such taxes. The French Government have announced that discussion of a financial transaction tax will be one of its priorities for its presidency of the G20 this year. Discussions have been taking place at a European level, and the European Commission is due to publish an impact assessment on further financial sector taxation, including transaction taxes, in the next few months. The House will be aware that, ahead of this, the Commission last week published its latest communication on the EU budget. This proposes that the EU budget could in future be part-funded through new taxes, including a financial transaction tax. I hope the House is also aware that this Government’s position is clear: we oppose any new EU taxes to fund the EU budget.

[Frank Dobson]

The Minister recently told me that the Government had made no assessment whatever of the money that might be raised by a transactions tax, as proposed by my hon. Friend the Member for Hayes and Harlington (John McDonnell)—a Robin Hood tax. If the Government have made no assessment of the money likely to be raised, how can they have meaningful discussions with international bodies about what the impact of the tax would be?

[Mr Hoban]

Significant studies have been done by both the EU and the IMF on such a tax, how it would work and the pitfalls in the proposals. We will see an impact assessment on that emerging shortly. We have not ruled out a financial activities tax. We are engaged in discussion with our international partners and we have pressed for the Commission to consider such a tax. It is working on that. We are making progress. Another review is not needed; there is sufficient work going on to explore the issue in significant detail. The amendment would impose more burdens on the Treasury and it would be better to allow that work to take its course.

[John McDonnell]

rose—

[Mr Hoban]

I would like to give way to the hon. Gentleman, but I want to try to wind up the debate because there are other important matters to be discussed this evening.

On Government amendments 32 to 50, since our proceedings in Committee, it has been brought to our attention that in one area the Bill as drafted may not fully achieve the intended policy ambition. These are the rules relating to netting and in particular the rules concerning multi-lateral netting agreements in groups. These are essentially agreements that allow different members of the same banking group to enter into a net settlement agreement with the same counterparties.

We have sought as a public policy objective to ensure that banks should be able to net off certain liabilities against assets, and that the levy is charged only on the remaining balance of liabilities. The amendments clarify the purpose of the Bill and ensure that the netting rules apply so that some banks are not adversely affected. We want to make sure that we keep the provisions under review. That is why we have put into the amendments a power to allow the Treasury to amend the rules applying to netting arrangements.

The hon. Member for Nottingham East asked whether there would be an impact on yield as a consequence of the amendments. There is no impact on yield, as the amendments reflect the policy objective that we have pursued.

In conclusion, we think it is right that banks should make a contribution reflecting the risks they pose to the UK financial system and the wider economy. That is why we introduced the bank levy. We expect the levy to raise more each and every year than the bank payroll tax did under the previous Government. All the Opposition have to offer in the debate is a tax that did not work the first time round. We have put in place a clear strategy to reform the banking sector. I believe that the actions we are taking are right, and I ask my right hon. and hon. Friends to oppose the Opposition amendments.

[Chris Leslie]

I repeat my congratulations to my hon. Friend the Member for Hayes and Harlington (John McDonnell) on at least getting the debate on the financial transaction tax on the table. We on the Front Bench also want to keep it on the table. It is appalling that the Government have ruled it out. My hon. Friend and I have already spoken about how we should revisit the issue in future legislative opportunities. The Front-Bench team has a qualm about the fact that the amendment does not mention sufficiently the need for international agreement on the subject, but broadly we agree that the matter needs to be taken forward. Unfortunately, we will not be supporting his amendment on this occasion, but it is an important topic which we must keep under review and keep a close eye on as it develops.

My hon. Friends the Members for Coventry North West (Mr Robinson), for Sefton Central (Bill Esterson) and for Derby North (Chris Williamson) and my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) highlighted the fact that there is no good reason for the Government’s inaction on bonuses. My right hon. Friend the Member for East Ham (Stephen Timms) and my hon. Friend the Member for Wirral South (Alison McGovern) spoke about the massive blow to the self-esteem that young people in particular feel, and the sense of their role in society and of their value that they lose, if they do not have the opportunity of jobs and employment.

The Minister says that our amendment 13, which would repeat a bank bonus levy, is unnecessary and counterproductive. The Government seem content with the lack of transparency on bonuses. They are happy with high and growing remuneration for executive bankers. They think the banks are paying a fair share, and they scoff at the £2 billion that could be raised by a tax on bank bonuses. We feel that the public disagree with the Government. The amendment would be a fair approach and it would help to create employment. That is why I urge the House to support amendment 13.

Question put, That the amendment be made.

18:36

Division 314

Ayes: 215

---

Labour: 201
Scottish National Party: 5
Democratic Unionist Party: 4
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Green Party: 1

Noes: 288

---

Conservative: 241
Liberal Democrat: 45

Amendment proposed: 31, page 42, line 30, at end insert—

‘(2) The Chancellor of the Exchequer shall review the possibility of incorporating a bank financial transaction tax within the bank levy, levied on trading in financial products including stocks, bonds, currencies, commodities, futures and options and publish a report within six months of the passing of this Act, on how the additional revenue raised would be invested to tackle unemployment and reduce poverty in the United Kingdom and to assist in tackling deprivation in the developing world.’.—(John McDonnell.)

18:50

Division 315

Ayes: 25

---

Labour: 13
Scottish National Party: 5
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Democratic Unionist Party: 2
Liberal Democrat: 1
Green Party: 1

Noes: 279

---

Conservative: 235
Liberal Democrat: 42

Clause 78

Supplies of commodities to be used in producing electricity

[Kerry McCarthy (Bristol East) (Lab)]

I beg to move amendment 12, page 45, line 5, at end insert—

‘(2) The Schedule shall not come into force except as specified in subsection (3) below.

(3) The Chancellor of the Exchequer shall bring the Schedule into force by order within six months of the passing of this Act.

(4) A statutory instrument containing an order under subsection (3) shall be accompanied by a report which details—

(a) any effective subsidy provided to, or additional profits accruing to, operators of existing and new nuclear power stations as a result of the provisions in the Schedule;

(b) the immediate impact of the provisions in the Schedule on consumers and on fuel poverty;

(c) the immediate impact of the provisions in the Schedule on energy-using manufacturing industries and on employment in those industries;

(d) the expected effect of the provisions in the Schedule on investment in new renewable power generation and on investment in new nuclear power generation;

(e) the measures that the Chancellor intends to adopt in a future Finance Bill in order to recoup any effective subsidy to or additional profits accruing to the nuclear industry as a result of the Schedule; and

(f) how the monies raised by those measures will be used to mitigate the immediate impact of the Schedule on consumers and on manufacturing industries and to encourage green investment.’.

[Madam Deputy Speaker (Dawn Primarolo)]

With this it will be convenient to discuss amendment 21, page 45, line 5, at end insert—

‘The Schedule shall come into force on a date specified by the Treasury by an order made by Statutory Instrument, which may not be made until an agreed packaged of mitigation measures for energy-intensive industries has been laid before the House of Commons and approved by a resolution of the House of Commons. The dates specified in paragraphs 8(3) and 9(5) of the Schedule shall be replaced by the date specified in the order under this section if it is later.’.

[Kerry McCarthy]

Let me start by confirming that Labour Members support the principle of a carbon floor price. We believe that carbon price support could be an excellent opportunity for the UK in providing a high and stable price for carbon. It could encourage investment in low-carbon power and green technologies, create a new generation of green high-skilled jobs which the UK sorely needs, enable the UK to make radical reductions in its carbon emissions, and contribute to meeting our carbon budgets. Unfortunately, however, we cannot support the way in which the Government have implemented this measure. It will hit those who can least afford it, damage the prospects of developing a UK green industry, and fail to reduce carbon emissions. We have to question whether we can call the carbon price support rate a green tax at all.

First, I shall deal with the impact on consumers. We know that people are struggling to pay their fuel bills. The OECD estimates that, on May’s figures, energy prices are nearly 10% higher than they were a year ago. Scottish Power recently announced electricity bill rises of 10% and gas bill rises of 10%, and other companies are expected to follow suit. The Government are not helping. Rising energy bills and fuel bills are coming on top of higher taxes, cuts to tax credits and cuts to public services. This year the Government have cut the winter fuel payment by £50 for people over 60 and £100 for people over 80, with no mention of that in the Budget statement or the pre-Budget report. That comes after their promise in last year’s Budget to protect key benefits, including winter fuel payments, for older people. They may claim that they inherited this from the previous Government, but we could and would have looked again at that decision in the light of rising energy prices, and so could they; that is the point of having an annual Budget statement.

These are the circumstances in which the Government have proposed a carbon floor price designed in such a way that it will cost working families by raising their energy bills. We understand that in the long term, if the policy is designed in a way that encourages a switch to low-carbon energy production, there should be no significant effect on consumer bills—that is why we support the principle of the carbon floor price—but right now, in the short term, there will be price rises for consumers at a time when they are already finding their fuel bills unmanageable. The Government have not included any counterbalancing measures to help working families to deal with those price rises. If the measure goes ahead in the form that the Government propose, between 30,000 and 60,000 more households will fall into fuel poverty in 2013, rising to between 50,000 and 90,000 more households by 2020. Those are the Government’s own estimates. Earlier this year, Consumer Focus said:

“In its current form there is a real risk that this policy may simply displace detriment.”

In other words, even if it did have a positive impact on green investment, that would be at the cost of more people falling into fuel poverty.

There have recently been somewhat hysterical reports about green taxes, alleging that they are the biggest factor in causing consumer bills to rise. That is not true. Ofgem figures from March show that environmental and social costs make up just 8% of the typical dual fuel consumer bill, and that has risen by just one percentage point since 2008. Climate change deniers cite figures suggesting that hidden green taxes add some £200 to energy bills, but those figures do not stack up. That does not mean, however, that now is the time to add to those costs. The Government have got it wrong. Ordinary working families were clearly the last thing on their mind when they designed this policy. That is why the amendment calls for them to look again at the effect that it will have on people in fuel poverty.

I turn to manufacturing, which several of my colleagues will wish to discuss too. Rising energy prices will affect not only consumers but firms that employ thousands of people across the country. In particular, they will hit energy-intensive industries such as steel, aluminium and chemicals. There is a danger, particularly in the absence of a credible Government plan for growth, that growth and jobs will be exported to other countries. According to a report by Thomson Reuters Carbon Point earlier this year, the carbon floor price will impose additional costs on businesses amounting to £9.3 billion. We understand that that effect might be mitigated in the long term if there is a switch to greener sources of energy, although that is not certain given the problems that I will come to in a moment. In the medium term, however, UK industry will be at a disadvantage, and jobs and growth will be put at risk. That is why the director general of the CBI and industry bodies such as the Chemical Industries Association have called for an exemption from these extra costs for high energy-using industries.

Concerns have been expressed by firms such as Tata Steel, which employs 1,000 people in Teesside. Its chief executive officer said:

“The introduction of the carbon floor price represents a potentially severe blow to the sustainability of UK steelmaking.”

Rio Tinto Alcan, an aluminium producer in the north-east, may close, shedding 600 jobs, and 1,800 jobs are at risk at INEOS ChlorVinyls in Runcorn. Some of the industries threatened by this measure are not only major employers but among the UK’s biggest export sectors. For example, the chemical industry, which accounts for 12% of total UK manufacturing, exports the bulk of its production, with a trade balance in 2008 of nearly £6 billion.

There is also the danger that we will harm our own prospects of building a UK green industry. This sector represents huge opportunities for the UK. For example, the wind energy sector provides over 10,000 jobs, and it expanded by 91% in just two years from 2007 to 2009. The solar energy industry in the UK provides over 10,000 jobs. There is a danger that we may not be able to sustain these sectors in the UK, despite any efforts from the Government, if the necessary materials are not available here. This would be yet another own goal for the “greenest Government ever” after their ill-thought-out change of policy earlier this year on feed-in tariffs, which has put thousands of green jobs at risk. The solar sector is a vital, nascent green industry in the UK. Until the Government’s announcement, the 10,000 jobs that it currently supports was expected to rise to 17,000 this year. The Government’s promised green investment bank was supposed to boost investment in new green industries, but it has been watered down: it will be a fund, and not a real bank, until 2015. That makes a mockery of the Government’s green credentials. Our amendment calls on the Government to look again at the carbon floor price and its effect on high energy-using industries. This is the wrong time to put jobs and green investment at risk without a plan to protect them.

I now move on to the impact on green investment. We accept that a well-designed carbon floor price can deliver reduced emissions and higher green investment, which is why we support the idea in principle. However, we doubt whether the Government’s proposal will deliver those goals. The UK is part of the EU emissions trading scheme, so any carbon permits that are not sold in the UK will simply be sold elsewhere in Europe. The Department of Energy and Climate Change commissioned Redpoint Energy, a consultancy, to examine the options for a carbon floor price. It said in a footnote to its report:

“Under the EU ETS, it would be expected that lower emissions from the GB electricity sector in a given year would be offset by higher emissions elsewhere within the trading scheme.”

A recent report by the Institute for Public Policy Research agreed that

“this policy would have no direct effect on emissions reaching the atmosphere.”

It went on to say that

“it is important to be clear that the UK would be meeting climate change targets in a way that has zero direct effect on emissions.”

The Treasury’s own consultation document admitted that for power stations covered by the ETS, the carbon price floor will not directly impact on the Government’s ability to meet their carbon budgets.

Consumers and companies facing higher energy bills because of this policy would be right to question whether this is a worthwhile use of their money. Will the Government’s policy encourage more investment in renewable power? The Energy and Climate Change Committee expressed doubt:

“when it comes to low-carbon investment, the effect of the Carbon Price Support will depend on the confidence of investors in the long-term reliability of the Carbon Price Support.”

[The Economic Secretary to the Treasury (Justine Greening)]

Perhaps I can just tell the hon. Lady that the Institution of Civil Engineers said that the policy will create a “more conducive environment” for investment. Does that allay her fears? If she has concerns about the structure of the policy, it would be helpful for Members to hear the Opposition’s alternatives.

[Kerry McCarthy]

As I will go on to explain, there are concerns about future stability, as we have seen with the North sea oil tax, which we discussed yesterday. Investors need stability to plan for the long term, particularly in solar and wind power, which need long-term investment. People need to know what to expect and what impact proposals will have.

As for what the Opposition are saying, I refer the Minister to our amendment, which calls for a review of three main points, which I am discussing in my speech. Those are the impact on fuel poverty, the impact on energy-intensive industries and the fact that this is, in effect, a subsidy for nuclear power, which I will discuss later. It is important for us to look at the consequences of this policy because, as with so many things, the Government have introduced it in haste and without thinking through the consequences. It is not until we look at the impact on these sectors that we will see what the ideal solution might be. It is premature of the hon. Lady to ask us to come up with an alternative before we have done that analysis and reached a consensus with the industry on what the impact will be. As I have said, we agree in principle with the carbon price support, but because of the way it is being implemented, it will not achieve any of the objectives that she presumably wants it to achieve.

[Justine Greening]

As we will no doubt debate later, we carried out an extensive impact assessment on this policy. Indeed, the hon. Lady has quoted a couple of figures from it. I reiterate what I said earlier. If she agrees in principle with the policy, which I very much welcome, it would be helpful to hear how she thinks the delivery of it ought to differ from what the Government are doing.

[Kerry McCarthy]

As I said, we are calling for a full-scale review. I am not convinced that the Government’s impact assessment examined in sufficient detail the impact on fuel bills, for example. As the Economic Secretary is intervening on me, it is obviously not the time for me to pose questions to her. When she speaks later, perhaps she can enlighten us as to what it was judged that the impact would be on consumers in meeting their fuel bills, on fuel poverty and on energy-intensive industries. What impact does she think that will have on jobs and growth in the areas where energy-intensive industries are based? Perhaps she could also respond to the questions that I will soon pose about whether it is wise to, in effect, create a subsidy for the nuclear industry when there are other competing priorities, on which some people would argue the money would be better spent.

19:15

As I was saying, there is concern about the lack of a stable regime for investors in the green sector. That is analogous to the lack of stability for investors in North sea oil. There was an off-the-cuff announcement in the Budget of a supplementary charge, which took the industry by surprise. As I mentioned in a point of order earlier today, the Government announced a £50 million tax relief for investors in North sea oil fields this morning—the day after the issue was discussed in the House. That shows complete contempt for the parliamentary process. A written ministerial statement is not very helpful today, when the debate on that subject happened yesterday.

The green technology industry has expressed scepticism similar to that of the oil and gas industry, especially given the Government’s recent track record, including the change of policy on feed-in tariffs, which could cost up to 7,000 jobs in the solar industry. The carbon price support rate must be set by the Government at the next Budget. The Government will face the most pressure to renege on their promise at the very times when the biggest effort will be needed to maintain the carbon price. Given the Government’s record on sticking to their policy announcements, they need to do a lot more to create certainty for green investment in this country.

[David Mowat]

I have listened carefully to the hon. Lady’s remarks on behalf of the Labour party. Can she make it clear for the House whether the Labour party supports a carbon floor? I thought that that was settled policy. If it does support a carbon floor, what is the particular aspect of the announcement that is causing such concern?

[Kerry McCarthy]

I am not sure where to start in responding to the hon. Gentleman. My opening line was that we support the idea of a carbon floor price in principle. Everything that I have said since has outlined why we have reservations about the way in which it is being implemented. I simply refer him to the speech that I am making.

I appreciate that there are difficulties in getting this policy implemented at an EU level. It would be easier if we could look at the EU emissions trading scheme in the round. Experts have said that measures on carbon pricing should first be considered at EU level, and that a UK-only solution is a second best option. Lord Turner, the Chair of the Committee on Climate Change, has said that, and it was echoed in the Institute for Public Policy Research report. The Government appear to have done nothing to explore the EU option. The coalition agreement says that the Government will

“make efforts to persuade the EU to move towards full auctioning of ETS permits.”

However, it does not mention any intention to talk to our EU partners about a carbon price floor. Perhaps that is unsurprising, given the Government’s record on dealing with the EU. For example, the Government’s MEPs tabled no proposals to reduce the EU budget, whereas Labour MEPs tabled amendments that could have cut more than €1 billion of waste from EU spending.

[Justine Greening]

Is the hon. Lady aware that one of the main reasons why the UK’s contribution to the EU budget is going up is that the former Labour Prime Minister, Tony Blair, gave away part of the rebate?

[Lyn Brown (West Ham) (Lab)]

Enough now.

[Kerry McCarthy]

The Whip is telling me that we do not have time to reply to that point. It is a bit rich of the Economic Secretary to say that, when she made great play of going to Europe and saying that we would not accept any rise in the EU budget—there was a lot of grandstanding and playing to the crowd on that issue—and then her party’s MEPs tabled no proposals at all to tackle the issue. That is far more relevant to what we are discussing than something that happened many years ago.

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

I am encouraged by what I think I am hearing about the European Union. My policy would be simply to leave it. Is it now the policy of the Labour party to cut the EU budget? If so, why did it not seek to negotiate a reduction in the EU budget when it was in power?

[Madam Deputy Speaker]

Order. Perhaps we can stick to this debate. If the hon. Gentleman wants to know the answer to his question he can discuss it privately with the hon. Lady outside the Chamber. We should return to the important issue of climate change.

[Kerry McCarthy]

I have touched on the fact that there needs to be greater Government engagement in Europe to try to deal with the matter at a pan-European level.

I turn to the nuclear subsidy. As I have said, the carbon price support rate will hurt families and industry in the immediate future, yet it seems likely to fail to reduce carbon emissions. We have to wonder why the Government decided to implement it. The obvious explanation is that they got it wrong, again. It would not be the only tax that they have bungled in this Finance Bill. I have already mentioned the difficulties over the fuel duty stabiliser and the North sea oil tax, which was—[Interruption.] Sorry, I have been thrown off slightly by a sedentary heckle from the Economic Secretary. As I was saying, the Government introduced a last-minute supplementary charge on North sea oil in response to growing public protest about prices at the petrol pump. We have subsequently seen how ill thought out that was, and it has led to the Government having to perform U-turns at a fairly rapid pace.

One explanation of why the Government want to introduce the carbon price support rate is the money that it will raise. Is it perhaps a revenue-raising measure in disguise? The 2011 Budget report reveals that it will raise £740 million in 2013-14, more than £1 billion in 2014-15 and £1.4 billion in 2015-16. If it fails to encourage faster green investment, as some predict, the tax could go on to raise much more as the carbon price approaches £70 a tonne. In fact, the Budget report states explicitly:

“The decisions the Government is taking to strengthen the tax system—including…the introduction of the carbon price floor announced at this Budget—will also help to support the long-term sustainability of the public finances.”

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

Does my hon. Friend agree that the problem with having a unilateral carbon price in the UK is not just that it will make international investors such as Tata Steel near Swansea think of moving their investment to Europe, and therefore helping Europe rather than Britain? She may be interested to know that in Port Talbot, near Swansea, a specialist steel is being developed. When wrapped around buildings, it produces its own heat and reduces the carbon footprint. Does she agree that the Government’s measures are undermining global market-changing technology to reduce carbon footprints, as well as destroying jobs in Britain?

[Kerry McCarthy]

That is an important point. Although there is concern about the carbon emissions of energy-intensive industries, in cases such as my hon. Friend has outlined they are actively working on measures to reduce carbon emissions. It is important that we do not throw the baby out with the bathwater and prevent that type of green investment.

The carbon price support rate will actually provide an effective subsidy to the nuclear industry, as the Economic Secretary has confirmed in a written answer. In fact, it will benefit nuclear power twice as much as the renewables sector, with an average value of £50 million a year for nuclear between 2013 and 2030, compared with just £25 million a year for renewables.

We support building new nuclear power stations as part of the UK’s energy mix, but the problem is that the Government explicitly promised voters that they would not grant nuclear power stations a public subsidy. In fact, there is meant to be cross-party agreement that we are against nuclear subsidies. The Conservative party said in its manifesto that it intended

“clearing the way for new nuclear power stations—provided they receive no public subsidy”.

The coalition agreement stated that the Conservative party was

“committed to allowing the replacement of existing nuclear power stations…provided that they receive no public subsidy.”

The Prime Minister himself said in the House in March:

“What we should not be doing is having unfair subsidies.”—[Official Report, 23 March 2011; Vol. 525, c. 950.]

Then there are Liberal Democrat Members, who were elected on a manifesto that opposed nuclear power entirely. At their party conference last year, a resolution was passed stating that

“any changes in the carbon price”

should not

“result in windfall benefits to the operators of existing nuclear power stations”.

When we delve deeper, it turns out that this is not the only nuclear subsidy by stealth that the Government are trying to sneak past the House. When I say “subsidy by stealth”, I am of course borrowing a phrase from the hon. Member for South Suffolk (Mr Yeo), the Chair of the Select Committee on Energy and Climate Change. Writing about the Government’s wider package of electricity market reforms, he has warned that they

“must not impose a one-size-fits-all reform on all low-carbon generation in order to avoid singling out nuclear for support.”

He said that the Government’s proposed design for feed-in tariffs

“seems to be more about concealing the fact that it is providing financial support for nuclear power than it is about coming up with the best approach.”

Even if the Government do support public subsidy for new nuclear build, they need to explain why they want to subsidise existing nuclear stations—and, for that matter, existing renewable power stations. Calling the carbon price support rate a green tax surely implies that it is intended to provide an incentive for future green behaviour. However, the Economic Secretary said to the Public Bill Committee:

“We are clear that ensuring that a tax is structured to drive positive environmental behaviour is one thing; ensuring that that can happen on the ground, and that people can change their decisions of the future is another.”––[Official Report, Finance (No. 3) Public Bill Committee, 19 May 2011; c. 242.]

A public subsidy for existing power stations, whether renewable or nuclear, is not behaviour-changing.

We should remind ourselves exactly where the subsidy comes from. The Economic Secretary may argue that it is not a public subsidy per se, because it does not involve taxing and spending. In fact it has a much more direct impact on every electricity bill payer, whether they are working families or manufacturing firms, and it is still a public subsidy in every sense. The hon. Member for South Suffolk says that the Government

“needs to be upfront about its financial support for nuclear energy”,

and I agree with him. That is why we have tabled the amendment.

The Government are using money taken from people and from energy-intensive industries to subsidise nuclear power stations, which they explicitly promised voters they would not do. They are also using that money to subsidise existing power stations, which makes no sense. We have tabled the amendment to give them an opportunity to explain why they have done that. If they are still sticking to their policy that there should not be a subsidy, I want to know how they will put that right.

[David Mowat]

Will the hon. Lady give way?

[Kerry McCarthy]

No, because I am just reaching the end of my speech. The hon. Gentleman will have an opportunity to intervene when other Members are speaking.

The hon. Members for Redcar (Ian Swales) and for Westmorland and Lonsdale (Tim Farron) have tabled amendment 21, which calls for mitigation measures for energy-intensive industries. I hope that they and other Liberal Democrat Members will feel able to support amendment 12. It has 11 signatories, not all from the Labour party, and like them we call for support for energy-intensive industries. In addition, we have called for help for consumers and support for green investment. Our amendment also calls for the nuclear subsidy to be recouped, as did the hon. Member for Cheltenham (Martin Horwood) this weekend, according to the Daily Mail.

The Government have confirmed that there will in fact be a windfall for the existing nuclear industry, despite the Liberal Democrats’ party conference decision last year. Fortunately, the coalition agreement allows Liberal Democrat Members to vote against that without its being seen as an issue of confidence in the Government. I hope that they will make use of that ability today.

The Government’s carbon floor price will not do what they said it would do. It is a missed opportunity for the country. We could have seen a new generation of green investment and jobs, but instead we see ordinary people being hit at the time when they can least afford it. We see UK manufacturing being hit when the Government say they want to promote growth, yet we will not see carbon emissions into the atmosphere reduced by a single tonne, and we might not see green investment. The Government have got the policy wrong, and our amendment asks them to go back and think again.

[Ian Swales (Redcar) (LD)]

I wish to speak to amendment 21, in my name and that of my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron).

I, too, support the carbon price support mechanism and its objectives, but without mitigation measures its introduction will have the surely unintended consequence of seriously damaging energy-intensive industries through higher electricity prices. Cumulative electricity prices in the region of 20% will make production costs higher in the UK than in European and international competitors. Analysis shows that the profitability of UK-based energy-intensive businesses could fall by up to 150%, or disappear altogether. They are mostly international businesses, and the competition cannot believe their luck that the UK seems determined to make itself much less competitive.

[Geraint Davies]

I agree with that point. Is the hon. Gentleman aware that Airbus, whose wing production is based in north Wales and which commands 55% of the total global plane market, is producing its latest generation of planes with a carbon composite that requires 30% less fuel consumption? It is therefore contributing to lower carbon footprints. By discouraging it through this ridiculous pricing technique, we are inadvertently harming the planet rather than helping it, and harming jobs as well.

19:30

[Ian Swales]

I am not aware of Airbus’s activity in detail, but I will support the hon. Gentleman’s point later by saying that such industries have a role to play in our future, and that they are not just of the past.

The hon. Member for Bristol East (Kerry McCarthy) has mentioned the comments of the head of Tata Steel. He also said:

“European steelmakers already face the prospect of deteriorating international competitiveness because of”

EU emissions costs. On the provision in the Bill, he added:

“This is an exceptionally unhelpful and potentially damaging measure.”

As well as steel, other large sectors are at risk—including chemicals; oil and gas; cement; aluminium; glass, bricks and ceramics; tyres; and paper. There could be more. Those are broadly the sectors that are most affected, but the EU has gone further and drawn up a list of 164 industrial sectors and sub-sectors that are deemed to be exposed to what it calls carbon leakage. That means that the EU recognises that the EU emissions trading scheme and other measures could disadvantage European companies that compete internationally. The sectors and sub-sectors that are judged to be at risk of carbon leakage are estimated to account for around a quarter of the total emissions covered by the EU emissions trading scheme, but for around 77% of the total emissions from EU manufacturing industry.

The UK Government's proposing to add a further tax to those already in place is bound to have an effect. We have just witnessed fresh closures and 1,500 job losses from Tata in Scunthorpe and Teesside. I see a number of hon. Members in their places who are directly affected by that. Tata again mentioned UK energy prices as a factor in its recent decision, but in the fourth carbon budget statement, the Secretary of State for Energy and Climate Change said that

“we need to ensure that energy-intensive industries remain competitive and that we send a clear message that the UK is open for business.”—[Official Report, 17 May 2011; Vol. 528, c. 177.]

The announcement has been welcomed, but there is concern that, to date, there has been insufficient detailed consultation on, and impact assessment of, the proposals with respect to energy-intensive industries. Consequently, the fear is that the Government might underestimate the risk to those sectors.

[David T. C. Davies (Monmouth) (Con)]

I am grateful to my hon. Friend—I suppose I should call him that—for giving way on that point. Does he find it slightly ironic that Members of all parties in this House have for years called for all sorts of extra costs on any industry that generates carbon in any form, but that now, all of a sudden, when the consequences of that become clear, they begin to express their reservations?

[Ian Swales]

I thank my—yes—hon. Friend for his intervention. It seems that the issue is becoming more prominent. That is due partly to industry lobbying. Earlier this year we set up an all-party parliamentary group on energy-intensive industries. I have major concerns for my constituency and the Tees valley, and I am an officer of that group—at least one other officer is in the Chamber. The very high level of interest shown in the group by companies from all sectors indicates the potential gravity of the problem.

Those industries are looking not for special favours, but simply for a level playing field on which to compete internationally. Despite what some commentators claim, there is already a price issue. Even before the Bill, the increase in bulk electricity prices in the UK over the past 10 years was 22% more than in Germany, 29% more than in France and 64% more than in Spain.

The inconvenient truth about UK carbon reduction performance is that it is partly due to the rapid decline in manufacturing. As we have heard in this Chamber many times, under the previous Government manufacturing reduced from 22% to 11% of the economy. Our goal should not simply be to reduce our energy usage at the expense of those industries which, by their nature, are energy intensive. A tonne of steel cannot be melted, and chlorine cannot be made from brine, without using a huge amount of energy—it is simply not possible. Our goal should be to improve our energy efficiency for the same level of activity, not to reduce activity. Otherwise, the trend of the UK exporting jobs and importing carbon will continue.

To ensure that the UK makes a real contribution to climate change, we cannot look just at carbon production; we must also measure carbon consumption. I say that mainly to ensure that the effect of imports is recognised, but we must also acknowledge the contribution of export businesses to our economy. There is no better example than the restarted Redcar steelworks, which will contribute almost 1% to the UK’s carbon emissions, but whose output will go almost wholly to Thailand. Whose carbon is that?

The Government’s policy has far wider economic consequences. Energy-intensive industries play a vital economic role. For example, as the hon. Member for Bristol East said, the chemical industry is a vital exporter—in fact, I believe that it is our biggest exporter. That illustrates how important such industries are to our national economy as well as our local economies. Those sectors feed many other industries, such as automotive, aerospace and green technology, which needs materials for wind, wave and solar power.

We should also remember that the service economy does not exist in isolation—it partly depends on manufacturing, all the way from office cleaners to corporate lawyers and merchant bankers. Pricing those industries out of the UK would mean that tax revenues fell because of closures, and a lack of further investment. That will have the knock-on effect of higher unemployment and an increased burden in welfare costs. I therefore hope that the Minister considers the wider economic consequences of the effects of the Government’s policy on energy-intensive industry.

Energy-intensive industries are often capital intensive, which means that companies cannot just pick up their kit and move. The key thing for the UK is whether executives in boardrooms across the world are writing off the UK as a place to invest and reinvest. International businesses have options on where to put their money. I know from experience in the chemical industry that a business can take up to 20 years to die after an exit decision is effectively made by ceasing to reinvest.

Energy-intensive industry does and will continue to play its part in improving energy efficiently. It also produces a range of environmentally beneficial products, such as catalysts, insulation, lightweight plastics, and, as we have heard, energy-saving aerospace products. The all-party group recently heard how developments in tyre technology reduce fuel use in vehicles, how new types of glass reduce heat loss from buildings, and which industries are needed to make photovoltaic cells. To give another example, I am aware of a research project in my constituency between Tata, the steel producer, and the Centre for Process Innovation, to make construction-grade photovoltaic panels. Such developments are vital in moving the UK towards a low-carbon economy. We do not want that expertise to be lost to the UK. Energy-intensive industries are not sunset industries that stand in the way of our low-carbon goals, but crucial allies in delivering the necessary technology to make them a reality.

There is therefore an urgent need for simplicity in carbon taxes and for long-term certainty for the industry. Energy-intensive industries need such clarity before the carbon price support mechanism is introduced. Will the Minister assure me that she supports the Energy and Climate Change Secretary, who said—and I repeat—that

“we need to ensure that energy-intensive industries remain competitive and that we send a clear message that the UK is open for business”?—[Official Report, 17 May 2011; Vol. 528, c. 177.]

Will she ensure that the Government engage in comprehensive consultation, and take steps to ensure that a full package of mitigation measures is agreed and legislated for, ahead of the introduction of carbon price support?

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to follow my north-east neighbour, the hon. Member for Redcar (Ian Swales), and if I may, I shall reiterate some of what he said.

I agree with both amendments, particularly amendment 12 tabled by my right hon. and hon. Friends. If this country was portrayed as a heat map, with particular emphasis on different components of industry, such as nuclear energy, energy-intensive industries and renewable energies, my constituency would burn the brightest. We on Teesside provide a large part of this country’s energy needs. I have a nuclear power station in my constituency, and just outside there is a gas turbine station and a combined heat and power facility. Petroplus, Europe’s biggest independent refiner and wholesaler of petroleum products, has significant oil and gas refining capabilities in my constituency.

Although we generate a lot of the country’s energy requirements, we use a lot of it too. As the hon. Member for Redcar said, we have significant energy-intensive industries—not just refining but petrochemicals, speciality and fine chemicals, plastics, biotechnology and pharmaceuticals. I also have a world-class steel pipe mill in Hartlepool supplying essential components in the supply chain for the oil, gas and chemical industries, although unfortunately the pipe mill has just laid off 90 people. Some 60% of the UK petrochemical industry is based on Teesside, as well as more than one third of our country’s pharmaceutical and chemical industry. The Tees valley has the largest concentration of petrochemical industry anywhere in western Europe, and we have the largest hydrogen network on the continent.

A single venture in Teesside, GrowHow UK, which makes nitrogen fertilizer in my area, uses 1% of the UK’s entire natural gas capacity. About 40,000 people are employed directly in the process industries on Teesside, with a further 250,000 employed indirectly through the supply chain. Energy-intensive industries generate one quarter of my region’s gross domestic product, with about £10 billion of sales. As the hon. Member for Redcar said, the importance of Teesside and these industries to the national economy, let alone the regional economy, cannot be overstated.

Like my hon. Friend the Member for Bristol East (Kerry McCarthy), who sits on the Front Bench, I agree with the principle of a carbon floor price. However, given the importance of energy-intensive industries to my area, I remain very concerned that the proposals in the Bill for carbon floor pricing represent a serious threat to UK competitiveness.

[Geraint Davies]

Does my hon. Friend agree that this carbon floor pricing will, first, run contrary to the strategy of shifting from reliance on banking to manufacturing and a broader base and, secondly, move the production of things such as steel, which is environmentally controlled and relatively clean, from Britain to somewhere such as south America, where the same amount of steel will be produced much less cleanly? The impact will be to harm the environment and the economy, which is ridiculous.

[Mr Wright]

I absolutely agree with my hon. Friend on both points. We are exporting not just jobs but carbon emissions to elsewhere in the world where there might not be the same high level of regulation on carbon emissions.

The point that I want to emphasise as much as possible is that my area is doing exactly what the Government want it to do—we are rebalancing the economy and have an emphasis on manufacturing and, in particular, export-based industries that can provide wealth and job creation. It seems that we are doing everything right according to the Government, but we are being penalised and not provided with a level playing field.

My hon. Friend the Member for Bristol East and the hon. Member for Redcar quoted the managing director and chief executive officer of Tata Steel’s European operations. I want to be as balanced as I can. He praised the Government’s enterprise zones and stated:

“It is good news that the Tees Valley is to be among the first of the government’s newly created Enterprise Zones, as Tata Steel will remain a major employer in that region”.

To expand on the quotes already given, however, I should add that he went on to state:

“The extension of the Climate Change Agreements and the return of the discount on the Climate Change Levy to 80% will come as modest but welcome relief to Britain’s hard-pressed energy-intensive industries. However, these benefits are likely to be dwarfed by the introduction of the Carbon Floor Price (CFP), which represents a potentially severe blow to the sustainability of UK steelmaking. European steelmakers already face the prospect of deteriorating international competitiveness because of the proposed unilateral imposition by the European Commission of very significantly higher emission costs under Phase 3 of the EU Emissions Trading System. The CFP proposal will impose additional unilateral emission costs specifically on the UK steel industry by seeking to artificially ensure that these costs cannot fall below government-set targets which no other European country will enforce. This is an exceptionally unhelpful and potentially damaging measure.”

19:45

The Government need to ensure that there is a level playing field for energy-intensive industries in the UK, especially in the north-east. We must not be hindered by the unilateral imposition of added costs, and Europe must not be rendered uncompetitive by additional regulation on energy-intensive industries that means that less-regulated economies such as Russia and China benefit. That will not do anything to alleviate environmental pressures.

I think amendment 12 would help the financial and economic environment for energy policy, provide the certainty needed for boards to make substantial investment in the UK and be the catalyst for wealth creation in my area. It would also help to safeguard the manufacturing capacity of vital industries. I hope the Government and Government Members will support it.

[Andrew Percy]

I will try to avoid further outbursts over the EU, Madam Deputy Speaker—I can never resist the opportunity to get my views on the EU written into Hansard.

I agree with much that has been said. I am not going to get into an argument with the hon. Member for Hartlepool (Mr Wright) over whose constituency glows redder, but in my constituency a significant amount of power is generated locally—by the Drax power station, which is just outside, by Eggborough power station and by Keadby gas power station. Furthermore, I share the Scunthorpe steel works in my constituency with the hon. Member for Scunthorpe (Nic Dakin)—unsurprisingly —and I will say something about that in a moment.

I echo some of the concerns expressed by colleagues on both sides of the House. In the Humber, the petrochemical industry is a huge employer, and we are hoping for further growth. Indeed, the whole renewables sector in the Humber is incredibly important, and it would be perverse were we to bring Siemens and other tower and turbine producers to the Humber only for them to be unable to use steel from Scunthorpe because it has been rendered uncompetitive.

I am not going to rehearse all the arguments on climate change. I am not a scientist—I do not understand a lot of these things—but I understand that it is probably a good thing to do something about the amount of carbon we are putting into the atmosphere. Of course, however, jobs must always come first. We need no greater reminder of that than what is happening in Scunthorpe at the moment with Tata Steel—1,200 jobs are going already because of losses going back a few years. In fairness to Tata, it has not blamed this policy, but it has said that it has considerable concerns about its impact on future growth at Scunthorpe. I would like to hear from the Minister—she and I have had conversations about this on several occasions, as she will remember—what the Government plan to do to support the high-energy users. The Humber economy is very much based around high-energy use, so this policy could impact on us disproportionately. I know that the Government are considering that point, but the sooner we can get some certainty the better.

As I mentioned, much has already been said, and in the interests of brevity I do not propose to go over it all. [Interruption] But I have not quite finished. Something needs to be said about general support for manufacturing. What has happened to manufacturing in this country not only over the past decade but over the past couple of decades is a scandal. I welcome the fact—I believe in being as positive as possible—that the Government are committed to a resurgence in manufacturing, which, as I said, is very important in the region represented by me and neighbouring colleagues. That is why we welcome the enterprise zones, which the hon. Member for Hartlepool mentioned, and we are hopeful of getting another one approved for the Humber shortly. I welcome the emphasis on skills and sending young people the clear message that working in manufacturing is just as valuable as trotting off to university to get a degree and become a doctor.

We are hearing all the right things from the Government, and I support that entirely. However, I have concerns about where we are heading with this policy, which is why I think that both the amendments have some merit. Before deciding how to vote, I will listen to the response from the Minister, who I know is very much alive to the issue. Clearly the Government will not want to do anything that puts manufacturing jobs at risk, so I look forward to her response. On that note, I will end this brief, four-minute speech, and look forward to hearing from other hon. Members.

[Nic Dakin (Scunthorpe) (Lab)]

I am pleased to follow my neighbour, the hon. Member for Brigg and Goole (Andrew Percy), and I support many of his comments.

For the Government to unite the representatives of manufacturing industries with Greenpeace, Friends of the Earth and the World Wildlife Fund in opposition to their proposals is a masterstroke. I do not accept the ingenious argument that the Economic Secretary to the Treasury gave in Committee, which was that such a range of opposition to the tax was proof positive that the right balance had been achieved. That is patently not the case: as we have already heard, the arguments of the high-energy manufacturers and the environmentalists are complementary, not contradictory. The key challenge that we face as a nation is how to balance greening the economy with growing the economy. The Government’s proposals fail to meet that challenge. The UK is competing internationally for investment. The Humber is competing with Bremerhaven and Esbjerg for green investment. As we have already heard, those making investment decisions too often sit outside these shores. In the real world, the carbon floor price represents a serious threat to our competitiveness. We are in danger of seeing multinational companies choose to invest not in the UK but elsewhere.

[Martin Vickers (Cleethorpes) (Con)]

The hon. Gentleman is making a persuasive case. He and I know the seriousness of the situation from our regular visits to Tata Steel in Scunthorpe, and he will be familiar with the Able UK site in my constituency. One of the arguments for the company coming to our area was the proximity of the steel works, which, ironically, Able UK wants to use for production in the renewables sector. I am sure the hon. Gentleman agrees that it would be tragic if that steel were produced elsewhere, thereby creating greater emissions.

[Nic Dakin]

The hon. Gentleman makes a cogent and sensible point. [Interruption.] Indeed, I note that the Economic Secretary is writing it down, so I hope that she will respond to it later.

We are in danger of exporting UK jobs to places such Ukraine and Russia, thereby boosting global warming rather than reducing it. As we have heard, my community in Scunthorpe faces serious challenges after Tata announced that 1,200 jobs were at risk. We have also heard the chief executive of Tata Steel, Karl-Ulrich Köhler, quoting the carbon floor price as part of the context of the decision. However, other, local companies are equally concerned. Richard Morley of Caparo Merchant Bar in Scunthorpe said to me:

“As well as supporting growth and jobs, companies like mine are well-placed to provide many of the technical and material solutions necessary to address climate change”—

the point that the hon. Member for Cleethorpes (Martin Vickers) made a moment ago—

“but we can only do so if we are able to remain competitive. The unilateral introduction of the”

carbon floor price

“at too high a level could threaten this.”

Richard Stansfield of Singleton-Birch has examined in more detail what the carbon floor price means:

“The CFP does not actually set a…price of £16 in 2013 as has been implied. The figure of £16 has been arrived at by using a 2009…carbon price of £11.06 and adding a £4.94 tax, called the carbon price support, to reach the £16. The current forward price of carbon in 2013 is already around £16, so adding this £4.94 will make the price of carbon £20.94. This will be £4.94 more than our European competition will be paying and £20.94 more than the rest of the world.”

Only last month we heard the new director general of the CBI, John Cridland, expressing concerns about the impact of the carbon floor price on high-energy manufacturing.

In a written answer to a parliamentary question, the Economic Secretary confirmed that the carbon price support provisions would put up consumer energy bills and deliver windfall profits of £50 million a year from 2013 to existing nuclear reactor operators. Greenpeace has calculated that the figure exceeds £1.3 billion up to 2020. The Government’s proposal is therefore a bad deal for bill payers. Almost £1 billion will be given to the nuclear industry for doing absolutely nothing new. The proposal will add nothing to energy output or Britain’s energy security, and there will be no requirement for the companies to invest the windfall in national priorities such as energy efficiency programmes or meeting our renewable energy targets.

I am afraid, therefore, that in its present form the carbon floor price is a badly designed tax. It will not drive the significant investment needed to develop clean, safe alternatives to fossil fuels or the technological improvements needed in energy-intensive industries. As research by Waters Wye Associates concluded:

“The outcome of implementing policies as they are currently conceived will…be poor both economically and environmentally. Global greenhouse gas emissions may well increase as well as hitting both investment and jobs.”

The current approach risks penalising British industry and endangering British jobs. It will hurt the consumer and fail to deliver our green ambitions. I urge the Government to think again.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I want to speak in support of amendment 12 for three reasons. First, the Government’s statements on subsidies for nuclear power have been absolutely clear. The amendment calls for a report, so that the Government can at least be transparent about how they will use the subsidies raised through the carbon floor price. Secondly, the impact on fuel poverty has to be measured and so, again, has to be transparent. Finally, like the hon. Member for Redcar (Ian Swales) and my hon. Friends the Members for Hartlepool (Mr Wright) and for Scunthorpe (Nic Dakin), I particularly support proposed new subsections (4)(c) and (f) of clause 78, which relate to the impact on energy-intensive industries.

The report should detail the impact on energy-intensive industries and make clear how the revenues will be used. The Government should commit this evening to using some of the revenues raised from the carbon floor price to mitigate its impact on the competitiveness of our industries. If we look at the numbers employed in energy-intensive industries across the UK, we see that at least 225,000 people are directly dependent on such industries, with around three times as many indirectly dependent on them through the supply chain.

The impact of the proposed measures would absolutely be felt in my constituency of Penistone and Stocksbridge. Tata Steel in Stocksbridge is a major employer, currently providing more than 800 jobs, and has recovered from its hiatus in 2008, when it was on the brink of going bankrupt and out of business. Tata Steel is now back in profit, employing as many people as it did in 2008, if not more. That is a success story for UK manufacturing and a vote of confidence by Tata Steel in the capacity of UK manufacturing and its ability to compete globally. In my constituency we also have Fox Wire, which makes world-class cabling for drilling and welling operations globally, and Naylor Industries and Hepworth, which manufacture clay pipes for all sorts of applications across the world. We also have Pilkington glass and Georgia-Pacific, which produces paper. That makes well over 1,500 jobs that are directly dependent on energy-intensive industries.

As my hon. Friend the Member for Scunthorpe set out in detail earlier, the impact of the carbon floor price is clear: the cost of carbon will increase from £16 a tonne, rising from 2013 to £30 a tonne by 2020. As he pointed out, that will create a significant risk that the industries that we are talking about this evening will be placed in an uncompetitive position globally, not just in relation to Europe, but in relation to the US, China, Ukraine and Russia. We share the view of the head of Tata Steel’s European operations that this will threaten the future of those industries in the UK.

What is it about those industries that makes them so special, and why should a special case be made for them? The argument is crystal clear: it would be very short-sighted to damage those industries in relation to the rest of UK manufacturing because their products are increasingly being geared towards improving fuel efficiency, and they are reducing their carbon emissions in their manufacturing processes.

20:00

It has been said that when one tonne of carbon is emitted in the production of a wind turbine blade, it is balanced by the fact that 123 tonnes of carbon will be saved through the energy produced by that blade. My Tata Steel plant in Stocksbridge is engaged in making components for wind turbines. It is involved in making the lighter but tougher steels required for components for Rolls-Royce engines in aircraft, and it also makes landing gear. The advanced manufacturing research centre at Sheffield university is increasingly engaged in research and development relating to reducing carbon emissions in manufacturing, particularly in the aerospace industry. There is a real partnership between Boeing and Rolls-Royce in Sheffield, working to ensure that that industry is absolutely focused on reducing carbon emissions.

The clay pipe manufacturing industry in my constituency has a crystal clear argument for its right to survive and to compete internationally on a level playing field. Clay pipes are biodegradable, and they last a lot longer than the plastic piping that is increasingly being used in applications across the UK and globally. The carbon floor pricing mechanism that we are discussing could put industries such as Naylor’s and Hepworth’s out of business. Around 90% of the clay pipe manufacturing in the UK is in my constituency. I do not think anyone would say that using biodegradable clay pipes was not better for the environment than using the plastic piping that is increasingly undermining that industry. Energy efficient glass is being custom made and fitted by Pilkington in my constituency. As I have already said, the steel industry is absolutely focused on an energy efficient carbon-reduced future.

The Minister represents Putney, but I know that she hails from Rotherham. She will therefore understand the historic importance of steel to south Yorkshire, and its ongoing importance to the area. She knows that steel is crucial even now to the survival of manufacturing there, and I am asking her to agree to producing the report and to commit the Government, through the Treasury, to come up with effective mitigation measures for the energy-intensive industries.

The Government say that they are committed to rebalancing the economy, to creating growth in the private sector and to rebuilding our manufacturing base. They now have an opportunity, through the most powerful Department in Government, the Treasury, to show that they mean business for manufacturing, that they mean what they say, and that they are committed not only to call centres and private sector growth in other areas of the economy but specifically and especially to the growth of jobs in high-wage, high-value manufacturing in the private sector. That is the kind of manufacturing that will help us to deliver the low-carbon future that we are looking for. I want to hear positive comments from the Minister on these points tonight.

Other Ministers from the Department for Business, Innovation and Skills and from the Department of Energy and Climate Change have said on the record in the Chamber, as well as off the record in talking to us all informally and in ministerial meetings, that they want the Government to produce a mitigation package as soon as possible. They understand the problem. We want to hear from the Treasury tonight that it understands it as well, because those Departments will not be able to put that package before the House until the Treasury agrees to it. I appeal once again to the Minister’s heritage: what she says tonight will mean a great deal not only to Members representing constituencies affected by the proposals but to the representatives of those industries who are probably listening now and waiting to hear her give some reassurance about their future.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I should like to speak to amendment 12. It is a great pleasure to talk about places that I know well, such as the Teesside Cast Products plant in Redcar, Stocksbridge, Hartlepool and Scunthorpe, as well as Skinningrove in my own constituency.

The chemical industry is no longer the dirty industry depicted in Ron Angel’s “Chemical Worker’s Song”. On Teesside, between 35,000 and 45,000 workers are directly or indirectly employed in the industry, and over the past 18 years, it has reduced its emissions by some 75%. That has been matched by the steel sector’s reduction in energy per tonne of steel produced from 31.7 GJ in 1973 to 19.4 GJ in 2010.

[Ian Swales]

Does the hon. Gentleman agree that those industries need no further encouragement to reduce their energy use, because, by definition, they already spend a large proportion of their money on energy? They all have a good record in reducing their energy use.

[Tom Blenkinsop]

I thank the hon. Gentleman for his comment, and I entirely agree with him. The industries are in it to make money, and it is obvious to anyone who knows them that they need to reduce the amount of energy that they expend to make their products.

British manufacturing output as a whole has been growing for decades, according to figures from the Office for National Statistics. Why is that? Output in the chemicals industry has increased, unlike in other sectors. During the 2008-09 downturn, the industry suffered the second smallest decline in production. The development of the chemical industry over the last decade under Labour has been largely unreported. Only now is it being seen as a sexy subject. However, in places such as Middlesbrough, Redcar and Billingham, we have always referred to ourselves as proud smoggies, in the knowledge that our manufacturing endeavours have far more worth than the machinations of the City.

According to DECC statistics on greenhouse gas reduction, the disappearance of the chemicals sector would directly save an average 10.79 million metric tonnes of CO₂ equivalent, out of the total UK generation of 627.85 million metric tonnes of CO₂ equivalent. Across industry, the chemicals sector is responsible for only 3.9% of energy-related emissions. The growth reviews in November and December last year gave good signals to manufacturing. However, the rhetoric contained in those reviews assumed that a low-carbon economy could emerge only by pricing energy-intensive users out of the market. The flaw in that logic is the assumption that the full substitution of fossil fuels will miraculously come about if intensive energy users are strangled. A further flaw is that the technology that will develop green industries actually flows from the existing energy-intensive industries, their research and development, and their skilled work forces, but they will obviously no longer exist in the UK if we force them abroad.

The December growth review stated that high energy prices were a barrier to advanced manufacturing growth, yet the Secretary of State for Environment and Climate Change said at the same time that recovery does not come from old industries “bouncing back”, and that the low-carbon industries would be an important part of our growth story over the next 10 years. That was in his speech to the Institute for Public Policy Research on 1 December last year.

For every tonne of CO₂ emitted in producing insulation, 233 tonnes of CO₂ are saved, and, as my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) said, for every tonne of CO₂ emitted in producing a wind turbine blade, 123 tonnes of CO₂ are saved. For every tonne of CO₂ emitted in the production of energy-saving tyres, 51 tonnes of CO₂ are saved—and so on, and so on. In the case of insulation, one year’s CO₂ emissions created producing insulation saves 2.4 billion tonnes of CO₂.

At the heart of the issue is the lack of understanding in the Treasury and DECC that these chemical companies cluster, as they always have done, and as they previously did within the large-scale set-ups of ICI. As NEPIC—the North East of England Process Industry Cluster—has proven in my region, locally produced products often feed on-site sister businesses or other company-owned plants. That integration produces better economies of scale, efficiency, profitability and technological development. It is regional clustering, as exemplified by NEPIC in north-east England, which was set up by One North East, that exemplifies industrially-led industrial activism. The Government’s carbon floor pricing policy, on the other hand, fragments industrial integrative clustering.

Unfortunately, the Government assume that secondary industries will not leave the UK, even if the primary chemical industries do. Indeed, the Secretary of State for Energy and Climate Change has said that

“quite a few of the high energy users have forms of natural protection like high transport costs so the impact is rather less than you might expect.”

Unfortunately, empirical evidence wholly contradicts the Government’s stance. As Jeremy Nicholson, director of the energy intensive users group has said:

“The idea that downstream industries are likely to remain here indefinitely if primary production goes might have a theoretical case but I’d say just look at the empirical evidence: downstream manufacturing thrives on co-location with primary industry and why would you expect that to cease in the future?”

Real life examples clearly show just how fragile downstream companies are. Let us consider Wilton, the former ICI site in the constituency of the hon. Member for Redcar (Ian Swales). The plants were balanced with the ICI ethylene cracker at the top of the production pyramid; as foreign ethylene became cheaper and producers produced offshore, the requirement for the cracker was reduced, leading to other plants downstream such as the Dow plant also being affected.

When Dow closed, 55 direct jobs were lost. That is not as big a media story as the events that unfolded at the mothballing of the Redcar blast furnace at the then Teesside Cast Products Corus plant, but the repercussions of Dow were just as profound. An estimated 2,500 jobs were lost downstream as a result of the closure of Dow’s ethylene oxide production plant—the only ethylene oxide plant in the UK. NEPIC has bounced back, bringing in other investments to Teesside, but it is acutely aware of the loss of primary chemical production and of lost opportunities for technological developments that could be made on Teesside, securing new green markets in turn.

More than this, however, the Secretary of State’s comments condone the loss of primary chemical production as a result of the carbon floor pricing while actually actively pursuing it. The question I must ask is: if industry flees within two years, as feared, how on earth will this carbon floor pricing levy taxation apply when the energy-intensive industry is no longer here? An industry cannot be taxed if it will not hang around to be taxed, which leaves Britain with neither the tax nor the industry.

As many primary raw chemicals are very expensive to transport and in some cases are banned from transportation, the Secretary of State’s relaxed approach appears uninformed. Many secondary production companies are small and medium-sized enterprises, often with fewer than 10 employees, and economies of scale for the transportation of such vast quantities of chemicals are just not viable, making the whole operation futile and highly costly for such small operations.

Amendment 12 would ensure that the Government look at the immediate impact of the provisions in the schedule on energy-using manufacturing industries and on employment in those industries; and at how the moneys raised by those measures will be used to mitigate the immediate impact of the schedule on consumers and on manufacturing industries and to encourage green investment. At the very least the Government must monitor and review their own policy and its consequences, which I fear will be devastating for energy-intensive industry and for my area of Teesside. A review will allow the Government to take stock.

[Ian Lavery (Wansbeck) (Lab)]

Is my hon. Friend aware of the double whammy of the European trading scheme and the carbon floor price, which will have a devastating effect not just on Scunthorpe and Teesside but on Lynemouth in my constituency? Rio Tinto Alcan is the company there and it makes a current profit of £50 million a year, which will be totally wiped out as a consequence of this double whammy, putting 600 quality jobs at risk. Does my hon. Friend agree that special measures must be put in place to overcome these unjust taxes?

[Tom Blenkinsop]

I thank my hon. Friend for his intervention. Yes, I certainly do. To finish, let me say that a review will allow the Government to take stock of the policy and to make quick changes to it, as I fear they might have to before it is too late.

[Nia Griffith (Llanelli) (Lab)]

There have been many excellent contributions, so I shall keep my comments short.

As secretary of the all-party steel group, I want to speak to amendment 12, in particular to subsection 4(c) and (f). We are asking for the Finance Bill to be amended because of the very significant negative impact that the carbon floor price, at the level set, is likely to have on heavy industry, such as the Trostre steelworks in my constituency and similar steelworks and energy-intensive industries throughout the UK.

20:15

To provide just one example, we are talking about tens of millions of pounds of incremental costs to Tata Steel UK—costs that are not faced by its European competitors, let alone by its global competitors. We have already seen manufacturers move factories to countries where costs are much lower and environmental conditions less stringent, but up until now the European emissions trading scheme has helped to create a level playing field within Europe. The real worry is that the proposed carbon floor tax will make us uncompetitive, even compared with our European competitors, and will drive Tata to invest elsewhere rather than in the UK. We all understand the need to reduce emissions and companies such as Tata have made significant improvements in fuel efficiency, but emissions affect global warming wherever they are produced, which is why we work together in the European Union on emissions and try to negotiate globally on climate change issues.

There is real concern that this carbon floor price will cause carbon leakage. Because the Government are imposing these conditions, manufacturers will choose to go to parts of the world where they can get away with less environmentally stringent conditions. They can therefore continue to produce the same amount of emissions, while we have lost that industry and lost valuable jobs. Our worry is that we are putting ourselves not only in an uncompetitive position vis-à-vis the cheaper countries in the world, but at a disadvantage in respect of our European competitors.

Tata has made these points very clearly, stating:

“Other European operators are likely to remain operating under an ‘abatement at least cost’ regime, therefore exposing Tata Steel UK to a different cost pressure and impacting on our ability to compete even inside the single market.”

We are deeply concerned that the carbon floor price will not deliver the desired investment growth. In other words, companies such as Tata Steel UK and other similar manufacturers could make long-term investment decisions based on what they see in the carbon floor price. They could turn away from the UK and decide that instead of investing here in the UK, they will take their plans elsewhere.

Tata Steel UK states that the carbon floor price will be

“increasing the longer-term risk to the sustainability of our UK operations.”

That is a very stark message indeed, which is why the amendment asks for proper account to be taken of the effect of this carbon floor price on energy-intensive industries and for details to be worked out on the mitigation measures that could be put in place for manufacturing industry and on measures to encourage the green technologies that we all so fervently hope to be part of and that will be part of the growth strategy for the future of manufacturing in the UK. For those reasons, I support the amendment.

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

I am pleased to speak in support of amendment 12, because the House needs much more detail from the Government on the impact of a carbon floor price, including possible unintended consequences.

First, however, let me say a few words about amendment 21. Although I have a great deal of sympathy with some of the comments made about the amendment, we need to be reasonable when looking at the impacts of the sort of floor price we are talking about on energy-intensive industries. I am quite sure that some parts within those industries will face real problems, and it is right to look at measures such as border tax adjustment so that they are not put at a competitive disadvantage.

Let us not forget, however, that the EU has already exempted large numbers of energy-intensive industries from paying for the EU permits under the emissions trading scheme. Let us not forget that not all energy-intensive industries are subject to carbon leakage. Some undoubtedly are, and we certainly need elements of mitigation for them, but some can quite easily raise their prices and pass them on. Let us not forget that what we are trying to do is to put a price on carbon. That is the purpose of the whole exercise. Yes, we need to look at mitigating measures, where necessary, but let us not throw the baby out with the bathwater and lose the purpose of the exercise, which is to shift to a greener economy. Let us not forget that research by the university of Cambridge and others has found no empirical evidence to show that more ambitious climate policies will result in mass relocation of industries out of the EU.

[Ian Swales]

I respect the hon. Lady’s expertise on these issues. Can she give examples of energy-intensive industries that she feels are at no risk of carbon leakage?

[Caroline Lucas]

What I can say is that I have been in the European Parliament, that representatives of industries have told us time and again that the latest EU environmental law will lead to mass relocation from Europe, and that plenty of studies have shown that that has not happened. I accept that many energy-intensive companies will face problems that will need to be mitigated, but, according to those studies, the risk of relocation is far lower than has been suggested.

[Ian Swales]

rose—

[Caroline Lucas]

I will not give way again, because I want to talk about amendment 12, which I have tabled.

I agree that an effective carbon price mechanism has the potential to reduce greenhouse gas emissions from electricity power, mainly by increasing the carbon liability attached to energy use and thereby making energy efficiency measures and renewables more attractive. It also embodies the “polluter pays” principle, which, of course, I also support. I fear, however, that the proposed carbon floor price will not ensure that investment in energy generation is directed towards low-carbon technologies.

I hold that view for a number of reasons, including the fact that market-based solutions to direct investment in low-carbon generation have proved pretty weak in the past. For example, the EU emissions trading regime has so far failed to maintain the cost of pollution allowances at high enough levels to make any significant difference in reducing emissions. It is also true that, because the floor price will be subject to annual votes in Finance Bill debates such as this, it will fail to provide the price stability that is needed to boost certainty and security for investors in low-carbon energy sources. Furthermore, it can be difficult to judge the level at which a carbon floor price should be set to give appropriate incentives to the various technologies that the Government wish to support.

It is clear from those inherent weaknesses that a carbon floor price will maximise its potential to support a low-carbon economy only if any additional revenues that it raises are ring-fenced for use in support of that transition. That must include, in particular, energy efficiency measures for the fuel-poor. Many Members have raised that subject this evening. The Institute for Public Policy Research estimates that an additional 30,000 to 60,000 households could be pushed into fuel poverty in 2013 as a result of the carbon floor price because it will push up the cost of electricity.

It is therefore crucial for flanking measures to be introduced alongside a carbon floor price, including measures that will properly support and protect those in fuel poverty. They should include proper capitalisation of the green investment bank, support for the implementation of the green deal—for instance, ensuring that the “eco” element is increased considerably, given that it is the part directed at the fuel-poor—and, indeed, assisting in the development of innovative renewable energy technologies. Failure to ring-fence the revenue of the carbon floor price would mean missing a real opportunity to focus efforts on the technologies that will most quickly cut emissions from power generation.

Many other Members have reinforced the idea that the carbon floor price must not deliver windfall profits to the well-established nuclear industry, which has already been heavily publicly supported for many years. The Government’s own figures show that existing nuclear generators stand to gain £50 million a year from it until 2030. It is vital for the Government to clarify whether such a windfall constitutes the kind of subsidy for nuclear power that they have repeatedly said they will not provide. It looks very much like a subsidy to me, and it looks very much like a subsidy to the Chair of the Energy and Climate Change Committee, the hon. Member for South Suffolk (Mr Yeo), who has said that the Government should be upfront about the fact that it is a subsidy. He has also said that

“it would be deeply irresponsible to skew the whole process of electricity market reform simply to save face.”

I hope that Ministers will benefit from his expertise, and will recognise that rigging the electricity markets simply to try to provide more support for nuclear generation is entirely wrong.

[David Mowat]

The hon. Lady is making a powerful case against the nuclear industry, but a few moments ago she made a case against high electricity prices and their impact on the poorest in our society. Electricity costs in France are between a third and a quarter less than those in this country owing to decades of cheap nuclear power, which has a beneficial impact on both heavy industry and consumers.

[Caroline Lucas]

The hon. Gentleman will not be surprised to learn that I do not agree with the tenor of his intervention. The truth is that the price people pay for nuclear power does not represent its true cost in terms of liabilities, decommissioning and clearing up after an accident. People in Japan are not paying the true cost of clearing up after Fukushima. That £250 billion was not included in people’s energy costs. Nuclear subsidies are incredibly untransparent, but, essentially, people are paying a great deal more for nuclear power. I agree with the hon. Gentleman that we need electricity prices that people can afford, but the answer is to invest in renewable energy and energy efficiency, which will become far more competitive and far cheaper than nuclear power very soon if we give them the support they require.

If the Government recognise that this is a subsidy, they should claw it back through a windfall tax. I tabled a new clause that would have allowed them to do exactly that, but, sadly, it was not selected for debate.

[David Mowat]

It may be true that renewables will become more cost-effective over time, but there is an long way to go: a factor of about four in the case of solar power.

[Caroline Lucas]

I entirely disagree. I wish that the hon. Gentleman had been at a meeting with representatives of the solar industry that took place a few days ago in Portcullis House. We were shown presentations by Ernst and Young and others which demonstrated that if a small amount is invested now, solar energy will be able to compete with all fossil fuels and with nuclear power in four or five years.

Although an improved carbon floor price mechanism could help to deliver a less carbon-intensive energy sector, it is important for the Government not to see it as a “silver bullet” solution. Other stronger levers, such as a well managed—I underline “well managed”—feed-in tariff regime and a strong emissions performance standard must also be part of the overall picture. Sadly, however, the Government are falling short in those respects as well. I should like them to devote at least as much effort to stepping up their work at EU level to ensure that the next phase of the EU emissions trading scheme is much more effective than the current phase. The recent collapse in the cost of EU carbon allowances under the scheme is clear evidence of their over-allocation, and the shortcomings of the scheme are becoming increasingly obvious.

I should also like the Government to work with European partners to ensure that, as a minimum, allowances are in line with the policy of cutting EU emissions by between 80% and 95% by 2050, as agreed by member states; that allowances cannot be banked from the second phase of the EU ETS into the third phase; and that a reserve price is set on the auction of permits into the market. Any permits that the market does not want to buy at the reserve price or more should be retired from the scheme.

I urge the Government to undertake to produce the report for which the amendment calls, and to take the opportunity to show how the benefits of a carbon floor price can be maximised and any unintended consequences eliminated. If the carbon floor price is to be effective, we need a tax on the windfall profits of the nuclear industry, along with flanking measures to ensure that those in fuel poverty do not suffer as a result of this policy.

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

The Economic Secretary to the Treasury has already suggested that those in favour of a carbon floor price should explain how it could be introduced in a different way from that proposed by the Government. I imagine that she will return to that subject at the end of the debate, but I suggest that she need only look at her own consultation document, which led to the amount that has been established and the mechanism by which the floor price works.

The consultation document posited a £1 difference between a Europe emissions trading scheme and a carbon floor price, certainly in respect of the starting period. It also warned about how far away from that £1 difference a floor price might go and what might happen to energy prices in the rest of Europe. As people who contributed to that consultation document suggested, because our energy supply is highly interconnected with that of Europe, a substantial difference could lead to investment going to where the sale price is cheaper, with, perhaps, new gas-fired power stations being developed on the other end of an interconnector rather than lower-carbon power stations being developed at our end of an interconnector.

20:30

Essentially, the Government ignored their own consultation document and came up with a carbon floor price that clunks, rather than floats, against the ETS. Indeed, it is a carbon floor price that has a £4.94 difference; as my hon. Friend the Member for Scunthorpe (Nic Dakin) said, when it is introduced there will be almost a £5 difference from the ETS, and rising, by decision, on an annual basis. It will also in essence be a straightforward tax—and not a very green one at that—on removing the exemption for producers upstream from the climate change levy.

The objective could have been achieved in many other ways, such as retiring permits, matching the ETS and undertaking downstream arrangements, all of which could have led to a different outcome in respect of the carbon floor price, and I say that as someone who supports the idea of having a carbon floor price. We therefore need to ask why this has happened in this way.

It has happened for two very tempting reasons. First, this clunking arrangement happens to net the Treasury about £800 million a year, so it is quite a large tax earner, and also—if one were so minded—potentially quite a large earner to redistribute through underpinning either mitigation for certain industries or other measures to develop a low-carbon economy. The second reason is that because this measure relates to upstream exemptions in respect of the climate change levy, it provides a clear and straightforward subsidy to the nuclear industry. That is not subsidy for new nuclear, however. One could argue that a subsidy for new nuclear ought to be honestly discussed, as the Chairman of the Energy and Climate Change Committee has suggested. The current policy of no subsidy for new nuclear might then be recast as an upfront debate on what subsidies new nuclear would need to come on stream in the time scale the Government suggest it should. It is not a subsidy for new nuclear, however; instead, it is a subsidy for existing nuclear.

The subsidy is essentially a subsidy for nuclear that will go out of commission. All but one of the current fleet of nuclear power stations will go out of commission by 2023. This is therefore a gold-plated pension fund for existing nuclear power station operation. That is because, as the Government have said, it in effect produces a £50 million subsidy for old nuclear. Another estimate is that up to 2030 it will produce £1 billion or more of subsidy. To the extent that it is defended as a subsidy—the Government’s Office for National Statistic indicates that a number of its measures are indeed subsidies—it is defended because it is a subsidy that is not exclusively for nuclear. However, old nuclear power stations generated some 69 billion kWh in 2009, compared with 9.3 billion kWh of generation by wind over the same period, and more than 70% of all that money—which will be free money for existing lower-carbon operators—will go straight to nuclear.

The money will not go just straight to nuclear either. It will go straight to one company, because after the closure of two nuclear power stations in 2012, all the existing nuclear power stations will be owned by one company: EDF. It has plans to develop four new nuclear power stations and it owns four sites about which there has been agreement on developing new nuclear in the recent national policy statement on nuclear power. We are talking about a direct subsidy going to one company to provide money for its existing power stations and this company has in prospect the plan to build four new nuclear power stations on sites it currently has. So a rather straightforward case is being put forward here.

When the new arrangement comes into being there should, at the very least, be a review of what its effects are, whether other ways of doing things might have been better and how such a subsidy might be clawed back to undertake the sort of things that hon. Members have mentioned in terms of protection for high-emitting industries. Such a review should also consider the question of developing renewable energy and other forms of low-carbon investment at the same time. Currently, £800 million per year sits in the Treasury and £1 billion sits in the coffers of EDF. That is a far cry from what I thought a carbon floor price was about and we ought to make speed to ensure that a carbon floor price undertakes what it is supposed to do, which is to reward good green activity and not reward bad green activity.

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

I wish to speak to amendment 12, and I shall do so both as chair of the all-party group on energy-intensive industries, which the hon. Member for Redcar (Ian Swales) so kindly mentioned, and as the Member of Parliament for Stoke-on-Trent Central—the potteries. I wish to draw the Minister’s attention to the impact of the carbon price on the ceramics industry, because that poses a real danger to the future of the industry which really began the industrial revolution, at Etruria, under the great influence of Josiah Wedgwood.

You will know, Mr Deputy Speaker, that the potteries came to north Staffordshire not because of the north Staffordshire clay, although that helped, but because of the coal—because of the energy—as Edwin Clayhanger told young George in the great “Clayhanger” novel by Arnold Bennett. The firing of the kilns and the making of the pottery demand intensive energy use, as temperatures of up to 1,200° C are involved, although we are hoping to bring that down with new technology. The cumulative impact of some of the carbon price legislation is therefore dangerously undermining the ability of these industries to survive.

The point about the effect of this legislation is that these industries will provide a classic example of carbon leakage. Over the past 20 years we have seen jobs disappear to Indonesia, Vietnam and China, and we face the threat of jobs leaving for Poland and Bulgaria. We do not cut global carbon emissions through this process. Instead, we export jobs and reimport the carbon. Britain loses economic competitiveness and the world gains nothing in terms of cutting carbon emissions. Ministers need to understand that many of the companies involved are international conglomerates, as many of my hon. Friends have pointed out. Such companies have the ability to move their businesses offshore, and they will do so if we become more and more uncompetitive.

Many in the ceramics industry are in favour of energy-saving measures, and I am not averse to those. We have seen, in different industries across the sector, the ability of energy-saving measures to improve performance. Let us consider what happened to the German car industry in the 1980s. When the Greens began to turn their attention towards the inefficiencies of that industry and its overuse of energy, that industry began to be transformed. Today the German car industry is among the most successful and competitive in the world.

The problem that we face in Stoke-on-Trent is that many of our industries and many of our pottery firms have already cut their energy usage by 80% or 90%, yet they still face new hikes and new measures. It will be very difficult for them to make further cuts. We need a more sophisticated way of measuring carbon, which is what our amendment suggests. We need a more sophisticated way of understanding carbon usage, and we need to understand its use over a lifetime.

We have already heard references to the chemical industry. In my constituency I am blessed with the Michelin tyre production company, and when the energy used in production is set against the lifetime use of those tyres, energy is actually saved. My hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) mentioned using clay pipes rather than plastic pipes, and again, over the lifetime of the products, energy is saved. In Newcastle-under-Lyme, next door to my constituency, one can also see some very good clay pipe production.

The point is that high-quality products made with high energy intensity often, in the long run, save carbon. The Government need to get their thinking straight. When considering the competitiveness of such industries, Ministers often point to cuts in corporation tax as saving businesses. If no profits can be made—if they are wiped out by the carbon costs—the cuts to corporation tax will make no difference. There is a failure to appreciate the cumulative impact and the international market.

I hope that we have begun to see the beginnings of a shift in thinking. We look forward to the outcome of the DECC-BIS-Treasury working party, which will reach its conclusions towards the end of the year. Ministers should regard our amendment as an attempt to help them and to encourage a degree of clarity in the dealings between their civil servants over the coming months. What is frustrating about this process is the fact that the ceramics sector in Stoke-on-Trent is enjoying a resurgence. Jobs are coming back from China because of rising energy and labour costs in both porcelain and bone china. We are seeing a resurgence in the kingdom of Spode, Wedgwood, Churchill and Dudson, and of new companies, such as Emma Bridgewater. It would be typical of British legalistic short-sightedness and the myopia of the Treasury world view if, faced with a rising and successful industry, we were to undermine it. If we are interested in rebalancing the British economy we should support the ceramics, chemical, steel, glass, aluminium and other energy-intensive sectors on their journey towards a green economy. The amendment seeks to do just that.

[Justine Greening]

Clause 78 and schedule 20 amend the climate change levy to introduce a carbon price floor for electricity generation. We have had a helpful and interesting debate on the two amendments and I shall do my best in the time available to try to address as many of the points that were raised as possible. Before I do that, it is probably worth returning to the question of why this measure is necessary in the first place. Indeed, the hon. Member for Brighton, Pavilion (Caroline Lucas) spent some time setting that out in her speech.

We all recognise that the UK needs significant new investment in low-carbon electricity generation over the coming decades. As the debate has shown, we do not want that to be the only thing that we encourage over the coming years. We also want to encourage a broader transition to a low-carbon economy. As the hon. Member for Penistone and Stocksbridge (Angela Smith) pointed out, many industries that have been mentioned today in the context of the challenges they face have the chance to benefit from their role in the low-carbon economy of the future.

We need significant new investment in low-carbon electricity generation. As well as preparing for an increase in demand for electricity over the following decades, the UK must meet its legally binding CO₂ emissions reduction targets, which require an 80% reduction from 1990 levels by 2050. That is why in the Budget, following consultation, we announced that the UK would introduce a minimum carbon price. As the hon. Member for Southampton, Test (Dr Whitehead) pointed out, we included a number of different scenarios in that consultation so that we could understand and get feedback from stakeholders on the impact of the different scenarios. In fact the carbon price floor will provide a strong incentive for billions of pounds of new low-carbon investment.

[Dr Whitehead]

Does the hon. Lady agree that none of the scenarios in the consultation document included the idea that there should be a £5 premium on the emissions trading scheme as a result of the introduction of a carbon floor price?

20:45

[Justine Greening]

The scenarios we looked at as part of the consultation asked stakeholders what carbon price they felt we should start at, and where they felt it should finish—the trajectory from the first to the last point. As suggested by respondents, we used the market price of carbon, which is low, although we used DECC’s central carbon price as an illustration in the consultation. The hon. Gentleman referred both in his intervention and in his contribution to the balance we have to strike in setting a carbon price floor that will actually make a difference while putting in place one that does not in the meantime make the energy-intensive industries in our country uncompetitive, as we heard in powerful contributions from my hon. Friends the Members for Redcar (Ian Swales) and for Brigg and Goole (Andrew Percy) and, in an intervention, from the hon. Member for Scunthorpe (Nic Dakin). I want to provide the House with some reassurance about the steps we are taking to ensure that we manage to strike that balance. Despite the various contributions we have heard today, when we take the time to read Hansard tomorrow we shall probably see that there was more agreement in the approaches than may have come across from the tone of the debate. The challenge for us on both sides of the House is to strike the right balance, and I want to talk a little more about how we intend to try to do that.

We know that ultimately we have to make the transition to low-carbon electricity generation cost-effectively, and that will happen only if investors have greater long-term certainty about the cost of carbon emissions. The shadow Minister, the hon. Member for Bristol East (Kerry McCarthy) talked about uncertainty, but the measure is about introducing more certainty so that the extra investment we need can take place. The impact assessment that was part of the consultation showed that although the carbon price floor will increase electricity bills in the short to medium term, bills will be lower in the longer term than would have otherwise been the case, as more low-carbon capacity leads to cheaper electricity. I shall talk about how we want to see fuel poverty tackled over coming years, because that is obviously important.

[Andrew Percy]

I particularly welcome my hon. Friend’s comments about supporting industry as we move forward. I had to pop out of the Chamber after my speech to meet people from Drax. One of the things they told me was that at the moment the system is so structured that it discourages them from buying UK coal in favour of foreign coal. Will she take that into account when looking at the extra support that can be provided? If not, could she meet us to discuss this important issue in a bit more detail?

[Justine Greening]

My hon. Friend makes a helpful contribution. I am always happy to meet hon. Members. In fact, only last week I wrote back to the hon. Member for Stoke-on-Trent Central (Tristram Hunt) to say that I would be happy to meet representatives of his local industry. One of the reasons we are working across Government—not just the Treasury, but BIS and DECC—is to make sure that we consider all the different aspects of the support we want for the energy-intensive industries, and get it right.

I am conscious of the time, and the fact that Members want to debate the remaining amendments, so I now want to make progress. In Committee we discussed at length the issues raised in the amendments. Not all Members present in the Chamber today will have heard those debates, so I shall go through my response to both amendments, taking amendment 21 first, as it raises some important points. It would require the Government to lay, and Parliament to approve, an agreed package of mitigation measures for energy-intensive industries.

A number of Members from across the House made powerful cases on behalf of their local industry about why the issues are so important. The Government recognise the issues and want to take steps to address them. There is, as I said, clearly a balance to be struck: we need to meet our carbon reduction requirements, but to do so in a way that still enables the UK to continue to have competitive energy-intensive industries. That is why the Budget helped to offset the impacts of the price floor on energy-intensive industry and to show, as we have heard, that the UK is open for business, as it must be.

In March we announced an extension of climate change agreements to 2023, with an increase in the discount on electricity from 65% to 80% for participants in the scheme from April 2013. We plan to consult on how to simplify climate change agreements for the companies participating in them. Overall we intend to reduce tax levels to among the lowest in the EU.

We announced that we would not introduce the previous Government’s planned complex and costly carbon capture and storage levy, which would have increased electricity bills by 2% from 2015. In addition, we set out plans that will see a cap on the cost of policies funded through energy bills. To support industry more broadly, we introduced policies that will reduce corporation tax by a further 1%, which is part of an overall year-on-year set of reductions in corporation tax.

As I said, BIS, DECC and the Treasury are already in discussion with energy-intensive industries to identify those most affected by the carbon price floor and to pull together the best set of options to address some of those concerns. The package that we plan to announce by the end of the year will build on the measures, some of which I have set out, that we announced in the Budget. The Bill could also be a means of implementing part of the package. I should be clear that the options that we are considering do not relate only to tax. They look across the board at what we can do to support energy-intensive industries.

On Opposition amendment 12, the carbon price floor is designed to give UK electricity generators certainty about the carbon price. That will encourage more investment in low carbon. Although some Members expressed concerns about how the policy will work, it has been supported by a number of members of the investment community. A range of policy assessments have been carried out not just as part of the consultation document, but as part of the extensive impact assessment that was done alongside that, including the tax impact and information note that was published at the time of the Budget.

[Caroline Lucas]

Does the Minister agree that the carbon price floor effectively constitutes a subsidy for nuclear power? Does she therefore agree that unless it is clawed back through a windfall tax, it would contravene the terms of the coalition agreement on no subsidies for new nuclear?

[Justine Greening]

I am pleased that the hon. Lady has raised that point, because it gives me the opportunity to be crystal clear again—alongside the statements that I made in Committee, and those that she knows I have made to the Select Committee of which she is a member—that this policy is not a subsidy for the nuclear industry. As was pointed out in the previous debate by my hon. Friend the Member for Bristol West (Stephen Williams), who I am pleased to see in his place following his contribution to the Committee stage, this is a tax on carbon, not on nuclear fuel rods, as happened in Germany.

The reason nuclear is outside the scope of the tax is that uranium and wind, for example, are not in the carbon price floor because, of course, they do not contain carbon. I understand the arguments that have been made, but they are a little like saying that because we have a tax on alcohol, that is a subsidy for the soft drinks industry. There is also a contradiction between what Opposition Members have been saying. They complain that this is a tax-raising measure, yet they also say that it is a subsidy. Those arguments are contradictory.

Amendments 21 and 12 are unnecessary, and I hope that they will both be withdrawn.

Question put, That the amendment be made.

20:54

Division 316

Ayes: 217

---

Labour: 200
Scottish National Party: 6
Democratic Unionist Party: 5
Conservative: 3
Plaid Cymru: 1
Green Party: 1
Social Democratic & Labour Party: 1

Noes: 276

---

Conservative: 235
Liberal Democrat: 40

Clause 87

Mutual assistance for recovery of taxes etc.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

I beg to move amendment 1, page 48, line 16, leave out subsection (4).

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss Government amendments 2 to 8.

[Mr Gauke]

Clause 87 and schedule 25 give effect to the new mutual assistance recovery directive, which comes into effect on 1 January 2012. The directive will improve the current mutual assistance provisions, which permit member states to recover and enforce tax debts and to exchange information across the European Union. This will improve tax compliance and make the tax system fairer. The directive extends mutual assistance to all national and local taxes. Local taxes are devolved, so consent is required from the Scottish Parliament and the Northern Ireland Assembly to legislate on their behalf. These consents could not be secured before those Administrations dissolved ahead of the May elections, so a number of exclusions were included in the Bill published on 31 March 2011. Agreement has now been received from Scotland and Northern Ireland that Westminster can legislate for these matters.

The amendments remove the exclusions included in the Bill in relation to Scotland and Northern Ireland. They also make an addition to the explanation of “relevant UK authority” in order to include a claim from another member state to recover an agricultural levy in Scotland.

[Gavin Williamson (South Staffordshire) (Con)]

I understand that my hon. Friend recently received the very prestigious award of tax personality of the year. I am somewhat concerned that this glorious award may be influencing his conduct as a Minister in carrying on his business in relation to tax policy. Is that a fact?

[Mr Gauke]

I am grateful to my hon. Friend for that intervention. I am trying hard not to let the award go to my head. I will endeavour to do my best, but it is of course a great honour. I take it as praise for what the Government are doing more generally on tax policy. Before I break into tears—I find it quite emotional to talk about the award—I shall return to the issue of mutual assistance.

HMRC’s data-gathering powers are modernised by clause 86 and schedules 23 and 24. It is important that the powers satisfy the international standards determined by the OECD and the global forum on transparency and exchange of information for tax purposes. The provisions in the Bill, which have been discussed in Committee, will ensure that HMRC can use its full range of existing powers to meet requests from overseas.

The global forum is currently conducting a peer review of the UK and a specific issue has been identified that we have to address. Schedule 36 to the Finance Act 2008 does not allow HMRC to require information from a third party when it does not know the full identity of the taxpayer but has some information from which their full identity can be ascertained, such as a branch code and a bank account number or a credit card number. At present, unless a serious loss of tax is suspected, HMRC is unable to issue a notice to a third party that can be reasonably expected to know the name and address of the person concerned. In the examples I have given, that would be a bank or credit card issuer. To meet our international commitments, we need to amend schedule 36 to allow a formal notice to be issued in those circumstances. However, we have made a clear commitment to consult on tax changes, so I have asked HMRC to consult over the summer on how best to achieve the changes, with a view to publishing draft provisions in the autumn and legislating next year. I envisage the changes taking effect from Royal Assent in 2012.

In conclusion, the amendments to clause 87 and schedule 25 will help to ensure that the new mutual assistance recovery directive is fully transposed into UK law by 31 December 2011. We fully support the aims of the directive and this implementing legislation. I therefore commend the amendments to the House.

[Chris Leslie]

The amendments look reasonably uncontentious. It is sensible to find ways to support mutual assistance between nation states in the recovery of tax debts and duties. I am glad that the consents have come from the devolved Administrations. Those justify the amendments, so we do not wish to oppose them.

May I, too, take this opportunity to congratulate the hon. Gentleman on the prestigious award of tax personality of the year. I am sure that there is more to his personality than tax. Perhaps in his speech, as well as thanking his parents and his agent, he could also thank his accountant.

Amendment 1 agreed to.

Schedule 7

Investment companies

[Mr Gauke]

I beg to move amendment 22, page 166, leave out line 18 and insert

‘day specified in the election as the day on which it takes effect (which must be later than the day on which the election is made).’.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss Government amendments 23 to 29.

[Mr Gauke]

The amendments will ensure that clauses 34 and 48 operate as intended when companies make retrospective changes to the dates to which their accounts are drawn up.

Schedule 7 allows companies to elect prospectively to change the currency in which they prepare their accounts for tax purposes. That is often referred to as their functional currency. That change must be prospective to prevent companies from changing their functional currency with the benefit of hindsight to realise a foreign exchange loss for tax purposes. Following the Public Bill Committee debate on clause 34, a major accountancy firm disclosed an avoidance scheme that retrospectively creates a short accounting period to circumvent the new rules. The amendments will ensure that clause 34 operates as intended when a company retrospectively changes the date to which its accounts are drawn up.

Clause 48 and schedule 13 implement an optional branch exemption regime. Companies must elect into branch exemption in advance of an accounting period to prevent them from leaving known losses outside of exemption in order to retain loss relief. Retrospective accounting period changes create problems similar to those that arise in connection with clause 34, whereby decisions on election into branch exemption may be made with the benefit of hindsight. The amendments will ensure that clause 48 operates as intended when a company changes its accounting periods. In each case, the date on which an election comes into force will be fixed in advance at the time when the election is made.

The amendments that relate to clause 34 will protect the £60 million yield in the original measure, and together the amendments will protect an estimated £200 million that would otherwise be likely to be lost due to avoidance schemes. They will ensure that clauses 34 and 48 operate as intended when a company uses hindsight to alter its accounting periods. I therefore urge the House to accept them.

21:15

[Chris Leslie]

Again, these Government amendments are sensible. It is important that we tighten loopholes for investment companies that might chop and change the election of their functional currencies to generate tax deductible foreign exchange losses and avoid a tax obligation. They seem important minor amendments to improve election arrangements, so we are happy to support them.

Amendment 22 agreed to.

Amendments made: 23, page 166, line 21, leave out subsection (3) and insert—

‘(2A) An election under section 9A(2)(a) may be revoked by notice of the revocation being given to an officer of Revenue and Customs before the election takes effect.

(3) Subject to that, an election has effect until immediately before—

(a) the day on which another election by X takes effect, or

(b) the day on which a revocation event occurs,

(whichever first occurs).’.

Amendment 24, page 166, line 41, at end insert—

‘(5A) Subsections (5B) and (5C) apply if a period of account of X (“the straddling period of account”) begins before, and ends on or after, the day on which—

(a) an election under section 9A(2)(a) takes effect, or

(b) a revocation event occurs.

(5B) It is to be assumed, for the purposes of this Chapter, that the straddling period of account consists of two separate periods of account—

(a) the first beginning with the straddling period of account and ending immediately before that day, and

(b) the second beginning with that day and ending with the straddling period of account,

and X’s profits and losses are to be computed accordingly for the purposes of corporation tax.

(5C) For those purposes, it is to be assumed—

(a) that X prepares its accounts for each of the two periods in the same currency, and otherwise on the same basis, as it prepares its accounts for the straddling period of account, and

(b) that if the accounts for the straddling period of account, in accordance with generally accepted accounting practice, identify a currency as X’s functional currency, the accounts for each of the two periods do likewise.’.

Amendment 25, page 167, line 28, leave out from ‘but’ to end of line 37 and insert ‘for a change in the company’s functional currency (within the meaning of section 17(4) of that Act) as between—

(a) the period of account of the company in which the gain or loss arises, and

(b) a period of account of the company ending in the 12 months immediately preceding that period.”’.

Amendment 26, page 167, line 44, leave out from ‘but’ to end of line 9 on page 168 and insert ‘for a change in the company’s functional currency (within the meaning of section 17(4) of that Act) as between—

(a) the period of account of the company in which the gain or loss arises, and

(b) a period of account of the company ending in the 12 months immediately preceding that period.”’.

Amendment 27, page 168, line 14, at end insert—

‘( ) Where an election made by a company before 27 June 2011 does not specify the day on which it takes effect, the election is to be treated as if it specified the first day of the first period of account of the company beginning after the election was made.’.—(Mr Gauke.)

Schedule 13

Profits of foreign permanent establishments etc

Amendments made: 28, page 209, line 39, leave out from ‘company’ to end of line 40 and insert ‘beginning on or after the relevant day.

(1A) “The relevant day” is the day on which, at the time of the election, the accounting period following that in which the election is made is expected to begin.

(1B) Subsection (1C) applies if an accounting period of the company (“the straddling period”) begins before, and ends on or after, the relevant day.

(1C) It is to be assumed, for the purposes of the Corporation Tax Acts, that the straddling period consists of two separate accounting periods—

(a) the first beginning with the straddling period and ending immediately before the relevant day, and

(b) the second beginning with that day and ending with the straddling period.

(1D) Where for those purposes it is necessary to apportion the profits and losses for the straddling period to different parts of the period, that apportionment is to be made on a just and reasonable basis.’.

Amendment 29, page 209, line 41, leave out from ‘before’ to end of line 42 and insert ‘the relevant day.’.—(Mr Gauke.)

Schedule 19

The bank levy

Amendments made: 32, page 315, line 34, leave out paragraph (b) and insert—

(b) M, or another member of the relevant group, has assets which correspond to liabilities which N, or another entity which is not a member of the group, has to M or (as the case may be) that other member (“N’s liabilities”),’.

Amendment 33, page 315, line 36, leave out ‘between M and N’.

Amendment 34, page 315, line 37, at end insert ‘, and liabilities of other members of the group to N or another entity which is not a member of the group,’.

Amendment 35, page 316, line 1, leave out paragraph (d) and insert—

(d) “the netting event occurs” if the insolvency or bankruptcy of—

(i) M, or another member of the relevant group which has assets which correspond to a liability covered by the provision mentioned in sub-paragraph (1)(c), or

(ii) N, or another entity which is not a member of the group and which has such a liability,

gives rise to the termination of any arrangements under which such a liability arises.’.

Amendment 36, page 316, line 23, leave out ‘M’s assets’ and insert ‘the assets of M, or of another member of the relevant group,’.

Amendment 37, page 316, line 24, at end insert—

‘( ) But if this paragraph applies in relation to more than one member of the relevant group, no part of an asset may be included in the net settlement assets of more than one such member.’.

Amendment 38, page 320, line 11, leave out paragraph (b) and insert—

(b) M, or another entity within sub-paragraph (9), has assets which correspond to liabilities which N, or another entity not within that sub-paragraph, has to M or (as the case may be) to that other entity within that sub-paragraph (“N’s liabilities”),’.

Amendment 39, page 320, line 13, leave out ‘between M and N’.

Amendment 40, page 320, line 14, at end insert ‘, and liabilities of other entities within sub-paragraph (9) to N or another entity which is not within that sub-paragraph,’.

Amendment 41, page 320, line 35, leave out paragraph (e) and insert—

(e) “the netting event occurs” if the insolvency or bankruptcy of—

(i) M, or another entity within sub-paragraph (9) which has assets which correspond to a liability covered by the provision mentioned in sub-paragraph (8)(c), or

(ii) N, or another entity not within sub-paragraph (9) which has such a liability,

gives rise to the termination of any arrangements under which such a liability arises.’.

Amendment 42, page 321, line 6, leave out ‘M’s assets’ and insert ‘the assets of M, or of another entity within sub-paragraph (9),’.

Amendment 43, page 321, line 7, at end insert—

‘( ) But—

(a) if N’s net settlement liabilities include liabilities of a relevant foreign bank covered by paragraph 17(17), X% (as determined at Step 2 in paragraph 24(1)) of the assets corresponding to the liabilities of the relevant foreign bank are to be disregarded for the purposes of sub-paragraph (14), and

(b) if sub-paragraph (12) applies in relation to more than one entity within sub-paragraph (9), no part of an asset may be included in the net settlement assets of more than one such entity.’.

Amendment 44, page 324, line 38, leave out paragraph (b) and insert—

(b) M, or another entity within sub-paragraph (9), has assets which correspond to liabilities which N, or another entity not within that sub-paragraph, has to M or, as the case may be, to that other entity within that sub-paragraph (“N’s liabilities”),’.

Amendment 45, page 324, line 40, leave out ‘between M and N’.

Amendment 46, page 324, line 41, at end insert ‘, and liabilities of other entities within sub-paragraph (9) to N or another entity which is not within that sub-paragraph,’.

Amendment 47, page 325, line 15, leave out paragraph (e) and insert—

(e) “the netting event occurs” if the insolvency or bankruptcy of—

(i) M, or another entity within sub-paragraph (9) which has assets which correspond to a liability covered by the provision mentioned in sub-paragraph (8)(c), or

(ii) N, or another entity not within sub-paragraph (9) which has such a liability,

gives rise to the termination of any arrangements under which such a liability arises.’.

Amendment 48, page 325, line 36, leave out ‘M’s assets’ and insert ‘the assets of M, or of another entity within sub-paragraph (9),’.

Amendment 49, page 325, line 37, at end insert—

‘( ) But—

(a) if N’s net settlement liabilities include liabilities of a relevant foreign bank covered by paragraph 19(17), X% (as determined at Step 2 in paragraph 24(1)) of the assets corresponding to the liabilities of the relevant foreign bank are to be disregarded for the purposes of sub-paragraph (14), and

(b) if sub-paragraph (12) applies in relation to more than one entity within sub-paragraph (9), no part of an asset may be included in the net settlement assets of more than one such entity.’.

Amendment 50, page 336, line 33, at end insert—

‘Netting agreements

(1) The Treasury may by order add to, repeal or otherwise amend any of paragraphs 16, 18(8) to (16), 20(8) to (16), 22 and 25.

(2) An order under this paragraph may make consequential amendments of this Schedule.

(3) An order under this paragraph may have retrospective effect in relation to—

(a) any chargeable period in which the order is made, or

(b) in the case of an order made on or before 31 December 2011, any chargeable period ending on or after 1 January 2011.

(4) Orders under this paragraph are to be made by statutory instrument.

(5) A statutory instrument containing an order under this paragraph may not be made unless a draft has been laid before, and approved by a resolution of, the House of Commons.’.—(Mr Gauke.)

Schedule 25

Mutual assistance for recovery of taxes etc

Amendments made: 2, page 390, line 29, leave out ‘other than excluded matters’.

Amendment 3, page 390, line 31, leave out ‘other than excluded matters’.

Amendment 4, page 390, line 32, leave out sub-paragraphs (3) and (4).

Amendment 5, page 391, line 18, leave out sub-paragraph (4).

Amendment 6, page 393, line 15, at end insert—

(ca) if the foreign claim relates to an agricultural levy and the steps are ones to be taken in or in relation to Scotland, the Commissioners concurrently with the Scottish Ministers;’.

Amendment 7, page 393, line 42, leave out sub-paragraph (2).

Amendment 8, page 395, line 26, leave out sub-paragraph (3).—(Mr Gauke.)

Third Reading

21:16

[Mr Gauke]

I beg to move, That the Bill be now read the Third time.

During the course of the debates on this Finance Bill we have spent some time combing through the details of our plans to put the economy back on course. It is a Bill that will help ensure the stability of our financial sector, protect the most vulnerable in society from the worst effects of the downturn, make Britain a better place to do business and stimulate private sector growth. We are clearly the Government who are setting the agenda on the need for a tax system that encourages growth, by cutting corporation tax, improving research and development tax credits, extending enterprise investment schemes and increasing the entrepreneurs’ relief.

To be fair, after three months of debate we have not seen much policy from the Opposition. Of course, the right hon. Member for Morley and Outwood (Ed Balls) proposed a temporary cut in VAT in the middle of our proceedings, although I cannot but draw the House’s attention to the fact that he then failed to table an amendment to that effect until it was too late. It fell to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who I am delighted to see here this evening, to table such an amendment. However, at that point the official Opposition abstained and failed to support the very policy for which they had been campaigning the week before. I would like to think that they were persuaded by the arguments made from the Dispatch Box that it was the wrong policy. Perhaps there is some cachet in being tax personality of the year after all, although on that evening not all Government Back Benchers were so easily persuaded by arguments from the Treasury Bench.

Hon. Members will be aware that this is the first full Bill in which we have demonstrated our commitment to the principles of tax policy making that were set out in last year’s Budget. To paraphrase Bananarama, it ain’t just what you do, it’s the way that you do it. I am sure hon. Members are aware that the Treasury Committee published its report on our new approach to tax policy making on 15 March, and that they will have noted the principles of good taxation set out by my right hon. Friend the Chancellor in his Budget speech. Like the Committee, he gave his views on what the key elements of our tax system should be. It should support growth and encourage competition; be certain and predictable; be simple to understand and easy to comply with; and be fair, reward work, support aspiration and ask the most from those who can most afford it. Those principles are central to the policy making process that is reflected in the measures that we see in the Bill.

The Bill supports growth in our economy, and will help to provide businesses with the most competitive tax system in the G20. We set out our plans for achieving that in “The Corporate Tax Road Map”, which was published last November. We are providing business with a clear understanding of our overall direction of travel; setting out the timetable for major areas of reform; and enabling businesses to have the confidence they need to invest, create new jobs and drive the recovery. John Cridland, director-general of CBI said, quite simply:

“This Budget will help businesses grow and create jobs. The Chancellor has made clear the UK is open for business.”

The Bill delivers some of the major changes: a cut in corporation tax to 26% this year and 25% next year, towards a rate of 23% in 2014, which will be the lowest corporation tax rate in the G7; cuts in the small-profits rates of tax; interim reforms of the controlled foreign corporation rules, before a full reform next year; and simplification of the rules relating to corporate capital gains. Those will help to deliver on making Britain competitive internationally, although that is not the only driver of growth: we are supporting British businesses through changes to the enterprise investment R and D tax credit schemes, making them more generous; we have doubled the rate of entrepreneurs relief; and we are increasing the disposal time for short-life assets to eight years.

We set out most of the measures in the Bill last year, just as we set out most of the measures for next year in Budget 2011. We will consult on draft legislation in the autumn to allow time to hear from interested parties and, as I have said, we have set out future changes in a number of areas, including for corporate taxes. Certainty is what British businesses need most, and that is what this Government are giving them.

On simplification, we recognised the spaghetti bowl of complexity in the tax system, so last summer we set up the Office of Tax Simplification to advise us on how to untangle matters. It has made substantial progress and has already examined the reliefs within the tax system. Following its recommendations, we have identified more than 40 reliefs for abolition, of which seven are repealed by the Bill. We recently launched a consultation on the remainder to ensure that taxpayers have sufficient notice of the changes, with a view to legislating next year. Furthermore, the OTS has made recommendations on the operational integration of income tax and national insurance contributions, and we announced in the Budget that we will take forward work on that. A simpler tax system is an easier tax system, and it reduces costs for business and the Government, although it may leave me with less to read on my quiet evenings in.

The final principle outlined by the Chancellor and echoed by the Treasury Committee is that of fairness. We have increased the personal allowance by £1,000, and will increase it to £10,000. We are making real steps in every year in this Parliament. We have cut fuel duty by only 1p, as opposed to the 6p increase that the previous Government would have imposed. We are freezing vehicle excise duty for hauliers, and there will be an inflation-only increase in vehicle excise duty for all other motorists.

We are supporting pensioners through the triple guarantee on state pensions and by removing the requirement to annuitise, and we are helping charities through changes to the substantial donors rules. We are taking action on tax avoidance to address issues that have spiralled out of control. In particular, we have introduced legislation to tackle disguised remuneration—the practice whereby well paid individuals disguise their remuneration as loans that are never repaid, which results in a loss to the Exchequer. That measure will raise more than £700 million a year, and I am genuinely surprised and disappointed that it did not receive Opposition support in Committee. We have also introduced the bank levy to encourage banks to behave in a less risky manner, while ensuring that they pay their fair share. The tax system must be fair, and this Government are ensuring that that is so.

When I thought that I would be making this speech on 4 July, I found it easy to weave in references to American independence, in which taxation played such a large part. The date of 5 July is a little less well known for historical events, although of course it was the date in 1948 on which the NHS was launched. My research on this day uncovered a further event of note, although I shall refrain from calling it historical—were the right hon. Member for Delyn (Mr Hanson) here, I would wish him a very happy birthday. I thank him for his constructive engagement during the passage of the Bill in Committee and on Report, as I do the hon. Members for Bristol East (Kerry McCarthy) and for Nottingham East (Chris Leslie). I hope that the right hon. Gentleman has found the time to celebrate. I would like to thank him for his good humour during the Bill. I would also like to take this opportunity to pass on my congratulations to an official who has been supporting me throughout the Bill and who is celebrating her 30th birthday today and showing her dedication to the cause. It may be her 30th birthday but she is still with us in the Chamber today.

We have a plan for deficit reduction that has been internationally endorsed, and we are sticking to it. We have a plan for growth—growth that will be driven by investment and exports, growth that is sustainable and growth that supports entrepreneurs throughout the country. The Bill puts in place the right conditions to allow British business to flourish, and I commend it to the House.

21:25

[Chris Leslie]

May I join the Minister in congratulating the Bill team on their hard work and unstinting efforts, especially in Committee, where unfortunately I was unable to join them? However, it has been a delight to revisit these issues on Report over the past couple of days. I would like to pay tribute to my right hon. Friend the Member for Delyn (Mr Hanson), whose birthday it is today—I do not know where he is at the moment, but I am sure that he is watching proceedings avidly.

I should also say happy birthday to the NHS and to the official who has been helping the Minister. I am told that 30 is the new 20. I thank my hon. Friend the Member for Bristol East (Kerry McCarthy), and also my hon. Friend the Member for West Ham (Lyn Brown). The Whips are often unsung in these matters, but we would not be here without their support and assistance—and tugging of jackets at various moments! I am not familiar with Bananarama’s greatest hits but the Minister, given his new personality award, might like to tell me a little more about them. I gather that “True Confessions” in 1986 was one of their greatest hits, but “Please Yourself” came in 1993—I think that somewhere between the two defines his approach to the Finance Bill.

Coming in at just under 400 pages, the third Finance Bill of the year, with a huge number of amendments, is a complex measure, but for all its detail and complexity, I am afraid that it represents a missed opportunity to tax the banks fairly and to support job creation across the UK. Those omissions make this a sub-standard and ill-judged Bill. Of course, like every country we need to get the deficit down, but the Government are creating a vicious cycle in our economy because they are cutting too far and too fast—hitting families and costing jobs. More people out of work and on benefits will make it harder to get the deficit down. In fact, the Government are now set to borrow £46 billion more than they had planned.

The Government said they would cut the deficit by cutting spending, but putting people on the dole and suppressing growth is a waste of money and a waste of their potential. Instead, the Government need a plan B. They ought to follow our balanced deficit plan, which puts jobs first. Of course, although we need tough decisions, getting people off the dole and back into work is the best way to reduce the deficit. As we have made clear today, rather than giving the banks a tax cut, the Government should adopt Labour’s plan for a tax on bankers’ bonuses and use the money to fund apprenticeships, getting young people into work and supporting small business.

I am afraid that the Bill jeopardises job creation and fails to support existing jobs. The rushed decision to make a tax raid on North sea oil means that companies are reconsidering their future in Britain, and puts investment and jobs in jeopardy. Of course the Government should seek windfall profits at a time of high fuel prices, but they have rushed that decision without consultation or proper consideration of the longer-term economic consequences. By slashing the investment allowances by £2.6 billion, the Government are penalising those companies that invest, particularly small businesses and businesses in the manufacturing sector. Again, that is putting jobs at risk and holding back growth.

The Bill leaves a number of unresolved and unanswered questions. In Committee, the Government said the child trust fund replacement for looked-after children was still being considered by the Department for Education, but that there was no fixed time frame for implementation. The Minister has been unable to put on record whether any progress has been made on that issue, which is a pity.

Clause 26, which deals with disguised remuneration employment income provided through third parties, has stood out as being particularly badly drafted. It is long and complex, and has been subject to no fewer than 88 last-minute amendments. Businesses are still raising concerns about its scope and interpretation. However, although the drafting of clause 26 was unclear, we did not oppose the principle, and it would be wrong if our position on it were further misrepresented. All we wanted to know was whether the provisions would catch some genuine transactions and whether Ministers were working properly with businesses and professionals to clarify those issues.

The amendments made on Report to clauses 34 and 48 were about closing avoidance loopholes that HMRC have detected. We support those amendments of course, but we have raised concerns about avoidance in respect of the foreign profits clauses. We also had concerns about the loss of tax revenue to developing countries—something on which the Government claim to have conducted only an “initial analysis”. It is a shame that the Government have passed legislation when they cannot give a figure for the impact on developing countries’ tax bases—an assessment that we called for before implementation. We can therefore only hope that the poorest countries in the world are not unintentionally harmed by that measure.

To conclude, as well as leaving a number of questions unanswered and creating uncertainty, the Bill represents a missed opportunity to get banks to pay a fairer share of tax to society, through a stronger bank levy and a repeat of the bank bonus tax. Tragically, it is also a missed opportunity to tackle unemployment and get people into work—further evidence that this Government fail to understand that the best way to secure growth and get the deficit down is to get people off the dole.

21:31

[Stephen Williams]

I shall make some brief remarks in this Third Reading debate on yet another Finance Bill. Unlike the hon. Member for Nottingham East (Chris Leslie), who is lucky not to have sat through every stage of the Bill, I have endured all of it, from the Budget and Second Reading right the way through to the upstairs and downstairs stages. I too congratulate my hon. Friend the Minister on being named tax personality of the year, which is indeed an exalted position. The tax personality of the year should, of course, know that 5 July is the end of a tax month; in fact, it is also the end of the first quarter of the traditional tax year, so he could have mentioned that too. I can only assume that the judges made their decision before they heard his Bananarama joke. Unfortunately you were absent at that point, Mr Speaker, so you will have to look in Hansard to see what I am talking about.

In the spirit of cross-Chamber harmony, I too briefly congratulate the right hon. Member for Delyn (Mr Hanson) on his birthday. He has also been with us for all stages of the Finance Bill, apart from this one. I can only assume that he has thought of somewhere better than the Chamber of the House of Commons from which to watch the final stage of the Bill.

This is a good opportunity to weigh up the credibility of both the official Opposition and the coalition Government, after all the various stages of the Bill. We have heard many times that the Labour Opposition believe that fiscal tightening and a reduction in the budget deficit are needed. However, although we have heard from many Opposition Members about the cuts that they oppose, we have not heard from any of them about the cuts that they favour. We have also heard about their difficulties with the various tax changes that the coalition Government are making. As my hon. Friend the Minister pointed out, the Opposition pulled a rabbit out of the hat in the middle of our proceedings when the shadow Chancellor announced a great new policy with a flourish. His policy was that the Opposition would, after all, oppose the VAT increase to 20%. However, first the Scottish National party gave the Opposition an opportunity to vote against the increase and they abstained, and then Plaid Cymru gave them another opportunity and they abstained again. Indeed, the Opposition could have given themselves an opportunity to vote against the increase, but they failed to get their amendment in on time. That is two official abstentions and one botched attempt to oppose the Government’s policy, so the next time any Labour MP says that they oppose the rise in VAT, they will not have much credibility.

The Opposition also even opposed tightening a tax avoidance measure in Committee, and this morning the last vestige of Labour credibility—if Labour had any—in dealing with the economy was stripped away by the hon. Member for Nottingham East, when Labour refused to support the extension of special drawing rights arising from Britain’s contribution to the IMF. Of course, that was part of the initiative launched by the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), when he supposedly saved the world—I think that was the phrase—at the London G20 summit in 2009. And today, his successor spokespersons for the Labour party refuse to support the spirit of internationalism in dealing with bail-outs around the world.

[Chris Leslie]

I hope the hon. Gentleman will allow me to put on record something that he admits has been conspicuous by its absence—namely, the fact that the UK’s subscription to the IMF is rising from, I think, £10.7 billion to more than £20 billion. I hope he will explain that figure to his constituents and tell them, at a time when we are also on the hook for the other European bail-out arrangements, why we should be paying twice in that regard. I would be interested to hear his point of view.

[Stephen Williams]

I would be happy to invite the hon. Gentleman, as well as any other hon. Members and my own constituents, to read my blog, where I explained exactly that point straight after this morning’s debate. The explanation is of course a movement between the Government’s reserves and the reserves that we denominate in special drawing rights at the IMF. That does not involve additional Government borrowing or additional cuts, as the hon. Gentleman very well knows. What we saw this morning was the Labour party making a cheap, opportunistic point on a very serious issue.

[Chris Leslie]

I am grateful to the hon. Gentleman for being so nice about me just a moment ago. The Minister refused to tell us this morning, but does the hon. Gentleman know how much British taxpayers’ money is on the hook, via our IMF support for Greece? How many pounds sterling are on the hook? Does he know what our liability is?

[Stephen Williams]

The hon. Gentleman will have heard exactly what I heard this morning from the Financial Secretary to the Treasury, which was that, in its whole history since 1945, the IMF has never lost its money because it is always the first creditor to be paid. Our money is therefore not at risk, but our providing it is essential in order to ensure that the international economy stabilises. That is also in our own national interest.

I have dealt with the Labour party’s credibility, but what about that of the coalition Government? The points that the hon. Gentleman has just made lead me neatly to compare this country with Greece. During the passage of the Bill, we have seen the sad events in Athens, with the Greek Government having to make difficult and unpopular decisions. Greece’s bond rating, which reflects people’s willingness to lend to it, is CCC, while ours is AAA, even though our budget deficit is much higher than that of Greece. The difference is that our Government have a credible plan for repairing our public finances, and that is what gives us credibility in world markets and at home.

The Finance Bill and the Budget have also confirmed one of the most important measures that the coalition Government will introduce—namely, making the income tax system fairer. That was the No. 1 commitment that my Liberal Democrat colleagues and I stood on in the general election. We believe that work should pay, and that the lowest-paid employees in this country should be shielded from income tax. I am therefore pleased that the Bill takes another step towards making our pledge of £10,000 of tax-free income come true during the lifetime of this Parliament.

The Bill also puts in place a bank levy, so that the bankers will pay something back towards the problems that they helped to create during the last Government’s period in office. The budget is now under control. That is why the coalition Government were formed in the first place. Many of us might have thought at the time that it was a somewhat unlikely coalition, but it was put together to take these difficult decisions, to repair our public finances, to bring back international confidence and to give confidence to our own constituents that our country could get back on track. The difficult decisions have now been made, and we will see the job through.

21:39

[Jonathan Edwards]

I will not take up much of hon. Members’ time this evening. I regret to inform the Treasury that we will vote against the Government. Leaving aside our concerns about the speed and depth of the cuts, our main concern as a party is obviously the effect of the Budget on Wales. Given the economic headwinds that Wales faces, the Treasury might be interested to know that all four parties in the National Assembly, including the Conservative party and the Liberal Democrats, have today signed a joint declaration calling for an immediate reform of the Barnett formula, borrowing powers for the Welsh Government, including the ability to raise capital funds via bonds, and fiscal responsibility in respect of taxation powers. Although 5 July is not usually a historic day, I would say it is today because all the Unionist parties have adopted Plaid Cymru’s economic policies. I understand that the Treasury Minister will meet the First Minister on Monday and I hope he will embrace this fresh mandate from the people of Wales.

Question put, That the Bill be now read the Third time.

The House proceeded to a Division.

[Mr Speaker]

I ask the Serjeant at Arms to investigate the delay in the No Lobby.

21:40

Division 317

Ayes: 285

---

Conservative: 241
Liberal Democrat: 43

Noes: 225

---

Labour: 209
Scottish National Party: 6
Democratic Unionist Party: 5
Plaid Cymru: 3
Green Party: 1
Social Democratic & Labour Party: 1

Bill read the Third time and passed.

Business without Debate

Tuesday 5th July 2011 Commons Chamber

Business of the House (Police (Detention and Bail) Bill)

Tuesday 5th July 2011 Commons Chamber

Ordered,

That, in respect of the Police (Detention and Bail) Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—(Mr Heath.)

Business of the House (Sovereign Grant Bill)

Tuesday 5th July 2011 Commons Chamber

Ordered,

That, in respect of the Sovereign Grant Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—(Mr Heath.)

COMMITTEE ON MEMBERS’ ALLOWANCES

Tuesday 5th July 2011 Commons Chamber

Motion made,

That Standing Order No. 152G (Committee on Members’ Allowances) shall be amended as follows—

(1) in line 2, leave out ‘Allowances’ and insert ‘Expenses’; and

(2) leave out lines 3 to 17 and insert ‘to consider such matters relating to Members’ expenses as may be referred to it by the House;’. —(Sir George Young.)

[Hon. Members]

Object.

PAY FOR CHAIRS OF SELECT COMMITTEES

Tuesday 5th July 2011 Commons Chamber

Resolved,

That the Resolution of the House of 30 October 2003, relating to Pay for Chairs of Select Committees (No. 2), shall be further amended by leaving out ‘the Committee on Members’ Allowances’.—(Sir George Young.)

REVIEW OF PARLIAMENTARY STANDARDS ACT 2009

Tuesday 5th July 2011 Commons Chamber

Motion made,

That, further to the instruction to the Committee on Members’ Allowances of 12 May, it be an instruction to the Committee on Members’ Expenses to report to the House on the review of the Parliamentary Standards Act 2009 by 31 December 2011.—(Sir George Young.)

[Hon. Members]

Object.

Delegated Legislation

Tuesday 5th July 2011 Commons Chamber

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

Rehabilitation of Offenders

That the draft Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2011, which was laid before this House on 16 May, be approved.—(Angela Watkinson.)

Question agreed to.

Mr Speaker: With the leave of the House, we shall take motions 10 and 11 together.

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

Betting, Gaming and Lotteries

That the draft Gambling Act 2005 (Gaming Machines in Adult Gaming Centres and Bingo Premises) Order 2011, which was laid before this House on 7 June, be approved.

That the draft Categories of Gaming Machine (Amendment) Regulations 2011, which were laid before this House on 7 June, be approved.—(Angela Watkinson.)

Question agreed to.

European Union Documents

Tuesday 5th July 2011 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Roadmap to a Single European Transport Area

That this House takes note of European Union Document No. 8333/11 and Addenda 1-3, a White Paper: Roadmap to a Single European Transport Area–Towards a competitive and resource efficient transport system; and supports the Government’s aim to ensure that the European Commission’s proposals are practical and proportionate and avoid excessive regulatory burdens on business, while respecting the principles of subsidiarity.—(Angela Watkinson.)

Question agreed to.

Petitions

Tuesday 5th July 2011 Commons Chamber

22:02

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

The excellent and award-winning stationmaster of Lymington was sacked for removing a shopping trolley from the line before a train could collide with it. The vicar of Pennington collected 8,400 signatures and sought to deliver them to South West Trains, but in an act of shocking discourtesy to the travelling public, the company refused to take them. It is therefore my privilege to present to this House the petition of the vicar of Pennington, which calls on this honourable House to enlist the support of the Department of Transport to intercede with South West Trains to reconsider this shocking injustice.

Following is the full text of the Petition:

[The Humble Petition of Revd Alex Russell, Vicar of Pennington,

Sheweth that a great injustice has been done by the dismissal of Ian Faletto Stationmaster at Lymington.

Wherefore your Petitioner prays that your Honourable House calls upon the Government to request that South West Trains reconsider their decision in the light of his many years of exemplary service to the public

And your Petitioner, as in duty bound, will ever pray, &c.]

[P000928]

Redevelopment of Rushden Hospital Site

22:04

[Mr Peter Bone (Wellingborough) (Con)]

To follow that is impossible, but my petition is of more importance to my constituents, because the hospital site, where there is of course no longer a hospital, has always been an area where it was planned that we should eventually have a hospital. Unfortunately, the NHS plans to sell it off and 270 local residents have signed a petition, led by Sheila Vickers. I shall read the petition where the point is well made:

The Humble Petition of residents of Rushden, Northamptonshire and the surrounding areas,

Sheweth,

that the proposed revised redevelopment of the Rushden Hospital site for housing is unpopular, ill-advised and detrimental to the residents of Rushden; that over 25% of the residents of Rushden petitioned the House of Commons for a new outpatient facility in the town, the majority wanting the new facility on the Rushden hospital site; that the proposal to build housing on the site instead of an NHS facility is unacceptable and the impact on the surrounding roads of a large housing development and the density of the development and the proposed cut-through to the Greenacre Drive Estate is wholly detrimental to local residents and notes that a similar proposal for housing development on this site was not approved by East Northamptonshire District Council.

Wherefore your Petitioners pray that your Honourable House urges the Secretary of State for Communities and Local Government to urge the Department of Health to withdraw the revised planning application and further urges him to request that the District Council of East Northamptonshire and the County Council and the Primary Care Trust work together to provide a suitable health facility on the site.

And your Petitioners, as in duty bound, will ever pray, &c.

[P000937]

Food Security Strategy

Tuesday 5th July 2011 Commons Chamber

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

22:06

[Laura Sandys (South Thanet) (Con)]

The vast majority of Members in the House have a lot of respect for the Minister of State, Department for Environment, Food and Rural Affairs, my right hon. Friend the Member for South East Cambridgeshire (Mr Paice) and his colleagues for the knowledge and strategic vision that they bring to their roles. The last year has shown a marked difference from previous years, with agriculture policy being based on fact and experience. My right hon. Friend has also been clearly focused on the issue that I intend to raise in this debate—UK food security.

I do not come from a farming background; to be frank I know little about agriculture per se, but I know about rising food prices. This year we have seen a 4.9% rise in food prices, and that impacts on my constituents as much as on those of my right hon. Friend. I believe that food inflation could seriously undermine our growth targets and have an impact on consumer spending in the wider economy. Although I doubt whether there is anyone up at this time of night in the Treasury, there might be one insomniac who is taking food inflation as seriously as we are.

I recognise that food security has risen up the Government’s agenda. It was given prominence in the defence and security review. In the Department for Environment, Food and Rural Affairs White Paper, the Minister announced that a group would be established to look at food security, and the Government Office for Science published an exceptionally insightful Foresight report on food security globally. I was also pleased to see DEFRA’s announcement, following the G20, which pledged to give greater transparency to commodity markets through the establishment of an agriculture market information system.

However, I propose to the Minister that we can and still need to do more to ensure long-term food security, to provide greater resilience of supply and greater ability to hedge this country against shocks and price volatility. I would like to highlight to the Minister the fact that some policy measures that are being used to build greater energy security might be a useful guide to ensuring greater food security.

[Mr Mark Spencer (Sherwood) (Con)]

I congratulate my hon. Friend on securing this important debate. She has identified the importance of energy, but does she agree that modern technology has a role to play? I hope she will join me in encouraging the UK Government to embrace new technology and allow UK farmers to produce more food so that we are all well fed.

[Laura Sandys]

Indeed. There are four key planks in energy policy that we should be looking to adopt in food policy, one of which, is innovation and new technologies. From an energy perspective, security of supply, price and affordability, tackling demand and, as my hon. Friend said, the introduction of new technologies are fundamental. We should examine the same suite of policies when we look at food security.

Security of supply is critical to this country. We import more than 50% of our food, and we are extremely dependent on international markets working. Fair trade, transparent markets and secure shipping lanes are all important, but in the past five years these norms have been severely challenged by international developments, climatic changes and population increase, as well as changing food expectations globally. As in the case of energy, we are facing the increased politicisation of the trade and greater uncertainties globally.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady share my concern and that of many others in the House about regulations in Europe and other parts of the world? Here at home we provide a top quality product that can sell anywhere, whereas in other parts of Europe and of the world, similar legislation does not exist. That puts producers there at an advantage over us, as we try to do the best we can in every case.

[Laura Sandys]

I welcome the intervention. That is particularly key in animal welfare matters. Yes, there are issues in relation to international standards and we need to ensure consideration of food safety and market equity. Perhaps I will come to that later in the debate.

In 2008 the food crisis that occurred started a trend towards something very worrying for a country that imports 50% of its food—protectionism. Indonesia, India, Egypt, Russia and the Ukraine all curbed their rice and wheat exports in response to domestic food inflation. What was most concerning was that those countries were able to mitigate domestically the price hikes that others faced around the globe. This has become an incentive for exporting countries to adopt further restrictions in the future. Although we might want to trust in global food markets, we must recognise that exporter countries will find it almost impossible to export food if their domestic populations are starving. I do not believe that our food supply is secure, and it is becoming more and more unstable.

With our level of import dependency, has there been any assessment of what impact an increase in protectionism would have on domestic costs, and is that seen as a strategic threat? The National Security Council has incorporated food security in its key priorities. Can the Minister give me an update and outline the work that is going on through that channel? Most importantly for both his Department and my interest, are there as many officials in the Treasury examining the impact of food insecurity and food inflation as there are looking at the global energy sector?

In order to mitigate some of the impacts of global insecurity in the energy sector, we have decided that increasing domestic resilience and domestic production is important. Do we have a similar strategy for food? Although I am most certainly not suggesting that we look to become self-sufficient, are we happy to be so dependent on international and more volatile imports?

The second point relates to price and affordability, which is extremely pertinent to all Members as it impacts on each and every one of our constituents. We all recognise that food prices will rise, but we must also be clear that that will have significant social implications, including impacts on nutrition, health and education. Are we thinking strategically enough about the impact of food price increases on young people and the elderly, for instance? In the energy sector we look at capacity mechanisms that help us hedge price volatility, such as increased storage to secure supply at times of global price rises and shocks. Such mechanisms could help us to manage the price volatility that has such an impact on our constituents and cushion us from protectionism and the politicisation of food exporting countries.

I urge the Minister to look again at issues relating to the food poor in the same way as we look at fuel poverty. An individual is classed as fuel poor if more than 10% of their income is spent on fuel. Does DEFRA have a similar measure to indicate food poverty? Those on low incomes will be worst affected by food price rises. I had a constituent come to one of my surgeries a couple of weeks ago. He is on jobseeker’s allowance and had a heart attack about a year ago. He has been told specifically by his doctor that he must eat fresh fruit and vegetables every day, but there is no way that he can afford to do so. Just as our constituents have campaigned for the Treasury to help shoulder the burden of rising fuel costs, we will see a similar response to food price rises if we do not take action to reduce volatility and control price.

The third point is that we also have the power to use food better and ensure that we get better value for the food we produce. We currently waste 30% of the food we produce, so much more can be done to get better value from the food we grow. This will take a cross-Government effort to tackle supermarket procurement, supermarket products and food labelling, such as the sell-by dates that make customers feel anxious and throw food away far too early. On of my bugbears, which I know the Department shares, is fish discards, which we must also tackle. I urge the Department to have constructive conversations with the Food Protection Agency, which many feel is too risk averse.

We also need to focus on other Departments and look, for instance, at education in schools on how to use food more effectively, explaining that we can use all meat products, including offal. The Department of Health should use its procurement power to demand better use of food. We cannot go on ploughing food into the soil because it does not look pretty enough, or discarding large parts of carcases because we have forgotten how to cook certain meat cuts. We as consumers must learn again how to keep food fresh and stop chucking good food in the bin.

Will the Minister give a commitment that we will address food waste and look at a cross-Government programme to ensure that the 30% we currently waste is reduced? I would also be delighted to set up with the Minister a little company that I have thought up, called Ugly Foods Ltd. I think that we could do rather well, and perhaps even create a profit centre for the Government, by selling all the food and produce that the supermarkets reject.

My fourth point is about innovation, which my hon. Friend the Member for Sherwood (Mr Spencer) referred to earlier. We should be looking at food production and technology as one of the most exciting growth areas for this country. I know that the Minister shares this belief, so why is agriculture, agronomy and food production not included as a growth sector in the Department for Business, Innovation and Skills? Why do we consider careers in the food sector to be careers of the past? I believe that they are the careers of the future. I would also like him to examine what food technology assets we have that can be exported, because that seems to be an important trigger for getting the Treasury and BIS interested.

Food insecurity is almost never raised in this House. We have delegated to global markets and domestic supermarkets the responsibility to deliver cheap food to our constituents, but I am not sure that that will be enough in the future, because inflation targets are at risk and food poverty will increase. I urge the Government to look again at an holistic approach to food security in which we start to see that in the food production sector we have real opportunities that could contribute to a more secure and profitable food sector in the United Kingdom.

22:20

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) on securing this debate. In many ways, it deserves a longer time span than she has achieved, because this subject is hugely important, and I congratulate her on choosing it. I hope that in the next few minutes I can reassure her on a number of her points, and in passing I also thank her for her kind personal remarks to me.

The Government believe that food security is a vital strategic issue for this country, so the opportunity to spend a few minutes discussing it is very welcome. My hon. Friend will be aware that a few weeks ago the Government’s chief scientific adviser published the final report of the Foresight future of food and farming project, and it identified the scale of the challenge that food security poses—the very points that my hon. Friend made. The food system in this country is consuming the world’s natural resources at an unsustainable rate, and the report also highlighted the most important challenges that we face if we are to balance the competing pressures and demands on the global food system in order to ensure that we can feed ourselves.

My hon. Friend also referred quite rightly to our domestic food industry, and I want to reassure her that we believe that farming and food are very important to the UK economy. The whole food chain contributes some £88 billion per annum, or 7% of GDP, and 3.7 million jobs—no small contribution on anybody’s measurement. As a sector, it contributes to the delivery of the Government’s long-term economic objectives on trade, green jobs, and growth and development, and, slightly contrary to my hon. Friend’s remarks, the UK food and drink industry was highlighted in phase one of the Government’s growth review as an important area for growth. I passionately believe that that is the right place for it to be.

[Jim Shannon]

I understand that in the United Kingdom 20% of agricultural land is not in agricultural use today. Does the Minister have any intention of using that land for agriculture and food production?

[Mr Paice]

I am afraid that I have no idea where the hon. Gentleman has got his statistics from; they are completely strange to me. I will certainly look into them after this debate, but I have no knowledge of a significant area of land having been taken out of agricultural production in the United Kingdom.

The Department for Environment, Food and Rural Affairs worked very closely, and continues to work, with the industry to ensure that our views are captured by the Department for Business, Innovation and Skills, and I assure my hon. Friend the Member that we certainly intend that to continue.

We will concentrate—particularly within the growth review—on the rural economy, and one of our main themes will be realising the value of natural capital. That includes a strand concentrating on the potential to increase competitiveness in the agri-food sector. We will ensure also that food and drink is included in other areas of the review, such as logistics, skills and mid-sized businesses.

The Government are also taking action to support British farming and to encourage sustainable food production by helping to enhance the competitiveness and, as my hon. Friend said, the resilience of the whole food chain while minimising our impact on natural capital. The Government have been keen to lead, and on the sustainable procurement of food, for example, our recently announced Government buying standards will help to ensure that food procured by central Government meets sustainable standards of production equivalent to the UK’s requirements, when that does not lead to an overall increase in costs. Full details were provided in the recent announcement.

Steps have also been taken to improve market information and transparency by establishing an agriculture market information system to promote greater shared understanding of food price developments. My hon. Friend rightly said that UK food security cannot be delivered merely by a narrow, self-interested national protectionist stance or by recommending self-sufficiency. She rightly reminded us that that is not unique to the UK but should apply to every country. Several countries around the world have adopted protectionist measures. Argentina did so a few years ago with the beef sector, as did the Russians, more recently, with grain, although they have recently relaxed their measures, and there are several other examples. I firmly believe that they are doing their own consumers down by taking that approach, which, in the long term, does not help the global market.

International trade has an important role to play in providing food security not only in the UK but elsewhere. We are a trading nation in a global market. The UK is a significant exporter of wheat, lamb, dairy products, breakfast cereals and beef. Our food security depends on access to the world market, and it is important to emphasise that our domestic food industry needs to be able to compete on the world stage. In 2010, 25 countries together accounted for 90% of our food supply, and 49% of it was supplied from within the UK; we could not produce some products because they are not suitable for our climate. Currently the UK produces the equivalent of 72% of our indigenous foods and 59% of our food overall; we then export 10% of it, hence the 49% I mentioned. Supporting exports of UK food and food products will contribute to rebalancing our trade position. Reform, not subsidy, will achieve these goals.

In the recently published natural environment White Paper to which my hon. Friend referred, the Government made a commitment to bring together Government, industry and the environmental partners to reconcile how we will achieve our goals of improving the environment and increasing food production. I assure her that I believe passionately that that is possible. I do not believe—some farmers challenge me about this—that it is an either/or situation; we can do both.

My hon. Friend referred to food waste, and she was right to do so. We recognise that addressing that across the entire food chain will be critical in building a sustainable food supply. As part of our commitment to a “zero waste” agenda, three weeks ago DEFRA published a review of waste policy that highlighted various actions to be taken to reduce food waste, including developing a responsibility to deal with the hospitality and food service sector, with a strong focus on preventing food waste; tackling food waste across the public sector; and exploring further the role of incentives in reducing food waste and ensuring that it is managed in the most sustainable way possible.

We will also continue to work with the food industry and others in areas such as improved supply chain management; improved product design, including simple things such as resealable packaging; and providing the right advice and information to help consumers, including clear information on matters such as portion sizes, freezing food and using leftovers. We believe that through these actions, we will help industry and consumers to waste less food and save money—but I must emphasise that this is not something that Government can do on their own.

[Mr Spencer]

Does the Minister agree that it is also important to encourage local authorities to provide areas for allotments so that members of the public can not only grow their own food there but use them to understand food production and add to their own education?

[Mr Paice]

My hon. Friend is entirely right. We want not only to encourage local authorities to provide allotments—and there are massive waiting lists across the country for them—but to encourage other organisations, such as charities and those in the private sector, to provide land for them, whether as part of permanent or temporary arrangements. There are plenty of pieces of disused land in our inner cities. Although the land itself might not be appropriate, it could be used for mini-allotments based on containerised soil, so that people can start to grow some of their own food. Such food is more wholesome and fresh and, as we all know, contributes to people’s health and their environment.

[Tessa Munt (Wells) (LD)]

I am concerned about the number of people, particularly young people, who are going into farming. We must do something to stem the tide of people who are leaving farming, particularly dairy farming in my area. Does the Minister have any ideas about how we could encourage more people to come into farming, particularly given the sale of the county farms?

[Mr Paice]

I am grateful for my hon. Friend’s intervention. I do not have much time to answer it, but I am happy to do so privately. I believe that the most important way to encourage young people into farming and food production is to ensure that the industry is respected and recognised as a vital part of our economy. No Government can turn the economics of agriculture around in the ways that my predecessors could. We do not fix prices or intervene in those ways, and quite rightly. However, we can ensure that the industry is recognised as a vital part of the British economy, and that it is a worthwhile career choice. I am happy to discuss that matter further with my hon. Friend.

My hon. Friend the Member for Sherwood (Mr Spencer) referred to allotments. I was just coming on to the issue of growing food in our schools, which is equally as important. We need to ensure that our schools are part of this project. The Secretary of State recently launched the food growing in schools task force. The task force, which is led by Garden Organic, will make recommendations on the need for a food growing area to be integrated into every school in the UK. I have had many dealings with schools that are twinned with individual farms. Pupils not only go on physical visits but, through DVD technology, the farm can go to the school. Such twinning arrangements allow for children to be frequently updated on how the crops or livestock are progressing, so that they can learn more about how food is produced.

My hon. Friend the Member for South Thanet was right to refer to food prices. Of course we acknowledge that some people struggle to afford a healthy diet. The Government provide a means-tested nutritional safety net for extremely low-income families through the Healthy Start initiative, which offers vouchers that can be spent on milk and plain fresh and frozen fruit and vegetables at participating retailers. It supports more than half a million nutritionally vulnerable pregnant women, babies and young children. We are trying to help.

We also routinely monitor trends in the affordability of food through domestic retail food price inflation and movements in the drivers of domestic retail food prices. It is important to recognise an issue that this House often does not understand. Since the removal of production-linked support in 2005, after decades of politicians across the political spectrum demanding an end to the common agricultural policy propping up prices, farm crops and livestock have been traded in a global marketplace. It is those markets that dictate our food prices, along with exchange rates, oil prices and wider commodity issues.

My hon. Friend also referred obliquely to the meeting of G20 Agriculture Ministers. The issue of international trade and price volatility was central to that meeting. I assure the House that the UK will take global leadership on this issue. We are committed to promoting better functioning of agriculture markets to help mitigate future price spikes, and that commitment is demonstrated through the important steps taken towards the development of better-functioning markets at the first ever meeting of G20 Agriculture Ministers.

My hon. Friend referred to the link between food and energy. We, too, recognise the strong dependency of our food supply on energy supply and transport infrastructure. As she suggested, the Government have a co-ordinated approach to the supply and resilience elements of food security. I will not go into great detail about it tonight, but I can assure her that my officials work closely with colleagues in all relevant Departments in response to the risks to our food security and other parts of our national infrastructure. The Department for Environment, Food and Rural Affairs also continues to build an evidence base on all aspects of the food supply chain.

The Government have made a sustainable and profitable food and farming sector the No. 1 business objective of DEFRA. We believe passionately in the industry, which, as I have said, is a vital part of the British economy and British life, particularly in rural communities. I congratulate my hon. Friend on securing the debate and on her contribution to it, and I hope I can reassure her that the Government are totally committed not just to British food and farming but to British food security, which is of interest to us all.

Question put and agreed to.

22:36

House adjourned.