House of Commons

Wednesday 19th October 2011 Commons Chamber

Wednesday 19 October 2011

The House met at half-past Eleven o’clock

Prayers

Wednesday 19th October 2011 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 19th October 2011 Commons Chamber

The Secretary of State was asked—

[Mr David Hanson (Delyn) (Lab)]

1. What recent discussions he has had with the Northern Ireland Executive on the threat from dissident groups.

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

3. What recent assessment he has made of the threat posed by terrorist groups in Northern Ireland.

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

11. What recent assessment he has made of dissident activity in Northern Ireland; and if he will make a statement.

[The Secretary of State for Northern Ireland (Mr Owen Paterson)]

With permission, Mr Speaker, I will answer Questions 1, 3, 8 and 11 together.

The threat level in Northern Ireland remains at severe, and we continue to work closely with our partners in the Police Service of Northern Ireland, the Northern Ireland Executive and the Irish Government to counter that threat. We are not complacent, and this Government remain totally committed to ensuring that the Chief Constable has the necessary resources to deal with the threat posed by those terrorist groups.

[Mr Hanson]

Does the Secretary of State welcome the many hundreds of people who came out in the constituency of my hon. Friend the Member for Foyle (Mark Durkan) last week to protest against the bombing for the second time of the city of culture office in the city of Derry? Does the right hon. Gentleman agree that they represent the true voice of Northern Ireland, and will he work with the Northern Ireland Executive to ensure that nothing deflects from the city of culture programme taking place in Derry?

[Mr Paterson]

I am grateful to the right hon. Gentleman for this question and entirely endorse his comments. It is quite extraordinary, when we think of how that city is coming together, united behind the city of culture programme, which is coming along soon, that that tiny number of unrepresentative people could do such a crazily reckless thing. The demonstration of people coming out on to the street shows the support that exists for the settlement and for the PSNI, and that was endorsed this morning in my conversation with the Northern Ireland Justice Minister, Mr David Ford.

[Jack Lopresti]

Does my right hon. Friend agree that the recent unanimous support from all parts of the Northern Ireland Assembly for the Police Service of Northern Ireland in dealing with the dissident threat sends a clear message that those organisations will not succeed?

[Mr Paterson]

I am grateful to my hon. Friend for that question, which follows on from what I have just said. He is absolutely right to draw attention to the fact that we now have a police service that is wholly accountable to a democratically elected Justice Minister and a democratically elected Policing Board, on which all parties sit.

[Mr Speaker]

Mr Patrick Mercer. Not here.

[Diana Johnson]

Is the security situation worse or better than it was a year ago?

[Mr Paterson]

I am very grateful to the hon. Lady for that question, and as she knows we have put in very significant extra resources, with £200 million going in over the next four years, backed by the Executive putting in a further £45 million. In discussions with the PSNI, we are determined to bear down on those groups, which are dangerous, and we are not complacent about them.

To answer the hon. Lady’s question directly, we have slowed down the increase in such activity which we saw when we came into office, but there is definitely more work to do, and none of us should underestimate the danger that that small number of people represent not just to the police, but to people going about their everyday business.

[Mr Nigel Dodds (Belfast North) (DUP)]

I endorse what the Secretary of State has already said about the lack of support from all parts for dissident groups in Northern Ireland, but on combating the dissident threat, what is he doing to strike at their source of funding and their raising of finances, particularly through illicit fuel laundering and other sources of revenue? What is happening to tackle that?

[Mr Paterson]

I am grateful to the right hon. Gentleman for that question, because it gives me an opportunity to make clear to the House the remarkable successes that the PSNI has pulled off, stopping fuel laundering and making some very significant arrests on illegal cigarettes. We should all remember the extraordinary level of co-operation that we now have between the PSNI and the Garda, working both sides of the border, because such activity is not restricted to the north.

[Mr Dodds]

I am grateful for the Secretary of State’s answer, but he will know that, as well as finance helping the dissident terrorists, one thing on which such people thrive is the hope that they are dictating the Government’s agenda. On that point, they have taken great comfort and solace from the fact that the Ministry of Defence decided not to allow a homecoming parade for the Royal Irish and the Irish Guards in Belfast. Will he continue his efforts and speak to the MOD about that issue, which has gone down very badly in all quarters of Northern Ireland, especially when such parades have been allowed elsewhere throughout the Province? Will he have a word with the Ministry of Defence on that?

[Mr Paterson]

I am grateful for that question, too, because I can now clarify that I have regular discussions with the Ministry of Defence. I went to Balmoral showground and I was there with the First Minister when the Royal Irish Regiment and the Irish Guards put on a wonderful demonstration and were warmly welcomed by a large number of people. That was agreed by the Ministry of Defence with the city council.

[Vernon Coaker (Gedling) (Lab)]

Recently there have been two bombs found in south Belfast, a bomb found in Bradbury place, and a pipe bomb left on the windowsill of a Polish couple on an estate in Antrim. These are in addition to the other bombs and outrages of which the Secretary of State will be aware. This is totally unacceptable. People have a right to live without fear and intimidation in any community. It is welcome that these attacks have been widely condemned as the work of a very small number of people who seem determined to turn the clock back. What is the latest assessment that the Secretary of State and the Northern Ireland Executive have made about the dissidents’ capabilities, and what steps have they agreed to take to combat their activities?

[Mr Paterson]

I very much welcome the hon. Gentleman to his first Northern Ireland questions. As I said in the statement last week, Northern Ireland would not have progressed to where it has without the extremely close co-operation of the main political parties, not just in the UK but in Dublin and Washington. I very much look forward to working with him and wish him well in his difficult role.

As the hon. Gentleman knows, we work extremely closely with the Justice Minister, David Ford, and, as I have already said, we work very closely with the authorities in Dublin, and our assessment is that these groups are still dangerous. He has rightly cited a number of recent incidents which are absolutely outrageous and which are wholly exceptional. The vast majority of people in Northern Ireland want to grab this wonderful opportunity to move Northern Ireland on, and so we will guarantee to work extremely closely with the Police Service of Northern Ireland, the Justice Minister, and the Garda in Dublin.

[Vernon Coaker]

I thank the Secretary of State for his kind words. I will certainly try to work with him and others for the good of the people of Northern Ireland.

What plans does the Secretary of State have to use his role in working with Northern Ireland ministerial colleagues to promote Londonderry/Derry as the UK city of culture 2013 both nationally and internationally? Is it not the case, as my right hon. Friend the Member for Delyn (Mr Hanson) said, that one very powerful way of combating any dissident threat is to give a positive image of what the city and the whole of Northern Ireland can offer in terms of culture, and to give a true reflection of the people of Northern Ireland, in stark contrast to those who so recently caused outrage when they attacked the city of culture offices?

[Mr Speaker]

We now need to speed up. I call the Secretary of State.

[Mr Paterson]

I am very grateful for the hon. Gentleman’s question and totally endorse it. I was at the launch of the city of culture with the First Minister and the Deputy First Minister, but the key people there were the young people who put on the film and the soundtrack by Snow Patrol, which wowed the judges; Phil Redmond confirmed that it was the thing that really swung it. That is a complete celebration of everything good that is going on in that city, as was the opening of the bridge this year. The tiny number of crazy people putting bombs outside the offices are unrepresentative, and they will not succeed.

[Mr Speaker]

I am extremely grateful. We will now move on with rather greater dispatch, I hope.

[Paul Murphy (Torfaen) (Lab)]

2. What plans he has to publish his conclusions on legacy issues in Northern Ireland.

[The Secretary of State for Northern Ireland (Mr Owen Paterson)]

My right hon. Friend the Minister of State and I have been meeting a range of political parties and victims’ groups to discuss the issue of dealing with the past. So far, we have not found consensus. While the Government have a role to play, the way forward on this matter must come from within Northern Ireland.

[Paul Murphy]

The Secretary of State is of course right that solutions must come from within Northern Ireland, but he will realise that there is now widespread opposition to his proposal for a semi-inquiry into the Pat Finucane case. Does he understand that by going ahead with his proposal, £1.5 million is likely to be wasted, and will he now rethink?

[Mr Paterson]

I am grateful to the right hon. Gentleman for his question, and I pay tribute to him, as I did last week in the statement. I am sorry that we disagree on this. He committed to a public inquiry, but he then passed the Inquiries Act 2005, which was the stumbling block. We inherited a complete impasse; this was going nowhere. We think that by accepting the conclusion of the Stevens inquiry, which is possibly the largest police inquiry in British history, and by having the family to Downing street for a fulsome apology, we can now concentrate on what is really important, which I raised with the family when I first met them—namely, to get to the truth as fast possible. That is why we have gone down this route of appointing a well-respected international lawyer and giving him very wide powers to get to the truth by December next year.

[Ms Margaret Ritchie (South Down) (SDLP)]

I thank the Secretary of State for his answer. However, given the political sensitivity surrounding legacy issues and the fact that the greatest legacy issue in Northern Ireland is the murder of Pat Finucane, will he reflect on the comments of the Minister for Foreign Affairs and Trade in Dublin and of members of the Finucane family, and realise that this could undermine the very architecture of the Good Friday agreement? Will he now redress the situation and ensure that there is an independent judicial inquiry into—

[Mr Speaker]

Order. We must have time for the answers as well.

[Mr Paterson]

I am afraid that I simply do not agree. We inherited an impasse and have come up with a solution. I have talked to senior members of the Irish Government and I talked to the Tánaiste this week after he had seen the family. On this issue, sadly, we will simply disagree with them. We will not let this one issue undermine the extraordinarily good relations we have with the Republic, nor will we let it undermine the settlement. If the hon. Lady had been at Hillsborough last night and seen people from right across the community welcoming the President, she would have seen just how far Northern Ireland has moved on. We are all determined to keep that going.

[David Simpson (Upper Bann) (DUP)]

One legacy issue that has never been addressed is the role played by elements of the Republic of Ireland’s Government in creating, financing, training and arming the Provisional IRA, and Dublin’s shielding of the provos by refusing to co-operate fully with extradition. Does the Secretary of State accept that the families in Birmingham, Warrington, London, Aldershot and elsewhere deserve to see Enda Kenny step to the mark, acknowledge the failings of the southern Government and formally apologise for those killings?

[Mr Paterson]

I think that it is outside my remit. If the hon. Gentleman has questions that he would like to address to the Government of the Republic, he should write to them direct.

[Harriett Baldwin (West Worcestershire) (Con)]

4. What recent discussions he has had with the Deputy Prime Minister on the commission to consider the West Lothian question.

[The Minister of State, Northern Ireland Office (Mr Hugo Swire)]

In September, the Government set out the steps that we are taking to establish a commission on the West Lothian question. Northern Ireland Office Ministers and officials will continue to have regular discussions with the Deputy Prime Minister and his office on this and a range of other issues.

[Harriett Baldwin]

The Minister will know that the West Lothian question is also known as the West Belfast question. Does he agree that it is important that the commission comes to a conclusion relatively quickly in order for steps to be taken to resolve this tricky constitutional issue before the next election?

[Mr Swire]

Yes, I believe—as do the Government, which is lucky—that we need this commission. I think that we will hear its terms of reference shortly. When it is set up, it should conclude quite quickly. No doubt my hon. Friend, who has campaigned assiduously on this matter, will wish to give the commission the benefit of her views.

[Ian Paisley (North Antrim) (DUP)]

Does the Minister agree that the creation of a two-tier Parliament here would be against the interests of the United Kingdom and the interests of Unionism throughout the United Kingdom? Does he further agree that if he were to proceed along the way of the West Lothian question, he would have to stand at that Dispatch Box and argue for double jobbing? Is that not against the interests of his Government?

[Mr Swire]

I think that the hon. Gentleman knows our views on double jobbing in relation to Northern Ireland. He will equally know of my view that everybody in this place is equal. I take a rather more positive view than he does. The Governments in Edinburgh and Cardiff and the Executive in Northern Ireland are up and running and functioning. I therefore believe that it is time we looked at how parliamentary business—the business of this House—can be done better to reflect a post-devolution United Kingdom. That is what the commission will look at. That should reinforce the strength of the Union—something in which he and I both believe.

[Mark Durkan (Foyle) (SDLP)]

5. What discussions he has had with ministerial colleagues on the regulation of credit unions in Northern Ireland.

[The Minister of State, Northern Ireland Office (Mr Hugo Swire)]

Following discussions between Treasury Ministers and the Department of Enterprise, Trade and Investment, the Treasury and the Financial Services Authority published a joint consultation paper in August setting out proposals for the transfer of the regulation of Northern Ireland credit unions from DETI to the FSA on 31 March 2012. [Interruption.]

[Mr Speaker]

Order. There are far too many private conversations taking place in the Chamber, notably on the Opposition Benches. I would have thought that everybody would want to hear Mr Mark Durkan.

[Mark Durkan]

I thank the Minister for that reply. Tomorrow is international credit union day, and credit unions in Northern Ireland have been waiting for the change that he described for a long time so that they can offer their members a much greater range of services. Will he assure us that his work with Treasury Ministers will mean that the primary legislation will be adequate, the secondary legislation will follow fast and the transition arrangements will have a strong regional presence so that the credit unions can work with the new regulator to make a success of the new powers?

[Mr Swire]

I congratulate the hon. Gentleman, and his predecessor John Hume, on championing the cause of credit unions for many years. There are 177 credit unions in Northern Ireland. They are part of the big society agenda, and we think they are great institutions. We want them to be able to expand and offer the services that credit unions in Great Britain currently can. He will agree that what is important during the change is that people with their money in those credit unions are properly protected. Like me, he will no doubt welcome the move to bring credit unions under the FSA or its successor, to protect them in a way that the Presbyterian Mutual Society savers were not protected.

[Stephen Pound (Ealing North) (Lab)]

The right hon. Gentleman will surely remember that a well-crafted and consensual Labour Bill to address precisely this issue was presented to the House in the last Parliament and cruelly garrotted during the wash-up. Does he regret the actions of his party?

[Mr Swire]

I do not believe that the Labour party got everything wrong, just most things.

[Mr Stephen Hepburn (Jarrow) (Lab)]

6. What discussions he has had with the Chancellor of the Exchequer on the effect in Northern Ireland of changes to air passenger duty.

[The Secretary of State for Northern Ireland (Mr Owen Paterson)]

I have had regular discussions with my right hon. Friend the Chancellor of the Exchequer, who came to Northern Ireland in June, heard at first hand from local businesses about the importance of the issue and became personally involved in resolving it. As a result he announced a cut in air passenger duty next month for all direct long-haul flights from airports in Northern Ireland.

[Mr Hepburn]

May I welcome yesterday’s announcement and say how encouraging it is to other parts of the UK that think that particular tax is unfair? Will the Minister keep the House updated on the progress of the tax cut so that we may learn something and get a change in other parts of the UK?

[Mr Paterson]

I think the hon. Gentleman is asking me to stray into areas that are not my responsibility, but I pay tribute to him and his friends on the Northern Ireland Affairs Committee, who rapidly produced a report making a convincing case for the change. I would like to put on the record that it was a team effort. My right hon. Friend the Minister of State worked closely with the hon. Member for East Antrim (Sammy Wilson) and with the Minister for Enterprise, Trade and Investment, Arlene Foster. The key person was the Chancellor, who saw the need for the change following his visit, took a real personal interest and pushed it through.

[Mr Laurence Robertson (Tewkesbury) (Con)]

I thank the Secretary of State, and indeed the Chancellor of the Exchequer, for taking swift and timely action on air passenger duty in Northern Ireland. When will the Secretary of State consider giving the Northern Ireland Assembly the power to set the level of corporation tax?

[Mr Paterson]

I am grateful to my hon. Friend for leading the Northern Ireland Affairs Committee and for getting the report through. I announced two weeks ago that a ministerial working group would be set up, chaired by my hon. Friend the Exchequer Secretary to the Treasury, and it hopes to meet in early November.

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

Has the Secretary of State had any discussions with members of the Northern Ireland Executive about the devolution of taxes other than corporation tax to Northern Ireland?

[Mr Speaker]

Order. We need particular reference to the importance of the air passenger duty. I am sure the hon. Gentleman meant to mention that.

[Mr Paterson]

I discussed air passenger duty with members of the Executive, namely the First Minister and the acting Deputy First Minister, yesterday, and I have discussed corporation tax. I have not discussed the devolution of any other taxes.

[Naomi Long (Belfast East) (Alliance)]

With respect to the devolution of air passenger duty, will the Secretary of State be pressing for a swift timetable to take that forward? Will he also consider other double-duty taxations caused by people having to travel through GB airports?

[Mr Paterson]

My hon. Friend the Economic Secretary made a statement yesterday confirming that from 1 November the long-haul rate will be reduced. I hope to see that followed through swiftly by the Treasury, which is working closely with Executive Ministers so that this issue can be devolved as soon as possible.

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

7. What recent discussions he has had with political parties in Northern Ireland on the law relating to donations to such parties.

[The Minister of State, Northern Ireland Office (Mr Hugo Swire)]

It is clear from my discussions with the political parties in Northern Ireland that, like us, they want greater transparency over donations and loans. We will legislate to deliver this as soon as we can.

[Thomas Docherty]

I am grateful to the Minister for his answer. He will appreciate the deep unease on both sides of this House about the continuing special measures required in Northern Ireland. Will the Minister spell out exactly when he proposes to legislate on this issue and when Sinn Fein will no longer get their special Short money?

[Mr Swire]

As the hon. Gentleman knows, I have reluctantly extended the current arrangements to 2013 and hope to return to the House on this matter before then. I point out to him that Sinn Fein is subject to the same requirement as all other parties, and donations of more than £7,500 must be reported to the Electoral Commission. We want to move to a period of full transparency, but the time is not yet right. [Interruption.]

[Mr Speaker]

Order. The House must come to order. The next questioner is a former Northern Ireland Minister and I trust that the House will want to hear him.

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

9. What recent discussions he has had with the Northern Ireland Executive on the contribution of aviation to economic development.

[The Minister of State, Northern Ireland Office (Mr Hugo Swire)]

I am in regular contact with Executive Ministers about air routes and fully understand the importance of the aviation industry to Northern Ireland, one of whose main companies, Bombardier Aerospace, I shall be seeing again shortly.

[Paul Goggins]

May I also welcome the Government’s decision to reduce air passenger duty on long-haul flights? This creates a new anomaly, of course, whereby if someone pays tax on a return flight from Belfast to New York they will pay less tax than they would on a return flight to Manchester. Given the importance of regional routes to the Northern Ireland economy, will the Minister press the Chancellor, who is sitting very close to him, for a lower rate of duty on flights between Belfast and regional airports in the UK?

[Mr Swire]

We have been pressing the Chancellor on quite a lot of things recently and I am not sure we want to press him much more. As the right hon. Gentleman knows, Northern Ireland shares a land border and the flights from Dublin were cheaper—that was the problem. We are most grateful to the Treasury for recognising the anomaly of the transatlantic Belfast route, and any other airlines that are listening in might wish to take advantage of that, because we want to grow air traffic to Northern Ireland as part of rebalancing the economy.

[Mr Gregory Campbell (East Londonderry) (DUP)]

We all agree with the recent announcement on the Continental Airlines transatlantic route. Will the Minister make himself available so that if other routes become possible from all three airports in Northern Ireland on the transatlantic scene he will be able to help deliver more progress?

[Mr Swire]

Yes, of course we will. The key is the transfer of APD to the Executive for this transatlantic route. An investigation into APD is going on in the Treasury and the hon. Gentleman might wish to make representations to it. As I have just said, we are very interested in growing air routes to Northern Ireland, and not least in growing more from Great Britain into Belfast or any other airport. We want more tourists, more businessmen and more economic growth.

[Nic Dakin (Scunthorpe) (Lab)]

10. What discussions he has had with the Northern Ireland Executive on reducing youth unemployment in Northern Ireland.

[The Minister of State, Northern Ireland Office (Mr Hugo Swire)]

Tackling youth unemployment is a key priority for the UK Government and Northern Ireland Ministers. The Minister for Welfare Reform, Lord Freud, has visited Northern Ireland on two occasions and met the Social Development and Employment and Learning Ministers to discuss these very matters.

[Nic Dakin]

What additional support is the Secretary of State putting in place to reduce youth unemployment so that young people have a positive future in Northern Ireland?

[Mr Swire]

The hon. Gentleman has a long track record in youth issues. We are very concerned about them. This was a problem for the previous Government, of which he was not a member, in all fairness, and it continues to be a problem. The Executive are dealing with a number of issues to do with apprenticeships and youth learning and we will continue to support them in every way. It is critical, however, that Executive Ministers engage with Lord Freud on the whole proposed package of welfare reform.

[Robert Halfon (Harlow) (Con)]

Does my right hon. Friend agree that the best way to increase youth employment in Northern Ireland is to invest in apprenticeships and the university technical schools, which is happening elsewhere in the United Kingdom?

[Mr Swire]

My hon. Friend is right—that is certainly one way of increasing youth employment. There is youth unemployment in Northern Ireland as there is in Great Britain, but as I have pointed out, that problem bedevilled the previous Government as well as this one, and we take it very seriously. Most of the levers are in the hands—

[Mr Speaker]

Order. I am sure that the Minister of State is delivering a formidably eloquent answer, but unfortunately I cannot hear it. Would he address the House?

[Mr Swire]

At the risk of repeating myself, the levers are mostly in the hands of Stormont Executive Ministers, and I urge them to engage with Lord Freud and his ministerial colleagues in respect of the package of welfare reform, which will be important for Northern Ireland’s future prosperity.

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

Will the Minister join me in welcoming the Northern Ireland Executive’s decision to cap tuition fees at just over £3,000 and the boost that that provides to young people in Northern Ireland who seek to graduate from university?

[Mr Swire]

Those are quite properly matters for the Executive. I would point out, as the right hon. Gentleman is well aware, that that money must be found from within the Executive’s existing budget.

The Prime Minister was asked—

[Mr Stephen Hepburn (Jarrow) (Lab)]

Q1. If he will list his official engagements for Wednesday 19 October.

[The Prime Minister (Mr David Cameron)]

I am sure that the whole House will wish to join me in remembering Rifleman Vijay Rai, from 2nd Battalion The Royal Gurkha Rifles. He was a talented and dedicated soldier, and our deepest sympathies should be with his family and his friends. He was proud to be a Gurkha and it is at times such as these that we especially remember the deep debt of gratitude that we owe all those brave soldiers.

This morning I had meetings with ministerial colleagues and others and in addition to my duties in the House I shall have further such meetings later today.

[Mr Hepburn]

I commend and share the views of the Prime Minister concerning our brave military personnel.

Is the Prime Minister aware that this year we commemorate the 75th anniversary of the Jarrow march? Is it not wrong that even today people in this country live in fear of the dole and unemployment? The Government have been in for one year and already we are back to the 1980s. I ask him a simple question: will he support workers or sacrifice them?

[The Prime Minister]

I believe that we need to be supporting people and helping them back into work. As the hon. Gentleman says, we should commemorate the Jarrow march, and I notice that it has been commemorated this year. We have a challenge right across the country as we see the numbers of those employed in the public sector inevitably go down, which would be happening whoever was standing at this Dispatch Box. We have got to make sure that there are more jobs in the private sector.

It is worth while that in the north-east Nissan is creating 200 new jobs, Hitachi is creating up to 500 new jobs, the Lear Corporation is creating an extra 300 jobs, and BT is creating an extra 280 jobs, in South Shields. There are 500,000 more private sector jobs—new jobs—compared with the time of the last election, but I recognise that we need to do more. That is what the Work programme is all about.

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

Q15. May I congratulate my right hon. Friend on his joint declaration with the Canadian Prime Minister on ocean renewable energy? We need to ensure that we have growth in our economy. What does he think universities such as Plymouth, which has a very good reputation for marine science research, can do to help to ensure that we have that?

[The Prime Minister]

I commend my hon. Friend for his question, because a number of universities in our country—including Edinburgh, which I have visited—are leaders in marine renewable energy. My right hon. Friend the Energy and Climate Change Secretary yesterday announced that we will go ahead with renewables obligation certificates, ensuring that we boost that vital industry and attract jobs to this country for offshore wind and other renewable technologies.

[Edward Miliband (Doncaster North) (Lab)]

May I join the Prime Minister in paying tribute to Rifleman Vijay Rai from 2nd Battalion The Royal Gurkha Rifles? In joining the Army, he was following in a proud family tradition. He showed the utmost courage and bravery, and our deepest condolences are with his family and friends.

The revelations over the past week about what has been going on in the most sensitive Department at the heart of the Prime Minister’s Government are deeply worrying. The former Defence Secretary had an unofficial adviser with access to top officials in the military and, indeed, in foreign Governments, who was funded by undeclared private donations solicited by him, yet the Prime Minister says that he and No. 10 knew nothing about these goings-on for 18 months. How did he allow this to happen?

[The Prime Minister]

First, I agree with the right hon. Gentleman that this is an important and serious issue, which is why I set up a full and proper inquiry by the Cabinet Secretary. He has produced his report, and it has been published in full. It is worth noting, however, that in this case the Secretary of State for Defence recognised that he had made a mistake, acknowledged that had broken the ministerial code and resigned. That was not something that always happened in the previous 13 years.

[Edward Miliband]

I have a piece of advice for the Prime Minister: this week of all weeks, show a bit of humility, eh? The truth is that we still do not know the full facts about this case, about the money trail and about who exactly in the Government met Mr Werritty. It is becoming clear that there is a network of individuals, some with close links to the Conservative party and other Cabinet members, who funded Mr Werritty. Given that the Prime Minister says that he knew nothing about the former Defence Secretary’s arrangements, can he give the House a categorical guarantee that over the past 18 months no other Minister has been engaging in similar activities?

[The Prime Minister]

I think that we should have a little humility from the people who gave us cabs for hire, passports for favours, mortgages for mates, dodgy dossiers, the smearing of opponents and good days to bury bad news. I note that these were the questions that the right hon. Gentleman was meant to ask last week. I have some advice for him: if he is going to jump on a bandwagon, make sure it is still moving.

[Edward Miliband]

The Prime Minister has no answer to the question that people want answered. We have seen a pattern of activity from him: he does not ask the tough questions of those around him, and when anything goes wrong, it is nothing to do with him. What did he say in the ministerial code that he published? He said:

“It is not enough simply to make a difference. We must be different.”

In the past three months, we have seen his Defence Secretary resign in disgrace and his spin doctor arrested. Is that what he meant by being different?

[The Prime Minister]

The right hon. Gentleman seems to have failed to notice that the Minister in question has resigned—you’re just a bit late.

[Mr Julian Brazier (Canterbury) (Con)]

Would my right hon. Friend agree that at a time when—[Interruption.]

[Mr Speaker]

Order. I want to hear Mr Brazier.

[Mr Brazier]

Would my right hon. Friend agree that at a time when the Governor of the Bank of England has said that we are facing a possibly unprecedented economic crisis, it is a good thing that the country is still committed to getting our debts under control and to retaining credibility in the financial markets?

[The Prime Minister]

My hon. Friend makes an important point. People should listen to what the Governor of the Bank of England said yesterday:

“With a lower level of sterling and a credible plan to reduce the fiscal deficit over the medium term, we were on track. But the problems in the euro area and the marked slowing of the world economy have lengthened the period over which a return to normality is likely.”

That is what we face in this country, but it means that we should stick to the plan of dealing with our debts and our deficit. If we listened to the Labour party and added £23 billion to the deficit this year, it would not be “Greek-onomics”; it would be “freakonomics”.

[Mark Durkan (Foyle) (SDLP)]

Q2. The Prime Minister has acknowledged that there was collusion in the murder of Pat Finucane. Does he accept that in order to get to the bottom of that we have to get to the top of that? Does he recognise that many of us lack confidence that a desk review by even an eminent lawyer will be able to do that? Will he reflect further on the grave misgivings expressed by the Finucane family and the Irish Government?

[The Prime Minister]

Of course I understand the scepticism of the hon. Gentleman; and of course, there was great scepticism by many at the time of the Saville inquiry about whether it would get to the truth. What matters most is the intent of the British Government in uncovering what happened, being frank about it, acknowledging it and apologising for it. That is what we are going to do, and we do not need an open-ended inquiry to achieve that. To those who are sceptical, I know that they will go on being sceptical; I would just ask them to have an open mind. I believe that we can deal with this issue properly.

[Martin Horwood (Cheltenham) (LD)]

Will the Prime Minister join me in congratulating Cheltenham borough council on building the first new council housing in 20 years and planning more and more affordable housing on brownfield sites, but also recognise the council’s anxiety that the first draft of the new national planning policy framework could render it powerless to defend vital and treasured green spaces on the urban fringe, which are being deliberately targeted by developers?

[The Prime Minister]

Let me reassure the hon. Gentleman on the planning policy. We are not making changes to green belt or other protections, and I am sure he can discuss that with the planning Minister. Of course I congratulate all local councils that get on and build the houses that we badly need to house the homeless and deal with overcrowding. I am sure that the hon. Gentleman will welcome the announcements that have been made—the Deputy Prime Minister and I have been working closely on this—to ensure that we use money from the right to buy to build more social housing so that we end the scandal of overcrowded housing.

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

Q3. I thank you, Mr Speaker, and your staff, and would like to put on record my gratitude to the Home Secretary and those in all parts of the House for their support for the Hillsborough families during Monday’s debate. Will the Prime Minister acknowledge that Governments have made mistakes, that 22 years is 22 years too long to fight for the truth and that if it is proven that there was an orchestrated cover-up, justice should prevail, despite two decades passing, and those really responsible for the Hillsborough disaster should be brought to book?

[The Prime Minister]

Last week I promised the hon. Gentleman that the time for his debate would be properly protected and that the House would have proper time to debate it, which it did. This week I can tell him that we are going to open up those papers and publish them as we promised so that people can see what was happening. However, it is important to remember that the Taylor inquiry was a proper and thorough investigation. It was not just an inquiry into what happened; it also led to huge changes in the way we manage and arrange football in this country. Hillsborough was a national tragedy. I am hugely sympathetic to the families of the victims, and I am sure that there are regrets for all the institutions involved at the time, including the Government.

[Damian Hinds (East Hampshire) (Con)]

The Prime Minister has already given his backing to national heroes day this Friday, 21 October. Will he join me in commending the hundreds of schools taking part, celebrating inspirational role models and raising money for Help for Heroes?

[The Prime Minister]

I am very pleased to do that. I am a huge fan of Help for Heroes. The way the charity has grown has been a remarkable story. I have seen for myself the extraordinary efforts that it has made at Headley Court, where it has built an extraordinary swimming pool that is used by so many people who are recovering from their injuries in Afghanistan and elsewhere. I would certainly be pleased to support what my hon. Friend says.

[Edward Miliband]

Last week we heard that unemployment was at its highest level since the last Conservative Government. This week we heard that retail price inflation was at its highest level since the last Conservative Government. Does the Prime Minister still think that his plan is working?

[The Prime Minister]

To put the right hon. Gentleman right, the last time that CPI—which is the measure of inflation that we all now recognise—was as high as this was in 2008, when he was in government. That is quite an important point to note. Of course inflation is too high. The principal reasons for it being so high are world food prices, world fuel prices, the depreciation of sterling—[Hon. Members: “VAT.”] Yes, there was an effect from the increase in VAT, just as there was an effect when he increased VAT at the beginning of 2010, but the reason for increasing VAT is to get on top of the record deficit that the last Government left.

[Edward Miliband]

As always, the Prime Minister says that it is just like that in the rest of the world, but we have the highest inflation of any EU country apart from Estonia. That is because of decisions that he made, including the decision on VAT. Week in, week out, the evidence mounts that his plan is not working, but he refuses to change course. Last week, we heard that his flagship national insurance scheme had not worked. Now let me ask him about his flagship regional growth fund, which he launched 16 months ago. Can he tell us how many businesses have had cash paid out to them under the scheme?

[The Prime Minister]

First, let me just put the right hon. Gentleman right on this issue—[Interruption.] It is important. One of the reasons Britain has such a difficult situation with inflation is that we were the country with the biggest boom and the biggest bust of any major European country. He cannot hide from that. The regional growth fund is going to be distributing billions of pounds right across the country, and it is a thoroughly worthwhile scheme that he should be supporting.

[Edward Miliband]

I do not think that the Prime Minister knows the answer. The Government have certainly issued lots of press releases about the regional growth fund—22 of them—but how many businesses have been helped during the past 16 months? Two businesses have been helped. And how many businesses have gone bankrupt in that time? Sixteen thousand. What greater example could there be that this Government’s plan is not working? We have had 18 months of his economic experiment, and what have we got to show for it? More and more people losing their jobs, more and more businesses going bust and inflation going through the roof—and all we have is a Prime Minister who is hopelessly out of touch.

[The Prime Minister]

All the right hon. Gentleman wants to do is talk down the economy, so he will not mention the fact that 300,000 new businesses have started and that 500,000 people have jobs who did not have one at the time of the election. The big question for the right hon. Gentleman is: if he does not like our plan, where is his plan? We now know that his plan to deal with our debts is—[Interruption.]

[Mr Speaker]

Order. Organised barracking is not acceptable. The Prime Minister’s answer must be heard.

[The Prime Minister]

The right hon. Gentleman’s plan is to add £23 billion to Britain’s deficit this year, and almost £100 billion to our deficit by the end of the Parliament. There is not a single country in Europe that would have such a crazy plan—[Interruption.]

[Mr Speaker]

Order. We are most grateful to the shadow Chancellor for his advice, but I would like to apply it to the House as a whole. The whole House must calm down; otherwise, it will be in need of medical treatment.

[The Prime Minister]

The problem is that it was the advice of the right hon. Member for Morley and Outwood (Ed Balls) that got us into this mess in the first place. When is he going to learn that there is not a single country in Europe that thinks that you deal with your debts by adding to your debts? That is why no one listens to him here or in Europe.

[Anna Soubry (Broxtowe) (Con)]

Yesterday, a report was published into the serious failure of Nottinghamshire police to protect a young woman who went on to be murdered by her violent partner. Does the Prime Minister agree that it is imperative that all police forces have the practices, policies and training necessary to protect women from violent men?

[The Prime Minister]

I absolutely agree with my hon. Friend; she makes an important point. Some police forces have taken huge steps forward in dealing with domestic violence, but not all of them have done so. We need to spread that best practice right across the country.

[Pat Glass (North West Durham) (Lab)]

Q4. The Association of Colleges has just announced the largest fall in college enrolments since 1999, and it cites the abolition of EMA as a major factor. This is a tragedy of the Government’s own making, and it lies directly at the door of the Secretary of State for Education. What is the Prime Minister going to do to put this right?

[The Prime Minister]

I think that the hon. Lady will find that the figures show that some enrolments in some colleges have actually gone up. Our replacement for EMA is a well-funded scheme that will be much better targeted at those people in need. The people who really need the extra money will get more than they did under EMA.

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

Families in the country are facing very high fuel bills, and there is a vested interest among the big six fuel companies not to allow competition into the market. What exactly is the Prime Minister doing to encourage more competition and to bring prices down?

[The Prime Minister]

One of the things we are doing is insisting that the big six have to make more of their energy available in a pooling arrangement so that new businesses can come into the industry. The reason we have to do this is that the last Government abolished the pooling arrangements, creating the situation with the big six—and we do not need to ask who the Energy Secretary was during that Government as we are looking at him.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

Q5. Given the importance of carbon capture and storage both as a way of helping to reduce our carbon emissions and as an exportable technology to help rebalance the economy, will the Prime Minister put his words into action and step in to ensure that the Longannet demonstration project goes ahead?

[The Prime Minister]

What I can say is that the funding we set aside for carbon capture and storage is still there and will be made available. Clearly, the Longannet scheme is not working in the way that was intended, but the money and support from the Government for this vital technology is there.

[John Pugh (Southport) (LD)]

Q6. Given the huge savings for the nation made by the Cabinet Office across government without legislation and the huge financial risks provoked by constant structural reorganisation, as in the NHS, would it not be better if politicians learned to manage more and meddle less—even if Governments find the latter easier and more interesting?

[The Prime Minister]

My hon. Friend makes an important point. Let me pay tribute to the Minister for the Cabinet Office and Paymaster General, my right hon. Friend the Member for Horsham (Mr Maude), who does this patient work at the heart of government and does not always get recognised for it. We have reduced management consultants by 70%, saving £870 million; we have spent £490 million less on temporary labour; we have spent £400 million less on marketing and advertising: that is an 80% reduction. These are serious changes to cut the cost of central Government and make sure we provide good value for money. None of those things was done under the last Government.

[Mr John Spellar (Warley) (Lab)]

Q7. Before the election the Prime Minister claimed that anyone caught carrying a knife should expect to go to prison. Has he read Brooke Kinsella’s article in today’s The Sun, revealing that 40% of all knife crime is carried out by under-18s? Why will he not deliver on his promise and put them in jail?

[The Prime Minister]

We are doing something that the last Government failed to do, which is to create a mandatory sentence for adults who are caught with knives to make sure that happens.

[Andrew Rosindell (Romford) (Con)]

The Prime Minister will be aware that the British people are simply crying out for a referendum on the future of Europe. Will he please make history, follow the example of great Prime Ministers like Winston Churchill and Margaret Thatcher and give the British people the chance to vote on our future with the European Union?

[The Prime Minister]

I completely understand and share the frustration that many have about the way in which the European Union goes about its business, particularly the costs and the bureaucracy, but I have to say that the key focus is to get on top of the EU budget, keep Britain out of the bail-out schemes and ensure that the single market is working. Of course we are committed as the Conservative party to the return of powers from Brussels to Westminster. We are also committed as a Government to ensuring that if power passes from Westminster to Brussels, there will have to be referendum. That promise is good for the whole of this Parliament and beyond, but I do not support holding a referendum come what may. That is not our policy and I will not support such a motion.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Q8. We are all aware of the bravery and courage of our armed forces as they serve in Afghanistan. Last November Ranger Aaron McCormick from just outside Coleraine in my constituency died in Helmand province; he was one of many who paid the highest price to defend freedom. His commanding officer said: “Today, there is a gap in our ranks which no ordinary man could fill. He was the best of his country and we mourn his loss.”Will the Prime Minister ensure that a review is carried out into the way the Ministry of Defence prepares its honours list so that families can see that the entire nation recognises the sacrifice and selflessness of these brave men and women?

[The Prime Minister]

I will certainly look carefully at what the hon. Gentleman says and perhaps arrange a meeting between him and the Under-Secretary of State for Defence, my right hon. Friend the Member for South Leicestershire (Mr Robathan) who is responsible for veterans and these issues. That would be a good thing to do. Let me say again that I have the highest possible regard for the professionalism, the courage and the dedication of our forces. We have paid a very high price in Afghanistan and in Iraq for what we have had to do there. I think the whole country, perhaps in a little bit of a contrast to what the hon. Gentleman says, recognises that and feels that very strongly and is looking for new ways to recognise what our armed forces do. That is why there is such strong support for Help for Heroes, for homecoming parades, for lists of honours, for the military covenant and for all such things. I think we should go on looking at what more we can do to recognise the service and sacrifice of our armed forces.

[Mr Adrian Sanders (Torbay) (LD)]

Q9. As a result of inaccurate reporting and statements about a European directive applying to insulin-dependent diabetics, up to a million such people fear for their driving licences. Is it not the case that the way in which the Department of Transport interprets that directive will determine whether or not people lose their licences? Will the Prime Minister make the position clear?

[The Prime Minister]

I will certainly try to do that.

I entirely understand my hon. Friend’s concern, which is shared by many insulin-treated diabetics throughout the country who want to continue to drive freely as they have in the past, but I can reassure him that relatively few of them will lose their licences as a result of the directive to which he has referred. The Driver and Vehicle Licensing Agency is going back to the European commission to check its understanding of the interpretation of the minimum standards in the directive. As Members in all parts of the House probably know, Departments gold-plate directives on too many occasions, and it cannot be said too often that they should stop it.

[Angus Robertson (Moray) (SNP)]

We learnt today that the British Airports Authority is to sell Edinburgh airport. Does the Prime Minister agree that it is important for the Scottish economy that we have as many direct international routes and services as possible? If so, why does he not listen to the views of the four major airports and Transport Scotland, which want air passenger duty to be devolved?

[The Prime Minister]

I think the most important thing is that investment goes into the infrastructure of our airports, and I know from first hand that Edinburgh airport has superb facilities which continue to be improved. As for air passenger duty, we will continue to listen carefully to those arguments.

[Mr Sam Gyimah (East Surrey) (Con)]

Q10. Does the Prime Minister agree that if we are to tear down the apartheid in the education system, for which he argued a few weeks ago, not only should well-performing private schools support under-performing state schools on an ad hoc basis, but we should go further and encourage them to federate?

[The Prime Minister]

My hon. Friend makes an excellent suggestion. I believe that that should be a cross-party initiative, and I pay tribute to Lord Adonis, who has made some extremely important speeches about the issue. I see a real opportunity for independent schools to do what Wellington college, Dulwich college and Brighton college have done, and sponsor academies in the state sector. I think that we can see the breaking down of the barriers between independent and state education, I think that this is a great way forward, and I hope that it will be given all-party support.

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

Q11. A change in the national targets regime and cuts have led to disarray in the Greater Manchester emergency services. A stroke victim has had to wait for an hour for an ambulance, the response time of the fire service has doubled in parts of Greater Manchester, and the police switchboard is in meltdown. What reassurances can the Prime Minister give that the failure of those services will not lead to a tragic death?

[The Prime Minister]

I will give careful consideration to what the hon. Gentleman has said. What I can say about health funding specifically is that we are implementing the £20 billion efficiency savings suggested by the now shadow Health Secretary, the right hon. Member for Leigh (Andy Burnham). However, the difference between the policy supported by his party and our policy is that we are putting all those savings back into the NHS, whereas the official Labour position is that increasing spending on the health service in real terms is “irresponsible”. We think it irresponsible not to increase spending.

[Jason McCartney (Colne Valley) (Con)]

Q14. David Brown Engineering in Lockwood, in my constituency, has received a regional growth fund investment that will help to create 80 new jobs. Does the Prime Minister agree that, notwithstanding the moithering and doom-mongering of Opposition Members, there are success stories out there? With that in mind, will he consider coming to open the new innovation and enterprise centre at Huddersfield university in the spring?

[The Prime Minister]

What a delightful invitation! I thank my hon. Friend—[Interruption.]

[Mr Speaker]

Order. I want to hear about the Prime Minister’s Huddersfield travel plans.

[The Prime Minister]

Thank you, Mr Speaker. I look forward to making those travel plans.

I think that my hon. Friend has managed to show that the Leader of the Opposition’s first lot of questions were irrelevant and the second lot were probably wrong.

[Ian Austin (Dudley North) (Lab)]

Q12. The answer the Prime Minister just gave to my right hon. Friend the Member for Warley (Mr Spellar) is simply not good enough. The fact is that, despite all the Prime Minister’s promises, fewer people caught carrying knives are going to prison under this Government than under the last, so will he apologise to Brooke Kinsella and all the bereaved families of victims of knife crime for breaking the promise he made that he would take a tougher approach?

[The Prime Minister]

I am full of admiration for the campaign Brooke Kinsella has run. When someone has suffered such a loss in their own family, it is incredibly brave of them to get out there and campaign for change—and not just change in the law, but also change in the way the police behave and in the way young people behave. I think she is a thoroughly good individual, with a very great campaign. What this Government are doing—which the last Government did not do—is have a mandatory sentence for knife crime, which we will introduce in our forthcoming Bill.

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

Will my right hon. Friend join me in supporting the Royal College of Speech and Language Therapists “giving voice” campaign, which rightly emphasises the central importance of speech, language and communication in tackling a wide range of social issues?

[The Prime Minister]

I will certainly join my hon. Friend in doing that, and I know that you, Mr Speaker, take a close personal interest in this issue as well. Anyone who has brought up disabled children knows the vital importance of speech and language therapists. They also know that there are often not enough of them to provide all the help and services we need, and that getting their services through the statementing process can be extremely tough. I therefore certainly agree with what my hon. Friend says.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

Q13. We know that officials from other Governments were given the impression that the former Defence Secretary’s unofficial adviser represented the UK Government. How many people in total were misled, and will the Prime Minister provide a list?

[The Prime Minister]

The hon. Gentleman should read the Cabinet Secretary’s report, as he will find there all the details he might need about what Mr Werritty was doing, but I have to say that for the hon. Gentleman’s party to lecture us on lobbying comes slightly ill given that we now know that the former Labour Defence Secretary is working for a helicopter company, the former Home Secretary is working for a security firm, Lord Mandelson is at Lazard, and even the former leader and Prime Minister has in the last few months got £120,000 for speeches to Credit Suisse, Visa and Citibank. He told us he had put the money into the banks; we did not know he would get it out so quickly.

[Mark Pritchard (The Wrekin) (Con)]

Returning to the topic of Europe, does the Prime Minister accept that moves towards fiscal union in the eurozone will ultimately undermine the single market and the United Kingdom?

[The Prime Minister]

My hon. Friend makes an extremely important point. While we believe that the logic of a single currency drives the eurozone towards greater fiscal integration, that poses particular threats and risks to those of us who want the single market to work properly. At the European Council this weekend it is important to argue for safeguards to make sure that the single market remains robust and properly protected. That is what we must do in the short term. Of course in the longer term there may be further moves towards further treaties and so forth, and at that stage there may be opportunities to bring further powers back to Britain—and there may, indeed, be opportunities to hold a referendum, but I do not believe the right answer is to hold a referendum willy-nilly in this Parliament when we have so much to do to get Europe to sort out its problems.

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

On a statutory register of lobbyists, will the Prime Minister also ensure that so-called think-tanks—whose propaganda is clearly aimed at manipulating both Ministers and the public for their own ends—are required to reveal who ultimately funds them, so that we all know whose interests they really represent?

[The Prime Minister]

We are committed to having a statutory register of lobbyists. That does need to be put in place and, as the right hon. Gentleman says, it needs to include think-tanks and other such organisations. It also needs to include one of the biggest lobbies of all—the lobby that owns the Labour party lock, stock and trade union barrel: the trade unions.

[Several hon. Members]

rose—

[Mr Speaker]

Order. We now come to the statement by the Lord Chancellor and Secretary of State for Justice. If Members leaving the Chamber can do so quickly and quietly, we can all look forward to hearing from Mr Secretary Clarke.

Prisoners’ Rights in Israel

Wednesday 19th October 2011 Commons Chamber

Mr Mark Williams (Ceredigion) (LD)

- Hansard - - Excerpts

It gives me pleasure to present a petition on the issue of the illegal detention without charge of many in the Palestinian community, notwithstanding the Egyptian-brokered deal that has seen the welcome release of the Israeli soldier Gilad Shalit and good progress on the release of Palestinian detainees. The petition is from Elizabeth Morley and the Free Palestine group in my constituency.

The petition states:

The Petition of the people of Ceredigion,

Declares that the Petitioners are appalled by Israel’s continued illegal detention without charge of thousands of Palestinians, including hundreds of children, women and sick people, held in inhumane conditions, in violation of their basic human rights.

The Petitioners therefore request that the House of Commons urges the Government to take every possible measure to ensure that Israel complies with all its international legal obligations in this regard, particularly the Fourth Geneva convention.

And the Petitioners remain, etc.

[P000966]

Train Fares in West Kent and East Sussex

Wednesday 19th October 2011 Commons Chamber

Sir John Stanley (Tonbridge and Malling) (Con)

- Hansard - - Excerpts

I am very glad to see my right hon. Friend the Member for Tunbridge Wells (Greg Clark) in his place. I know that were it not for the constraints on him as a Minister, he would be joining in the presentation of this petition with his customary enthusiasm and determination.

The petition states:

The Petition of residents of West Kent and East Sussex,

Declares that the Petitioners note the campaign by the Kent and Sussex Courier on Southeastern rail fares and that the Petitioners believe that local rail travellers have been unfairly targeted by double figure fare increases, above the average across the network.

The Petitioners therefore request that the House of Commons urges the Government to review its policy on the setting of rail fares.

And the Petitioners remain, etc.

[P000967]

For the thousands of rail travellers in west Kent and on the three lines to London through my constituency—the Borough Green and West Malling line, the Tonbridge line and the Edenbridge line—the extortionate increase in rail fares that they face is a matter of huge importance. I am glad of the opportunity to present this petition.

Justice and Security Green Paper

Wednesday 19th October 2011 Commons Chamber

12:34

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

With permission, Mr Speaker, I should like to make a statement. I have today laid before Parliament the justice and security Green Paper. The document is the culmination of more than one year of careful analysis and consideration on how to respond to a difficult challenge for any liberal democracy: addressing how sensitive material can be properly handled in the civil justice system and how the work of the security and intelligence agencies can be properly scrutinised and those bodies held accountable.

The problem is this: in recent years, there has been an increase in the number and diversity of judicial proceedings that examine national security-related actions. In many cases, the facts cannot be fully established without reference to sensitive material, but this material cannot be used in open court proceedings without risking serious damage to national security or international relations. Difficulties arise both in cases in which individuals are alleging Government wrongdoing and in cases in which the Government are seeking to take Executive action against individuals who pose a risk to the public. The consequence is a Catch-22 situation in which the courts may be prevented from reaching any fully informed judgment on the case because they cannot hear all the evidence in the case. They cannot hear all the evidence because it would do serious damage to national security if the evidence was available to all parties and the public. The Government are left with unsatisfactory choices: they could risk damage to national security by disclosing the material or summaries of it, or attempt to defend a case with often large amounts of relevant material excluded. If the material cannot safely be disclosed, the Government may be forced to settle cases, either by paying compensation or by withdrawing a case brought against an individual.

Further problems are posed by applications for the disclosure of sensitive material being sought for use in other legal proceedings, particularly those overseas. The material has sometimes been generated by foreign Governments and shared with the United Kingdom Government on the most confidential of bases. In these cases, disclosure would endanger crucial international partnerships and put at risk the sharing of information, which is critical to Britain’s national security.

These are issues of the utmost importance, which the previous Government faced just as much as the current one do. The work of the security and intelligence agencies, and the sensitive information that they and foreign partners produce, is essential to prevent terrorist attacks, disrupt serious crime networks and make the case for Executive actions such as deportations and asset freezing.

The current situation is clearly unsatisfactory for everyone: the Government are unable to defend their actions; claimants are left without clear judgments based on all the relevant information; and the public are left with no independent judgment by the court, because it has not been able to consider all the evidence. So the justice and security Green Paper contains a number of proposals to address these extremely difficult issues, and takes account of recent Supreme Court judgments. The Green Paper seeks views on a range of proposals including: extending the so-called closed material procedures, such as those used already in certain civil contexts, to all civil proceedings; clarifying the law on the requirement to provide a summary of the sensitive material heard in closed procedures to the other party when the procedures are utilised; enhancing the existing special advocate system to equip it to best serve the interests of the individual affected by the closed hearings; and ensuring that security issues are properly considered in cases seeking disclosure of material for use in other legal proceedings, including proceedings overseas.

The Green Paper has a further vital goal: reviewing the existing oversight arrangements for our security and intelligence agencies and the wider intelligence community. Allegations of misconduct undermine public confidence in the work of the security and intelligence agencies. It is essential that we have a strong system for overseeing their activities.

In recent years the context in which the agencies work has changed significantly, with the conflicts in Iraq and Afghanistan and the terrorist attacks of 11 September 2001 and 7 July 2005. There have been revolutionary changes in the way that people communicate and use technology. Cyber-security is a major and growing issue, and the budgets and public profiles of the agencies have increased substantially. Given all these changes it is important to ensure that scrutiny of the agencies and the wider intelligence community is effective and credible in the eyes both of Parliament and the public.

The Green Paper makes proposals further to develop the status and remit of the Intelligence and Security Committee, the Intelligence Services Commissioner and the Interception of Communications Commissioner. The Intelligence and Security Committee—that is the existing Committee—has recommended a number of detailed reforms and these have formed the basis of several of the proposals in the Green Paper. Significant reforms that we are floating include changing its status to become a statutory Committee of Parliament, giving Parliament a greater say in ISC appointments and giving the ISC greater powers to require information from the security and intelligence agencies.

The document seeks views on the appropriate balance of arrangements across the overall system of oversight. The Government welcome scrutiny of their activities in every area, including national security. The Green Paper seeks ways to increase both judicial and other independent scrutiny of such matters to unprecedented levels without undermining protection of the public and whilst maintaining strong safeguards for the rights of individuals. Faced with difficult challenges, Governments are sometimes encouraged to suppose that they need to choose between security on one hand and the rule of law on the other, but that is a false choice. As I hope this Green Paper shows, we must have both. I commend this statement to the House.

[Sadiq Khan (Tooting) (Lab)]

First, may I thank the Secretary of State for Justice for giving advance sight of his statement this morning and for the briefing that was provided last week? We are supportive of the attempts by the Government to find a solution to the challenging situations that are encountered in sensitive legal cases. At the outset, I would like to take the opportunity to pay tribute to our security and intelligence services for the difficult and challenging work they do in keeping our country and citizens safe.

As the Secretary of State said, the work of the security and intelligence agencies and the sensitive information that they and foreign partners produce is essential to prevent terrorist attacks, disrupt serious crime networks and make the case for Executive action such as deportations and asset-freezing. It is important that we support them with this difficult task, and finding a sensible way of handling intelligence material in judicial proceedings is one way in which we can do that. The starting point for all of us is, I hope, restating the principle of open justice, which is a central tenet of our justice system. However, we also recognise that there are occasions when the use of classified intelligence can prove to be a challenge to maintaining open justice. This is compounded by the fact that we are in a globalised environment where the sharing of intelligence between international allies is crucial to ensuring our national security and interest overseas.

I agree with much of what the Secretary of State has said about the challenges we face in this area. I hope that he has had a chance to read the excellent piece in The Independent today written by my right hon. Friend the shadow Home Secretary on the importance of strong oversight for strong national security. It recognises that changes are required to ensure that scrutiny of the agencies and the wider intelligence community is effective and credible in the eyes of both Parliament and the public.

We need, as a matter of urgency, to bolster the safeguards and scrutiny mechanisms concerning issues of security and intelligence. I welcome the fact that the Secretary of State is proposing measures to enhance the powers of the Intelligence and Security Committee. We support the publication of a Green Paper: it is right and proper to foster a debate on what are challenging issues and to encourage key stakeholders to contribute their thoughts.

That being said, I want to take this opportunity to ask a number of questions of the Secretary of State. First, who will decide which cases are treated in the way that he sets out in his Green Paper? How many cases does he believe will be dealt with in the manner suggested and what advice has he received from special advocates and from others involved in the Special Immigration Appeals Commission? How will the overall system be scrutinised? Who will undertake the role of overseeing the whole system? Can the right hon. and learned Gentleman comment on the views of the intelligence and security agencies on these proposals? Are they supportive of what has been recommended in the Green Paper?

We are happy to work with the Government to increase both judicial and other independent scrutiny of the intelligence and security agencies without undermining the protection of the public and while maintaining strong safeguards for the rights of individuals.

[Mr Clarke]

I thank the right hon. Gentleman for his extremely constructive response, which is important. As I said, these problems were just as acute for the previous Government as they are for the present one, and with the mounting number of actions being brought in this field, the situation is getting steadily worse. I can assure the right hon. Gentleman that the Government hope to get cross-party agreement. This is a very green paper. We are genuinely open to suggestions as to how to tackle the issue.

It is very much in the national interest that we do that. As the right hon. Gentleman has just said, we intend to protect our system of open justice and at the same time to protect the security of our intelligence agencies and public safety. It is essential that we set aside the ordinary partisan debate and seek to produce a system whereby our public and our allies can be reassured that these matters will be handled sensitively in this country. People will share intelligence with us knowing that it will be used properly, will not be misused and will not be disclosed in areas where it would do damage. At the same time, the public will be able to find out more often the outcome of complaints and actions involving the security services, and have a judge take the matter to a conclusion. I welcome what the right hon. Gentleman said.

I have indeed read the article in The Independent produced by the shadow Home Secretary. I have to say that she, too, was briefed on Privy Council terms, I think. I am used to that. I have been briefed on Privy Council terms quite frequently in the past by members of the previous Government and did not always leap out to the nearest newspaper in order to give a reaction to the briefing that I had just had, but of course in the spirit of bipartisanship that I have just proclaimed, I will take her views seriously. She is trying to find reasons for disagreeing with us on both sides of the argument, but sooner or later she will decide whether we are being too draconian and protective or too indifferent to individual liberties. I look forward to further instalments as, no doubt, does my right hon. Friend the Home Secretary.

The first question that the shadow Justice Secretary asked is key. He asked who will decide that the closed material procedure is the right way to proceed in whatever civil action we are talking about. In the first case it will be put to the court by the Secretary of State, but the final decision will rest with the judge. That is absolutely key. The special advocate is quite entitled to challenge the fact that this evidence is being given under the closed procedure, and the judge will have to be satisfied that on what he or she knows of the claim, it is indeed reasonable to proceed on that basis and there is indeed a threat to national security. That is a considerable reassurance.

I do not know how many cases there will be. The present pattern is that the numbers of cases is steadily increasing. It is becoming fashionable, almost, to start challenging the courts in encounters of any kind with the intelligence agencies. I do not dismiss all these actions, but there are about 30 coming through the pipeline now, so it is urgent that we address the matter.

Accountability is like the ordinary accountability for the court process, but the ISC will no doubt play a part in seeing how the proposal is working and its impact on the Security Service. On the Intelligence and Security Committee’s views on its own reform, as I have already said, we have based many of our recommendations on what the Committee itself has said. It is my understanding—I may discover more clearly in a moment, if any of my right hon. Friends intervene—that the ISC is broadly supportive of where we are going. We are undoubtedly strengthening the Committee. It is being made a Committee of Parliament. It will be accountable to Parliament as well as to the Prime Minister, and it will have increased powers if our proposals gain favour in the course of the consultation.

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

I welcome the publication of the Green Paper because it is better to find a way of getting intelligence material into closed court proceedings than for the cases to remain unresolved. May I point out to the Secretary of State that if that is extended to inquests, it will strengthen the case for a chief coroner, which I have put to him? As someone who has served on the Intelligence and Security Committee for a long time, I believe very strongly that that Committee has to have access to operational information in order to do its job properly.

[Mr Clarke]

On the first point, we canvassed opinion on the prospect of it being extended to inquests. There will be a range of views on that, so this is a genuinely green part of the Green Paper. My view is that in cases where families are desperately anxious to have a proper inquiry and for someone to make some judgments about what caused the death of a family member, it is particularly unsatisfactory if the whole thing cannot be brought to some sort of conclusion because the proceedings are too open to members of the public so the evidence cannot be heard. We will therefore consult carefully on inquests. I am not sure that the legislation proposing that we have a chief coroner would have given him any powers to do much about such inquest cases, but no doubt that issue will be raised if we continue to debate whether we need a chief coroner.

We propose to improve the ISC’s powers to require information to be brought before it. There are of course difficulties and sensitivities relating to operational information, but those will no doubt be raised in response to the Green Paper and are touched on, rather carefully, in the document I have published today.

[Mr Jack Straw (Blackburn) (Lab)]

On the strengthening of the ISC, I commend what the Secretary of State is proposing. It is 17 years since the ISC was established—a different time and in the shadow of the cold war—and, as he has pointed out, circumstances have changed, so the proposals must be right. On the main part of his statement, I congratulate him on finding what appear to be elegant solutions to the terrible dilemma that successive Home Secretaries and Foreign Secretaries have faced, as I know, where the pursuit of apparent openness has resulted in injustice being done to the intelligence and security agencies and the plaintiffs, and sometimes defendants, in these actions. Will he confirm that the model he is seeking to extend for criminal-related cases will build on the establishment, many years ago, of the Special Immigration Appeals Commission? He says that the matter is urgent, and I entirely agree, so when does he plan to conclude the consultation and introduce legislation?

[Mr Clarke]

I am grateful to the right hon. Gentleman. He will not be surprised to learn that, although I made the statement today, I have been working very closely with my right hon. Friends the Foreign Secretary and the Home Secretary, whose interests are crucially involved, as he well knows, having done both jobs. We propose to complete the consultation by January next year, by which time we expect to be able to come back with legislation for the House to consider. I hope that people will feed in their views, because the whole point is to try to carry as much consensus in the House as possible. Although we have not yet decided, we will perhaps introduce legislation next year.

[Several hon. Members]

rose—

[Mr Speaker]

Order. We have a further statement to follow and it is of course an Opposition day. I therefore appeal to all Members, without regard to seniority or distinction, for brevity.

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

My right hon. and learned Friend will know well that much of the success of intelligence is based upon co-operation with other countries. Does he agree that one of the most difficult components in the balance we must strike is the need to ensure that we do not prejudice relations with other countries, such as those with whom we have a special intelligence relationship, such as the United States, Canada, Australia and New Zealand?

[Mr Clarke]

Having said that I worked on this with the Home Secretary and the Foreign Secretary, I have now seen my right hon. Friend the Minister of State, Cabinet Office, the right hon. Member for West Dorset (Mr Letwin), who was extremely closely involved in these matters.

[Mark Durkan (Foyle) (SDLP)]

And the Attorney-General.

[Mr Clarke]

Yes, and the ladies who made the tea. I compliment them all. I work very closely with colleagues and this is very much a Government Green Paper.

On co-operation, I agree entirely with my right hon. and learned Friend. We share information and work closely with reliable allies, with whom we are mutually very dependent, and apply the so-called control principle. It would clearly make things impossible if they feared that legal processes in the United Kingdom would mean that the confidentiality of information they share with us was likely to be compromised. It is of great importance to the security of this country that we do not compromise that principle.

[Keith Vaz (Leicester East) (Lab)]

I welcome the Green paper and the fact that the right hon. and learned Gentleman is working closely again with the Home Secretary on this and other issues, but I caution against extending the role of special advocates in any way. I do not know whether he was suggesting that, but there are criticisms of special advocates and the way they deal with information. I welcome the fact that the ISC is to be enhanced, but there have been occasions when the Home Affairs Committee has asked the head of MI5 to appear before us, only to be told that we must visit him. Will this now mean that he will appear before the Home Affairs Committee when we ask?

[Mr Clarke]

Special advocates are a key part of what we are proposing. Controlled material proceedings will involve the use of special advocates, but the Green paper touches on how to improve that use. There are serious problems relating to how much special advocates have to know about the evidence they will hear before they can take proper instructions from their clients and how far they can report back to their clients the gist of what has been said. At the moment that works quite well in immigration tribunals, on which this is based, but the Green Paper asks for suggestions on how the role of special advocates can be improved. They are an essential part of the process, but anything that helps us handle the difficulties in using them would be welcome.

[Sir Malcolm Rifkind (Kensington) (Con)]

I warmly welcome the priority given to the protection of information provided by friendly foreign Governments, because, quite frankly, without that protection the provision of that intelligence would simply dry up, to the great detriment of this country. As Chairman of the Intelligence and Security Committee, may I say how much the Committee welcomes the decision to follow its recommendation that it should become, for the first time, a Committee of Parliament and be given effective powers relating to the operation of the intelligence agencies and not simply relating to policy, procedure and administration, as laid down in the current legislation? That is very much to be welcomed because it will enable Parliament and the public to have confidence that there is genuine, independent and effective oversight of our intelligence agencies.

[Mr Clarke]

I am grateful for that authoritative response to the Green Paper. I think that it matters on both sides of the House that the ISC becomes a Committee of Parliament and, in a fuller sense, is accountable to Parliament as well as to the Prime Minister. We can build on the excellent work it has done since it was first established.

[Hazel Blears (Salford and Eccles) (Lab)]

I, too, welcome the Green paper and its proposals. Maintaining the confidence of our allies in sharing their information is absolutely key, but so is maintaining the British public’s confidence in our legal system. If closed proceedings are to be extended, there will be controversy about the role of special advocates, not only in the House, but more broadly among the public, so the proposals to strengthen their role are particularly important. We must ensure that we get that right so that the public, defendants and the whole system have confidence in a fair trial and at the same time protect and maintain the necessary secret intelligence we have. It is a difficult balance to strike, but I am sure that the Secretary of State is up to it.

[Mr Clarke]

The right hon. Lady is also a member of the ISC, so I am grateful for her support for our proposals. She is quite right to stress the need for public confidence generally. The present situation is wholly unsatisfactory. The Guantanamo Bay case, which we settled recently, showed exactly what can go wrong. I had to come to the House to announce that we had paid out a total of £20 million, together with costs, because we had ceased to defend the action. Everyone who was inclined to believe the detainees thought that there was secret information that would confirm everything they said, and everyone who was against the detainees thought that the security services had been crippled, that they could have defended themselves and that we were paying money to worthless people. Every conspiracy theory could flourish, depending on temperament, before we even started. That is no way to retain public confidence. In our view that definitely requires closed material procedures, which means that we must have special advocates, so we welcome views on how to improve the way in which they carry out that very difficult task.

[Mr David Davis (Haltemprice and Howden) (Con)]

The purpose of state secrecy is to protect the safety of citizens, not to cover up criminality or to avoid embarrassment. In the Binyam Mohamed case, which led to the Gibson inquiry, the very senior judges involved went to a great deal of trouble to balance the requirements of security and open justice, but, from what I understand of this Green Paper, I am concerned that had my right hon. and learned Friend’s proposals been in place a few years ago, what we learned from the Binyam Mohamed case would not have been put in the public domain, that we would not have had the Gibson inquiry and, indeed, that we would not have been able to resolve the issues arising from it. Other nations—Canada, Australia, Germany, France and Italy; all our major allies other than America—are able to be very robust about that. Why can we not be?

[Mr Clarke]

If my right hon. Friend will excuse me, I shall not comment on the Binyam Mohamed case in detail. The judges take one view and others take another, but the Green Paper addresses the problem. One would need the facility for closed material procedures, so the starting point would be a decision, confirmed by the judge, that in the interest of national security the case should take place in closed proceedings and, therefore, not be revealed afterwards. That is an altogether better way of resolving the issue than allowing an argument to break out between judges, the Security Service and everybody else afterwards about whether something has been revealed that should not have been. That was where we were in the case of Binyam Mohamed.

I cannot remember my right hon. Friend’s second point, but we have got the balance right. Members of the Intelligence and Security Committee have said that confidentiality vis-à-vis allies is absolutely crucial, and it is no good currying favour by trying to get behind that, because in fact the safety of people in this country would be endangered if we did not have the full and frank co-operation of allied countries providing us with their intelligence, just as we provide them with ours.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I am still seeking brevity, an object lesson in which I know will be provided by the right hon. Member for Wythenshawe and Sale East (Paul Goggins).

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

I am very grateful, Mr Speaker, and I, too, welcome the Green Paper. It is perfectly clear that the balance on disclosure has tipped too far in sensitive cases, and that results in Ministers being constrained in their ability to fulfil their ultimate obligation, which is to protect the public. Given the complexity of the situation, may I ask specifically what plans the Secretary of State has to consult the judiciary?

[Mr Clarke]

I have had some preliminary discussions with the judiciary, and I am quite sure that they will now respond quite fully to our Green Paper, but I agree that, as we are making very important changes to civil procedure, it is essential that we take on board their views. In the end, this House will decide, but it would be most unsatisfactory and be asking for a great deal of future trouble if we started trying to put in civil procedures that the judiciary thought unsatisfactory and, in case law, sought to modify. I have taken great trouble to consult the judiciary, and I will continue to do so. I think that that will be possible, because they are just as concerned as everybody else about national security and, certainly, about open justice, and they will help us to reach a conclusion.

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

There will be nervousness at the use of special advocates in cases such as those of the Guantanamo detainees or in inquests. Does the Secretary of State agree that the most effective way of stopping such cases coming forward is to ensure that international law is observed, that torture is never condoned implicitly or explicitly and that our security services are more effectively monitored so that we can always be certain about the probity of their activities?

[Mr Clarke]

I certainly agree with all my right hon. Friend’s principles, and they are confirmed by the current Government: we are flatly against the use of torture; we do comply with international law; my right hon. Friend the Prime Minister has published new guidelines for the security and intelligence services; and, as I have said, we certainly want them to be properly accountable.

No one has ever established malpractice in previous cases, and one thing we are seeking to do is to draw a line under all the past allegations. I have been settling cases and all the rest of it, but no one has ever made an adverse finding against the security services on any of those grounds. Having public confidence, we now want a process whereby we can sustain it.

[Mr George Howarth (Knowsley) (Lab)]

The Secretary of State will be aware that certain judicial decisions on intelligence sharing have undermined the confidence of our close allies, particularly the United States, with a material effect on some areas in which they are willing to co-operate. Does he not share my concern that our close allies will be concerned to find that he now places on judges the burden of making those decisions? In reality and in our experience, judges look at the conduct of their own proceedings, rather than at national security.

[Mr Clarke]

There has been the one case, the Binyam Mohamed case, which we have touched on, but unsurprisingly no one here has touched on the growing number of cases under the so-called Norwich Pharmacal procedure, on which we make recommendations. It is important that we do not find that the interests of the particular parties lead to highly sensitive intelligence material just getting into the public domain. Having consulted the judiciary, and from my experience of them, I have to say that it is actually wrong to argue that they are indifferent to the needs of national security; they accept that we need clear reform of our processes. We had been waiting for some Supreme Court cases before we produced our final proposals in this Green Paper, and the judiciary think it is time for Parliament to make clear how the processes can be modified to enable them to protect justice and liberty on the one hand and national security on the other.

[Jessica Lee (Erewash) (Con)]

Will my right hon. and learned Friend please set out the position in respect of Northern Ireland? It is of course a part of the United Kingdom, and it bears the scars of conflict all too well, so will these measures be applicable in Northern Ireland?

[Mr Clarke]

It is very important that my hon. Friend raises this issue. We have indeed consulted the Northern Ireland Office. The issue applies to Northern Ireland, and these matters come up frequently in the Northern Ireland context. In the course of our consultation on the Green Paper, I expect that we will receive quite a lot of representations based on the experience there.

[Chris Bryant (Rhondda) (Lab)]

We clearly need some form of closed material procedure, if only to deal with the counter-intelligence threat, which is very strong at the moment, from countries such as Russia, but may I urge the Lord Chancellor to look at whether the Chair of the Intelligence and Security Committee could not, as is the case with the Public Accounts Committee, always be a member of the Opposition? The Member who currently holds the post could perfectly well have held it when we were in power, so would it not make greater sense for the Chair to be a member of the Opposition?

[Mr Clarke]

Well, we will look at that, because I stress that this is a Green Paper and we are seeking cross-party consensus, which, were we ever to go into opposition again, I trust we would maintain on such subjects. The shadow Home Secretary made the same point, and we will look at it, but the idea that the Chairman’s party allegiance is an important consideration is not immediately obvious to me. I am glad that the hon. Gentleman confirms that the current Chairman, who happens to be a Conservative MP, is a former Foreign Secretary and whom nobody criticises as Chairman, is the right person to be Chairman. A rule that the Chair switches party might be relevant to other Committees, but for this Committee it is not quite as necessary as it obviously is for a Select Committee.

[Mr David Burrowes (Enfield, Southgate) (Con)]

I commend the Justice Secretary for drawing the politicised sting from the false battle between justice and security. Will he give us his early thoughts on the possibility of creating an inspector-general of the intelligence services in order to ensure that oversight is concentrated in a single body?

[Mr Clarke]

The idea is floated in the Green Paper, and it often comes up. We will obviously look at it, alongside all the other things we are looking at to make the security services more accountable, but it is a suggestion often made, it remains a live issue and we will consider it very carefully.

[Fiona Mactaggart (Slough) (Lab)]

One way we could make the new Committee effective would be to guarantee that its reports were debated in this Chamber. Will the Government commit to making time for such debates, or will they leave it to the Backbench Business Committee?

[Mr Clarke]

That is more a matter for the Leader of the House than for me, but I am just turning to some members of the Committee, and I note that its reports are debated here sometimes. If Members with a close interest in the subject do not consider the frequency of debate to be adequate, however, I suggest that they take it up with my right hon. Friend. I do not think that these particular measures touch upon the frequency of debate, but the Committee is to be made more accountable to Parliament. That is one of the underlying features of our reforms.

[Dr Julian Huppert (Cambridge) (LD)]

I am instinctively uncomfortable about keeping evidence secret from those in court cases, but I look forward to seeking the detailed safeguards in the Green Paper. The Secretary of State says that the measures are intended for civil cases, but what assurances can he give the House that he will not consider using similar processes for criminal cases, in which somebody’s liberty might be at risk?

[Mr Clarke]

There is no question of having this in criminal cases—it would be quite impossible. A person could not be convicted on the basis of evidence that he was not allowed to hear and that was withheld from the public. The position will be the same after this as it is now—if evidence is not possessed that can be used in open court, the prosecution has to be dropped and cannot proceed. I share my hon. Friend’s sensitivities about any part of civil proceedings being closed—particularly, for example, in inquests, as I said a moment ago. However, I have come to the conclusion that that is less unsatisfactory than a situation in which the case cannot be heard in civil proceedings, so both parties go away, both claiming they are still right, and nobody has been able to hear all the evidence and give a judgment that, although not everybody will always accept it, will be of considerable reassurance to the general public if someone has heard it all and come to a conclusion.

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

Does the Secretary of State acknowledge that it is vital that we have a common regime across the United Kingdom in dealing with the fight against terrorism? Given that, what talks will he have with the Department of Justice in Northern Ireland to ensure not only that there is a consistent approach but that there are no loopholes?

[Mr Clarke]

I think that the issues are exactly the same, in relevant cases, in all parts of the United Kingdom. Obviously the situation in Northern Ireland is particularly relevant to all this, so we have already consulted in Northern Ireland with the Justice Minister and others, and we will continue to do so. We are hoping to resolve problems that have been big in Northern Ireland for a long time, and we could not possibly have different principles applying on either side of the Irish sea.

[Jonathan Evans (Cardiff North) (Con)]

Does my right hon. and learned Friend recognise that there remains a high level of dissatisfaction with the degree of parliamentary scrutiny covering issues in relation to, for instance, extraordinary rendition, which was investigated in Europe in an inquiry that I was associated with but which here in this House was dealt with only by an all-party committee? In those circumstances, does he think that the changes that he is proposing will enable the Intelligence and Security Committee to look into these matters more effectively?

[Mr Clarke]

Yes, indeed; I entirely agree with my hon. Friend. I remind him that we are going to look into rendition and a lot of the other allegations once we get the Gibson inquiry under way. It is clear that that inquiry will go into all the things that have troubled my hon. Friend and other people for some years. Again, we try to do these things in parallel. We are trying to draw a line under the past and then make sure that practice in future attracts less criticism because there is less ground for it. We cannot start the Gibson inquiry until the police have completed their investigations, which are still ongoing; as soon as they have concluded them, the whole question of rendition, among other things, will be looked at by the inquiry.

[Andrew Miller (Ellesmere Port and Neston) (Lab)]

The Secretary of State rightly highlighted the importance of the growing cyber-threat. He is of course aware that the vast majority of targets of those threats are in areas such as finance, utilities and so on, which, historically, we have not regarded as places where security threats would occur. This now requires a much higher level of engagement from employees and people working in those sectors. Will he take steps to ensure that the industries where there are real threats are carried with us in this important regard?

[Mr Clarke]

As the hon. Gentleman knows, we are investing in cyber-security. He is right to say that this is now an extremely important issue for many sectors of British industry, as well as for the Government, that complicates matters and gives rise to the need for more actions now. There are myriad circumstances in which national security may be compromised by certain material. Some of the simpler ones arise because the identity of informants might be revealed. In others, the existence of some particular technology of which the other side is blissfully unaware will be revealed if one starts putting in one’s intelligence material. It is just as important to national security that those who are not friends of this country should not always know the capacity of the intelligence services in these cases. That is why the growing problem of cyber-security is a particular reason for strengthening our procedures and strengthening their supervision by this House.

Train Fares in West Kent and East Sussex

Wednesday 19th October 2011 Commons Chamber

Michael Fallon (Sevenoaks) (Con)

- Hansard - - Excerpts

I, too, present a petition that is also strongly supported by my right hon. Friend the Member for Tunbridge Wells (Greg Clark) on behalf of the residents of west Kent and East Sussex, who are calling one last time for Southeastern rail not to increase rail fares so far above the rate of inflation. The petition is supported by more than 2,000 people and I hope that even now Southeastern will think again.

The petition states:

The Petition of residents of West Kent and East Sussex,

Declares that the Petitioners note the campaign by the Kent and Sussex Courier on Southeastern rail fares and that the Petitioners believe that local rail travellers have been unfairly targeted by double figure fare increases, above the average across the network.

The Petitioners therefore request that the House of Commons urges the Government to review its policy on the setting of rail fares.

And the Petitioners remain, etc.

[P000968]

Cabinet Secretary Report (Government Response)

Wednesday 19th October 2011 Commons Chamber

13:14

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

With permission, Mr Speaker, I would like to make a statement on the Cabinet Secretary’s report on the allegations against my right hon. Friend the Member for North Somerset (Dr Fox). In the interests of transparency, the Prime Minister published the report in full yesterday afternoon and copies were made available to Members immediately after publication. The Government have come to the House at the earliest appropriate moment following the report’s publication. It is not usual for the Government to make an oral statement following the resignation of a Minister. However, given the wider implications of the Cabinet Secretary’s report, it is right that the House has an opportunity to consider the Government’s response.

Before coming to the report, I would like first to set out to the House the changes to the regulations governing Ministers which this Government have already introduced. In May 2010, the Prime Minister published a new ministerial code and committed the Government to an unprecedented level of transparency. The Government are publishing on a quarterly basis details of all Ministers’ meetings with external organisations, including lobbyists, and including meetings with senior media executives; all hospitality received by Ministers; all gifts given and received by Ministers over £140; all Ministers’ visits overseas; contracts over £25,000; special advisers’ salaries over £58,200, and estimated pay bill; special advisers’ gifts and hospitality received; spend on Government procurement cards over £500; and senior officials’ hospitality expenses and meetings with external organisations.

The Prime Minister also significantly tightened the rules regulating former Ministers when they leave office. Former Ministers are now barred from lobbying Government for two years, as well as having to get the advice of the independent Advisory Committee on Business Appointments for any appointments or employment they wish to take up for a period of two years after leaving office, and the code makes it clear that former Ministers must abide by the advice of the Committee.

Turning now to the matter in hand, following speculation in the media my right hon. Friend the Member for North Somerset requested that the permanent secretary at the Ministry of Defence investigate the allegations. The Prime Minister then asked the Cabinet Secretary to establish the facts of the case in relation to allegations in the context of the ministerial code. The interim report prepared by the permanent secretary found that

“there are areas where the current guidance on propriety and the management of Ministerial Private Offices needs to be strengthened”.

As the ministerial code makes clear, it is the Prime Minister’s duty to enforce the ministerial code, having consulted the Cabinet Secretary. My right hon. Friend the Prime Minister has therefore acted at all times in accord with the proper process.

Last week, my right hon. Friend resigned as Defence Secretary. As he said in his resignation letter to the Prime Minister:

“I mistakenly allowed the distinction between my personal interest and my government activities to become blurred”.

My right hon. Friend the Prime Minister accepted my right hon. Friend’s resignation from Government and his reasons for resigning while making it clear that he viewed him as a superb Defence Secretary, who had implemented fundamental changes that will help to ensure that our armed forces are fully equipped to meet the challenges of the modern era—and I wholeheartedly endorse that view.

The report by the Cabinet Secretary confirms that my right hon. Friend did indeed breach the ministerial code. The ministerial code requires Ministers to ensure that no conflict arises, or could reasonably be perceived to arise, between their public duties and their private interests, financial or otherwise. My right hon. Friend’s actions constituted a clear breach of the ministerial code which he has already acknowledged. However, as recognised in the Cabinet Secretary’s report:

“Dr Fox has stated to Parliament Mr Werritty had no access to classified documents and was not briefed on classified matters. There is nothing in the evidence we have taken to contradict this.”

The report also says that

“there is no evidence from this review that casts doubt on Dr Fox’s statement to Parliament that public funds were not misused”

or

“that Dr Fox gained financially in any way from this relationship”.

The permanent secretary at the Ministry of Defence has already accepted that there should have been much tighter procedures within the Department and is taking steps to strengthen them to ensure that the ministerial code is properly adhered to.

The Cabinet Secretary’s report concludes that my right hon. Friend’s close and visible association with Mr Werritty in the UK and overseas, and the latter’s use of misleading business cards, has fuelled a general impression that Mr Werritty spoke on behalf of the UK Government. The risks of my right hon. Friend’s associations with Mr Werritty were raised with him by both his private office and the permanent secretary. My right hon. Friend took action in respect of business cards, but clearly made a judgment that his contact with Mr Werritty should continue. This may have been a reasonable judgment had the contacts been minimal and purely personal and had not involved Mr Werritty’s frequent attendance at meetings in the MOD main building and on overseas visits. The damage arose because the frequency, range and extent of the contacts were not regulated as well as they should have been, and that was exacerbated by the fact that the Department was not made aware of all the various contacts.

The Cabinet Secretary also concluded that the links and a lack of clarity in the roles meant that the donations given to Mr Werritty could give rise to the perception of a conflict of interests. He went on to say that there was an inappropriate blurring of the lines between official and personal relationships. Mr Werritty should not have been provided with access to my right hon. Friend’s diary and itinerary. Nor should he have been allowed to participate in the social elements of the then Defence Secretary’s overseas trips in a way that might have given rise to the impression that he was part of the official party. He should not have had meetings in the MOD with such frequency, as that access may have provided others with a belief that Mr Werritty was speaking for Government and was part of an official entourage. That impression was, of course, reinforced by the business cards that Mr Werritty provided to people.

The Cabinet Secretary has recommended further strengthening of procedures across Government. There are five specific recommendations in his report and it is worth setting those out in full. The first is:

“Where discussions take place with external organisations which raise substantive issues relating to departmental decisions or contracts and where an official is not present Ministers should inform their department.”

The second is:

“On Ministerial visits, whether in the UK or abroad, departments should make sure there is no confusion about who is and is not a member of the Ministerial party”,

and the third states:

“Officials should accompany Ministers to all official visits and meetings overseas at which it is expected that official matters may be raised, and should seek guidance from the FCO if there is any uncertainty about the status of such meetings or the attendance of non-officials at them.”

The fourth is:

“Permanent Secretaries should discuss with Ministers at the time of their appointment and regularly thereafter whether any acquaintances or advisers have contractual relationships with the department or are involved in policy development. The Minister and the Permanent Secretary should take action as necessary to ensure there can be no actual or perceived conflict of interest in line with the principles of the Ministerial Code.”

Finally:

“Permanent Secretaries should take responsibility for ensuring departmental procedures are followed, and for raising any concerns with Ministers, advising the Cabinet Secretary and ultimately the Prime Minister where such concerns are not resolved.”

The Prime Minister has accepted those recommendations in full and the Cabinet Secretary is writing to permanent secretaries today to set out the processes that now need to be followed.

Finally, I will turn briefly to wider action that the Government already intend to take to ensure greater transparency between Ministers and external organisations. The coalition agreement committed us to regulating lobbying through introducing a statutory register of lobbyists, ensuring even greater transparency. It is worth noting from the Cabinet Secretary’s report that:

“Whilst Mr Werritty was not a lobbyist, the Government’s commitment to consult on a statutory register of lobbyists will bring further transparency to this area.”

We intend to produce a consultative document setting out our proposals next month, with an aim of legislating next year. This work is being taken forward by the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Forest of Dean (Mr Harper), and my hon. Friend the Deputy Leader of the House.

At the end of the last Parliament, public trust in Parliament was at an unprecedented low. This Government are committed to working to rebuild confidence in our political and democratic institutions and we will continue to put in place any measure necessary to ensure that the highest standards rightly expected of our elected representatives are met.

I commend this statement to the House.

[Ms Angela Eagle (Wallasey) (Lab)]

I thank the Leader of the House for his statement, but what a condemnation it was of the way in which government is being run in this country. It is a matter of deep regret that the Prime Minister has chosen not to deal with this statement himself. It is the Prime Minister and not the Leader of the House who is the guardian of the ministerial code, and who has the final say on who is fit to be in his Government. Today, he has ducked those responsibilities.

When news of the potential wrongdoing at the Ministry of Defence first surfaced, the former Secretary of State for Defence announced an inquiry into himself, but only after he had called the allegations “baseless”. As the revelations mounted daily, the Prime Minister belatedly announced this limited inquiry by the Cabinet Secretary. By then, it was apparent to everyone that the ministerial code had been breached. The Secretary of State admitted as much. Why then did the Prime Minister not refer this case to the independent adviser on Ministers’ interests, Sir Philip Mawer?

What we have today is a far cry from such a full, independent, external inquiry. The Cabinet Secretary has been forced to rely on the word of Adam Werritty and the former Defence Secretary, whose explanations have repeatedly unravelled at the first hint of scrutiny. This report merely scratches the surface of potential misconduct in government. Consequently, it raises more questions than it answers.

Even in its narrow and limited form, the Cabinet Secretary’s report is damning. It finds the former Defence Secretary’s conduct

“not appropriate and not acceptable”.

It reveals, in stark detail, multiple breaches of the ministerial code. The former Defence Secretary has knowingly circumvented the long-established rules that are in place to prevent conflicts of interest from arising. The report shows that wealthy individuals funded Adam Werritty. He was, in effect, a privately funded special adviser. The former Secretary of State’s shadow political operation routinely undermined our civil service structures and their accountability. The report fails to expose the full facts about the money trail. There is no investigation into the benefits that Adam Werritty received. There is no full disclosure of his funders and the purpose behind the donations. Given the Prime Minister’s failure to answer this question earlier today, can the Leader of the House give the House a categorical assurance that no similar practices are taking place anywhere else in this Government?

I turn now to the details of the report. We need answers on the following issues. The role of the Sri Lanka Development Trust is not considered in the report. Mr Werritty’s presence in Iran, Washington and Israel remains unexplained. We do not know whether Mr Werritty profited from his association with the former Defence Secretary, although we do know about the five-star nature of his taste in flights and hotels. We do not know what those secretive donors, who were in effect Mr Werritty’s paymasters, were promised for their money, nor indeed if they got it. We do not know whether the former Defence Secretary commissioned any work from the MOD as a result of the offline and irregular meetings brokered by Mr Werritty. We do not know which other Ministers and senior staff have met Mr Werritty, because the Prime Minister has refused to publish a full list. That is totally unacceptable. A full list must be published. In order to deal with all those issues, will the Leader of the House agree that further investigation is both essential and urgent?

Will the Leader of the House also tell the House whether he has initiated an inquiry into the use by the former Defence Secretary of his parliamentary office to run Atlantic Bridge as a charity, and whether he is satisfied that that was proper under parliamentary rules? Some of the key funders of Atlantic Bridge were the key funders of Adam Werritty. They are also the key funders of the Conservative party. The links are complex, but they are deep and well-established.

We learned yesterday of the meeting between Adam Werritty and two members of the existing Defence team. They must give the House a full explanation of the details of those meetings and their connections to Adam Werritty.

We also learned in the report that the risks of the former Defence Secretary’s association with Mr Werritty were raised with him by his private office, the permanent secretary, a former permanent secretary and a former Chief of the Defence Staff. He chose to ignore those warnings. Why was he allowed to make that choice? What did the permanent secretary at the MOD then do? Were any of those concerns raised with the Cabinet Secretary and, if so, did the Cabinet Secretary raise them with the Prime Minister? Why was this situation allowed to continue for so long? Why was the former Defence Secretary allowed to treat the ministerial code as if it was an optional extra?

The report recommends that senior civil servants have greater oversight of ministerial behaviour. Yet the fact remains that it is Ministers who are responsible for their own conduct and the Prime Minister who is the guardian of the ministerial code. He is expected to enforce it, not allow it to be broken multiple times.

Before the last election, the Prime Minister promised to end the

“cosy relationship between politics, government, business and money”.

That promise has now been broken. This scandal has only damaged public confidence in the Government further. Meetings without civil servants; money off the books; luxury social visits in between visits to our brave servicemen and women; and today, the Prime Minister’s contempt on the matter was revealed. Simply saying that the Defence Secretary has resigned is not good enough. The Government need to take responsibility for this self-inflicted crisis. The House needs answers to the unanswered questions, or people will only conclude that this Government have something to hide.

[Mr David Anderson (Blaydon) (Lab)]

On a point of order, Mr Speaker.

[Mr Speaker]

Order. We do not take points of order in the middle of statements, or at any time in statements, only afterwards.

[Sir George Young]

I will go through the issues that the hon. Member for Wallasey (Ms Eagle) raised. No Prime Minister has ever made a statement to the House following the resignation of a Minister. In circumstances such as these, when there has been a report on a breach of the code, there has normally been a written ministerial statement. There has never before been an oral statement in circumstances such as these, but this Government have come to the Dispatch Box at the earliest stage, having made a written ministerial statement and set out our proposals.

The hon. Lady said that the Cabinet Secretary or the Prime Minister had not followed due process. If she looks at paragraph 1.3 of the ministerial code, she will see that it states:

“If there is an allegation about a breach of the Code, and the Prime Minister, having consulted the Cabinet Secretary feels that it warrants further investigation, he will refer the matter to the independent adviser on Ministers’ interests.”

That is exactly what he has done. We have established that there has been a breach of the code, the Secretary of State has resigned and we have a comprehensive report identifying the breaches and making recommendations for the future. It is not a superficial report; it is a comprehensive piece of work by the Cabinet Secretary, and the House should be grateful for it.

I turn to the specific questions that the hon. Lady asked. Other Ministers are perfectly happy to make it clear whether they have met Mr Werritty. On whether similar practices are going on throughout Government, if she has any evidence I would like her to bring it forward. [Interruption.]

[Mr Speaker]

Order. Members must not chunter or, worse still, yell at the Leader of the House. He must be heard.

[Sir George Young]

It is worth noting that paragraph 11 of the Cabinet Secretary’s report states:

“I am of the view that this is an issue which was specific to Dr Fox.”

The hon. Member for Wallasey raised a number of other issues, some of which are for other bodies to deal with. If she looks at paragraph 1 of the Cabinet Secretary’s report, she will see that it states:

“Since then, more allegations about Dr Fox’s conduct have arisen many of which will be the responsibility of others to answer, including the Electoral Commission which regulates political parties and their funding.”

She also asked a specific question on a matter that is the responsibility of the Charity Commission.

The hon. Lady then asked what went wrong in the Ministry of Defence. If she reads the report, she will see that what went wrong was that the permanent secretary did not raise the issue with the Cabinet Secretary, who would then have raised it with the Prime Minister. There is a specific recommendation in the report that that situation should not happen again, and that if there are any future instances, the permanent secretary should notify the Cabinet Secretary, who will notify the Prime Minister.

I say very gently to the hon. Lady that her party is not negotiating from a position of strength on this issue. I think what the public want is a serious debate about what went wrong, and they want Members on both sides of the House to join together in driving up standards in public life.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I remind right hon. and hon. Members who came into the Chamber after the start of the statement—there were several of them on both sides of the House—that they certainly should not expect to be called. It would be much better if they did not stand. This is an Opposition day and there is pressure on business, so brevity is of the essence.

[Mr Andrew Tyrie (Chichester) (Con)]

I warmly welcome the Leader of the House’s statement. In it, he said that senior civil servants “accepted that there should have been much tighter procedures within the Department”. Will he say specifically what is wrong with existing procedures, and what steps he is taking to ensure that the failing lies with those procedures rather than with the action or inaction of the civil servants themselves?

[Sir George Young]

I thank my hon. Friend for his endorsement. What went wrong was that the permanent secretary, having raised the matter with the Secretary of State, and the Secretary of State having persisted in the behaviour that she found disturbing, did not take further action. The matter should have been escalated to the Cabinet Secretary, who would then have notified the Prime Minister. A specific recommendation is going out to all permanent secretaries today that should there be a recurrence in future, it should be escalated. Had that happened in this case, the issue probably would have been addressed at a much earlier stage.

[Mr Ben Bradshaw (Exeter) (Lab)]

I feel sorry for the Leader of the House for his being forced to make this statement because the Prime Minister does not have the gumption to do so.

Given that it was quite clear on day one of this scandal to anybody who has bothered to read the ministerial code that the Minister in question not only broke it but drove a coach and horses through it, why the dither and delay from the Prime Minister? Does that not show yet again that we have a Prime Minister who does not do detail and does not have a clue what is going on in the rest of his Government?

[Sir George Young]

If I may say so to the right hon. Gentleman, I think that is way over the top. When Lord Mandelson resigned not once but twice, the Prime Minister did not come to the House to make a statement. In this case there is a statement from a Minister on the action that we propose to take to stop any recurrence. Far from the Prime Minister dithering or delaying, he asked for something to be on his desk on Monday. He then asked the Cabinet Secretary to produce a report. Out of decency and fair play, the Prime Minister decided to wait until the report was available rather than taking precipitate action. That is not dither and delay; that is fair play.

[Robert Halfon (Harlow) (Con)]

Does my right hon. Friend not think it rather strange that some of those who are campaigning hard for a register of lobbyists did nothing over the past 13 years and created a lobbyists’ free-for-all? Does he not also think that it is strange for the Labour party, which found itself in the Bernie Ecclestone lobbying scandal, to now pretend it is Mother Teresa?

[Sir George Young]

My hon. Friend reminds the House that, as I said a moment ago, the Opposition are not negotiating from a position of strength. It is indeed the case that from 1997 to last year, no action was taken to introduce a statutory register of lobbyists. When the Public Administration Committee recommended that in 2009, the Labour Government specifically rejected it, and they voted against other measures that would have promoted transparency, so I do not think we have any lessons to learn on this matter from Labour Members.

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

Is Mr Werritty the only unofficial representative acting on behalf of a Cabinet Minister or a Minister of State?

[Sir George Young]

If the hon. Gentleman has any evidence—[Hon. Members: “Ah.”] I think people should be careful before making general allegations without any specific evidence at all. This is a—[Interruption.]

[Mr Speaker]

Order. I apologise for interrupting the Leader of the House, but may I say to the House that he is a person of unfailing courtesy? I think that would be accepted on both sides of the House. He does not yell at other Members, and—[Interruption.] Order. And other Members should not yell at him.

[Sir George Young]

I quoted a passage from paragraph 11 of the Cabinet Secretary’s report, in which he stated that he believed the situation was “specific to Dr Fox”. I do not think there is any evidence at all that Mr Werritty had a similar relationship with any other Minister in the Government. If the hon. Member for Leyton and Wanstead (John Cryer) has any evidence of any irregularity, I think he should put it forward and substantiate what he has said.

[Brandon Lewis (Great Yarmouth) (Con)]

I appreciate the Leader of the House’s point about a register of lobbyists, and I add my voice to the call for a statutory register. Does he find it surprising to hear some of the comments from the Opposition, given that under the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), union officials were regularly in No. 10 unofficially attending meetings?

[Sir George Young]

I agree with my hon. Friend that this should not become part of the political currency between the two parties. On the issue of lobbying, as I think he knows, we plan to publish a consultation document early next month on our proposals for a statutory register of lobbyists, with a view to legislating next year.

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

I appreciate the right hon. Gentleman’s seemingly all-encompassing catchment in the designation of lobbyists, but I would like assurance on two points. First, will he confirm that the ultimate funding of all lobbyists, think-tanks and all others who seek to exert influence will be revealed on an open public register that is readily accessible and tell us what the sanctions will be if that is not done? Secondly, since all those who seek to manipulate always want to escape detection, how will he deal with the admittedly difficult situation in which formal meetings suddenly morph into informal meetings where significant commitments might be made but remain undetected?

[Sir George Young]

I am very grateful to the right hon. Gentleman for his contribution. The answer to the first section of his question is yes, that is exactly what we have in mind: an open, accessible register of statutory lobbyists. On the other issues, we propose to consult on what exactly a lobbyist is. I think the definition should embrace what people outside generally believe to be lobbying and should be comprehensive. On the question of what activity is then caught, we would be very grateful for his views during the consultation process.

[Charlie Elphicke (Dover) (Con)]

May I welcome the Leader of the House’s statement? The Select Committee on Public Administration is looking into how we can do more to fix broken politics. I particularly congratulate him on ending the sofa government that we saw in the past as well as the tidal wave of sleaze, and I urge him to take action on the revolving door that still persists for former Ministers of this House.

[Sir George Young]

The revolving door is an issue I addressed in my statement and we are tightening up the process for it. I am delighted to hear that the Public Administration Committee, which originally proposed the statutory register in its report, is thinking of returning to this issue and I hope that it will inform the Bill when it is introduced.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

On 10 October, I asked the then Defence Secretary when he was first made aware of concerns by his permanent secretary. He said that

“I was not aware of any direct approach from them. The first direct approach I can remember was when my current permanent secretary came to me in August”.—[Official Report, 10 October 2011; Vol. 533, c. 30.]

That leads to two questions. Either the then Defence Secretary misled the House and he was made aware of that before then or the previous permanent secretary has some serious questions to answer. These things have been going on since he took office and for more than a year concerns have arisen and nobody has done anything. The civil service must look at its own conduct in how it makes people aware when things go wrong.

[Sir George Young]

I think it is clear from the report that things did go wrong in the Ministry of Defence. That was accepted in the permanent secretary’s initial report. Procedures were not followed and we are learning from that and ensuring that there is no recurrence.

[James Morris (Halesowen and Rowley Regis) (Con)]

Is it not the case that my right hon. Friend the Member for North Somerset (Dr Fox) has resigned and that the Cabinet Secretary’s report could not be clearer that there was no breach of national security and that my right hon. Friend did not gain financially from any of these arrangements? Is not the most important thing now for the debate to move on? We have important operations in Libya and Afghanistan that we must focus on in the national interest.

[Sir George Young]

I agree with my hon. Friend. We have commissioned a report, we have found out what went wrong, we have made recommendations to put it right and we have learned the lessons. I agree that we should now move on.

[Mr David Anderson (Blaydon) (Lab)]

Both in questions to the Prime Minister and during this statement today, the question of whether other Ministers have behaved in a similar manner has been raised. The Leader of the House has made it clear that anyone who wants to make allegations should do so. I do not think that people are making allegations—they are raising the general worry that the rest of the population of this country feels. If someone as experienced as the former Secretary of State allowed this to go on, thinking that it was reasonable, surely it is possible that other Ministers, equally unwittingly, might be doing the same thing. Would it not benefit us all if the Cabinet Secretary were to look into all these things to ensure that there is not any other concern?

[Sir George Young]

I understand the hon. Gentleman’s point, but in the last Parliament a number of Ministers from his party had to resign. We never made any suggestion that because one Minister had broken the code, all Ministers had broken the code, and it is important that similar accusations should not be made in this Parliament.

[Chris Bryant (Rhondda) (Lab)]

The trouble with the idea of trying to move on is that we are seeing a pretty shabby pattern in which the Prime Minister is given evidence, refuses to look at it but holds on for dear life to as many of his friends as he can. It happened with Coulson and it has happened again now. Now there is evidence about the hon. Member for Bexhill and Battle (Gregory Barker) and his apparent adviser, Miriam Maes. Will there be an investigation into that, too?

[Sir George Young]

On the first point, to say that the Prime Minister refused to look at the evidence is simply absurd as he looked at it, published it and has acted on it. As for the issues concerning the Department of Energy and Climate Change, the matter has been resolved. The person concerned is an adviser to the Department and not to a Minister.

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

Is the Leader of the House aware that some good has come out of all this, as it has shown up the whole murky world of various shady and dubious lobbyists and various individuals who have contributed heavily to the Tory party? One thing is absolutely clear: the Tory party has not changed from last time it was in office.

[Sir George Young]

It would be easier to take the hon. Gentleman seriously on this had he not voted against a specific amendment to promote transparency in lobbying.

[Jonathan Ashworth (Leicester South) (Lab)]

A few moments ago, the Leader of the House said—if I heard him correctly—that other Ministers would be perfectly happy to reveal whether they had meetings with Mr Werritty. Will he therefore tell the House when we will get a full and comprehensive list of all meetings between Ministers and Mr Werritty and whether it will extend to senior officials, too?

[Sir George Young]

It has already been put in the public domain for a number of Government Departments. It will be put in the public domain by the rest of the Departments very shortly.

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

How many Government Front-Bench Members have received donations from Pargav Ltd and will the Leader of the House investigate that? May I urge on him caution about the defence of bringing forward evidence? The last time that was used was on the 10th of this month and the former Secretary of State subsequently resigned, having used that very defence.

[Sir George Young]

Any donations that Ministers or any Members of the House have received from a company such as Pargav have to be put in the Register of Members’ Financial Interests.

[Mr Nigel Dodds (Belfast North) (DUP)]

I welcome the fact that the Government are adopting the procedure of coming forward today and making a statement, which is a departure from previous practice and is to be welcomed. One of the recommendations of the report is that greater responsibility should be given to permanent secretaries to ensure that departmental procedures are followed, yet in this case the permanent secretary at the MOD has already accepted that there should have been much tighter procedures within the Department. What confidence can the public have, given the obvious failings within the Department at that senior level?

[Sir George Young]

The recommendations apply not just to the permanent secretary but, for example, to the private office as well. I am grateful to the right hon. Gentleman for his welcome for this new procedure and I hope that it is one that I do not have to follow too often.

[Mr Andy Slaughter (Hammersmith) (Lab)]

How is what the Leader of the House has said about conflicts of interest or perceived conflicts of interest and the ministerial code be consistent with the approach the Government have taken in the case of the hon. Member for Huntingdon (Mr Djanogly), who has been relieved of those areas of his portfolio where such a conflict might occur?

[Sir George Young]

That matter has been dealt with by the Cabinet Secretary.

[Fiona Mactaggart (Slough) (Lab)]

The Leader of the House said in his statement that Mr Werritty was not a lobbyist. How then will the register and the reforms that he proposes affect the behaviour of someone like Mr Werritty?

[Sir George Young]

I did not say that I did not think that he was a lobbyist but that the Cabinet Secretary did not think that he was a lobbyist. When we publish the consultation paper next month, we will be open to consultation on what a lobbyist is. In the view of many people, the definition should include Mr Werritty.

[Kevin Brennan (Cardiff West) (Lab)]

Leaving political differences aside, it is a genuine shame that one of the few members of the Government from an ordinary background has been forced to resign. Will the Leader of the House tell us how many donations were solicited by the former Defence Secretary, how much those donations were valued at and why he solicited them?

[Sir George Young]

I am grateful for what the hon. Gentleman said about my right hon. Friend the Member for North Somerset (Dr Fox), but he was not forced to resign. He chose to resign last Friday and set out the reasons for that in his letter.

[Paul Flynn (Newport West) (Lab)]

Is it not the prime duty of the Leader of the House to try to restore public faith and confidence in this institution? We handled the expenses scandal in an atrocious way that damaged us greatly. Would it not be a terrible mistake if we ignored the real abuses of the revolving door and of lobbying and went ahead and indulged in a process of blaming each other? If we are going to be successful in convincing the public, we must follow the Public Administration Committee. Otherwise, the public will look at this debate today and say, “Same old MPs, same old sleaze.”

[Sir George Young]

I believe that the hon. Gentleman’s question will be the last. On that consensual note, I hope we can draw these exchanges to a close.

Personal Statement

Wednesday 19th October 2011 Commons Chamber

13:49

[Dr Liam Fox (North Somerset) (Con)]

Two weeks ago, I visited Misrata in Libya, and I met a man who showed me photographs of his dead children. A few days later, I resigned from the Cabinet. One was an unbearable tragedy, the other was a deep personal disappointment. I begin with that necessary sense of proportion.

As I said in the House last week,

“I accept that it was a mistake to allow distinctions to be blurred between my professional responsibilities and my personal loyalty to a friend.”—[Official Report, 10 October 2011; Vol. 533, c. 23.]

I accepted then that it was a mistake to attend a meeting with a potential supplier without an official present and, with hindsight, I should have been more willing to listen to the concerns of those around me. I have attempted to be clear and transparent on all the issues raised.

I would like to say again that I am very sorry to my colleagues in the House and to all those who feel let down by the decisions I have made. I have always believed in personal responsibility, and I accept the Cabinet Secretary’s conclusions. I am pleased at the explicit acknowledgment that I neither sought, expected nor received any financial gain. That was being widely and wrongly implied. I also welcome the clarification of the fact that no national security issues were breached, that no classified documents were made available, and that no classified matters were briefed. Those accusations, too, were widely made and are deeply hurtful.

The ministerial code has been found to be breached, and for this I am sorry. I accept that it is not only the substance but perception that matters, and that is why I chose to resign. I accept the consequences for me without bitterness or rancour. I do not blame anyone else, and I believe that you do not turn your back on your friends or family in times of trouble. However, it is unacceptable that family and friends who have nothing to do with the central issues should be hounded and intimidated by elements of the media, including in this case elderly relatives and children. It is difficult to operate in the modern environment, as we know, where every bit of information, however irrelevant or immaterial, is sensationalised, and where opinions or even accusations are treated as fact. It was particularly concerning that Harvey Boulter, who was present at the Dubai meeting and subsequently the defendant in a blackmail case, was treated so unquestioningly.

Last week’s media frenzy was not unprecedented, and it happens where a necessary free press and politics collide, but I believe that there was, from some quarters, a personal vindictiveness—even hatred—that should worry all of us. But just as these events can bring out the worst in human nature, they also bring out the best. I have been touched, and frankly overwhelmed, by huge numbers of letters, e-mails and calls, from friends and strangers alike, in particular from my constituents in North Somerset. That has meant more to me than anyone can know.

I would also like to thank my parliamentary colleagues, including those in the Cabinet, for their strong and generous support, which shows politicians at their best—although I apologise that it may take me some time to get round to thanking all of you in person.

I am also indebted to my loyal staff for their support, in particular to my special advisers, who find themselves out of work as a result of my decision. I will miss the Ministry of Defence and the fantastic people who work there, military and civilian. It has been a life-changing experience and a great honour to work with some of the bravest and best people in our country. I am proud of what we have achieved there in 17 months and I will help in any way my successor, who I know will do an absolutely excellent job.

I would like to thank my family and friends for their love and support. It is not easy to watch someone you care about being attacked in a very aggressive and prolonged way. We choose this life; they do not. Of course, I would like above all to thank my wife, Jesme, who has dealt with this whole business with her usual grace, dignity and unstinting support.

Finally, it is not always easy to be in public life, but it is an honour, so I would like to thank all the party leaders, including the Prime Minister, who have enabled me to serve on the Front Bench for 17 consecutive years. I will give this Government my full support as they rescue our economy from the mess we inherited.

Most of all, I would like to thank my constituents in North Somerset for giving me the honour to represent them in the House of Commons and the opportunity to serve.

Point of Order

Wednesday 19th October 2011 Commons Chamber

13:54

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

On a point of order, Mr Speaker.

[Mr Speaker]

I will take this point of order if it is not about any of the matters about which we have just heard.

[Thomas Docherty]

This morning’s Scottish newspapers have gained information from Alex Salmond and the Scottish National party Government about a commercially sensitive deal for a £1billion project that will potentially take place in my constituency. It is clearly unacceptable to the House for an SNP Government to breach such commercial discussions. Can you advise what opportunities would be available to the House to discuss this important issue in the coming days?

[Mr Speaker]

I think I can. I can advise the hon. Gentleman, a doughty and indefatigable campaigner on behalf of his constituents, to use every ounce—and there are many—of his ingenuity, through the Order Paper and in other ways, further and at greater length to draw attention to his dissatisfaction. I feel sure that that is what he will do.

Fee Charging Debt Management Companies (Promotion of Free Debt Management Advice)

Wednesday 19th October 2011 Commons Chamber

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

13:55

[Yvonne Fovargue (Makerfield) (Lab)]

I beg to move,

That leave be given to bring in a Bill to require fee charging debt management companies to inform potential clients of the availability of free advice on debt management; and for connected purposes.

I have brought forward this Bill to level the playing field between the fee-charging debt management companies, which can spend a considerable amount of money on advertising, and the free agencies, which put all their money into providing a service, and which consequently might not be as well known. In fact, a Google search for “debt advice”, or even for “citizens advice” brings up two debt managements companies at the top of the list, which promise to

“wipe off 75% of your debts”.

Individuals who are looking for a solution to their debts are essentially making a distress purchase. They have realised that their debts are mounting and made that difficult decision to seek help to deal with them. However, searching and deciding on a debt management solution is not like looking for other services. Many people have struggled alone for a considerable time and feel ashamed; they might not have told even their family and friends. It is not like going to a neighbour and asking them to recommend a plumber, and I have never yet heard of anyone asking their mates in the pub whether they have been in debt and who helped them to get out of it.

Instead people turn to the internet or advertisements, or even to a company that has cold-called them. If they are lucky, they go to a citizens advice bureau, but very few have heard of Payplan, National Debtline or the Consumer Credit Counselling Service, which could all help with free solutions tailored to the individual.

What is the problem with fee-charging debt management agencies, beyond the obvious contradiction of charging individuals to get out of their debts? It is estimated that 375,000 people in the UK are on commercially provided debt management plans, costing them £250 million in debt management fees each year. The CCCS estimates that for a debt of £30,000, a client of a debt management company pays £6,000 in fees to that company, and that they extend the life of their debt for 18 months.

Unfortunately, too many of those companies take advantage of people when they are at their most vulnerable. Many people end up in a worse financial situation than when they first sought help. There is significant evidence of companies providing misleading information about their services. They claim to be able to write off debts and charges, and to give free advice, although fees are involved. There is also evidence of some payday lenders acting as an introducer to a debt management company. If that is not a case of, “We’ll get you into debt and then tell you about somebody who you can pay to get out of it,” I do not know what is.

It has been reported that rather than promoting free debt advice, some fee-charging companies have told callers that the CAB is not a specialist money adviser, and not to deal with it on a one-to-one basis. One individual approached a bureau for help after a company refused to cancel a plan that he signed up for within the 14-day cooling-off period. After the CAB intervened the agreement was cancelled, but the company told the client that the bureau would not contact the creditors, so she risked court action by doing what she was doing. High management fees, particularly up-front fees, can also be a particular problem. In one case, an individual was cold-called by a debt management company and paid an up-front fee of £1,000 before receiving any advice at all. I had a constituent who paid £300 to a fee-charging debt management agency, only to find out that they then had no disposable income, after which the agency referred them to my local CAB.

Up-front fees are not the only problem, however. Ongoing fees are also an issue, as companies need to recoup their costs early in the life of the agreement. When I worked for an advice agency, I saw a client who had been paying £80 a month to a debt management company for six months, not one penny of which had gone to her creditors. She said that she did not know where to go, so she looked on the internet and contacted the company. She was considerably upset when she realised that her debt had actually increased, despite those payments, because the interest had not been frozen. Also, debt management companies cannot and do not offer the full range of debt remedies available to an individual, and on occasion have even failed to inform clients of the need to pay their priority creditors first. Another CAB client reported that she was encouraged to make offers via a debt management company to her non-priority creditors, for which they took a fee. As a result she struggled with her mortgage payments, fell into arrears and is now worried about losing her home.

The number of complaints to the Financial Ombudsman Service is rising. There have been 457 new complaints in 2010-11, a staggering 54% of which were upheld in favour of the consumer. The complaints generally fall into two categories. The first is poor administration: money paid to a company is kept in that company’s accounts for a considerable time rather than being paid to the creditors. The second is when, as I have described, a high proportion of the money paid is retained by the company to cover its costs rather than being paid to creditors. This demonstrates that it is not only the individuals who suffer detriment but their creditors, who could be paid much more money more quickly.

It is surely obvious, therefore, that making people aware of free quality agencies, which make sure that all the money paid goes to the creditors, will benefit both parties. An argument often used by the fee-charging sector is that there is insufficient capacity in the free sector. I agree that this needs to be carefully monitored and that a sustainable cross-governmental strategy for the provision of free debt advice is essential. However, a recent partnership between the CCCS and Citizens Advice has demonstrated that the agencies are working together to direct people to the most appropriate form of advice and to ensure that the most expensive form of delivery, the face-to-face advice, is kept for the people who need it most—the most vulnerable—and that people do not have to turn to the fee-charging debt management sector through lack of available free advice.

No one should suffer through ignorance of the services available to help them, and I believe that the Bill will provide for individuals to be informed of the full range of agencies able to support them, instead of allowing them to fall into the hands of some of the fee-charging companies that propel them into further debt and despair.

Question put and agreed to.

Ordered,

That Yvonne Fovargue, Nic Dakin, Phil Wilson, Sheila Gilmore, Alex Cunningham, Teresa Pearce, Justin Tomlinson, Damian Hinds, Tracey Crouch, Tessa Munt, Jonathan Edwards and Dr Julian Huppert present the Bill.

Yvonne Fovargue accordingly presented the Bill

Bill read the First time; to be read a Second time on Friday 20 January 2012, and to be printed (Bill 237).

Opposition Day

Wednesday 19th October 2011 Commons Chamber

[Unallotted day]

Energy Prices

Wednesday 19th October 2011 Commons Chamber

[Relevant documents: The Fourth Report from the Energy and Climate Change Committee, Electricity Market Reform, HC 742 and the Government response, HC 1448, and the Sixth Report from the Committee, Ofgem’s Retail Market Review, HC 1046, and the Government response, HC 1544.]

14:04

[Caroline Flint (Don Valley) (Lab)]

I beg to move,

That this House believes that the energy market does not serve the public interest and is in need of urgent reform; notes with concern research by OFGEM showing that average household energy bills have risen, while energy companies’ profit margins have soared; recognises that, with a cold winter forecast and Government support cut, millions of families will struggle to heat their homes; believes that energy tariffs are confusing and unfair, meaning that 80 per cent. of people currently pay more for their energy than they need to, and that consumers who try to switch are often given inaccurate information; further believes that to tackle climate change, build a new low carbon economy and make the UK a world leader in green energy, which will bring new industry and jobs to the UK, people need to know that the energy market is fair; and calls on the Government to investigate mis-selling and ensure consumers are compensated, introduce a simple format to be applied across all tariffs, so that people can compare the full range of energy deals at a glance, increase transparency by requiring energy companies to publish their trading data, reform the energy market to break the dominance of the Big Six by requiring them to sell power into a pool, allowing new businesses to enter the market, increasing competition and driving down energy bills for families and businesses, and demand that energy companies use their profits to help reduce energy bills this winter.

I am pleased to move this Opposition day motion, and it is good to see the Secretary of State in his place this afternoon; we were all concerned for his well-being after his no-show on “Newsnight” on Monday. It was the day of that amazing energy summit, yet he was nowhere to be seen. That tells us just how well the summit went. As today’s report on fuel poverty highlights, the stakes could not have been higher: according to the National Grid Company’s forecast last week, this winter could be as bitter as last year, which saw the coldest December on record. Moreover, energy bills have risen by more than 20% this year alone, driving inflation to the second highest level in Europe, and have risen by more than 50% in the past four years, which means that the average family is now paying £1,345 a year just to keep the lights on and the house warm.

That matters. People do not have a choice about whether to consume energy. At the same time as more than one quarter of families are struggling to afford their energy bills, more price rises are on the horizon and more families are worried about how they will make ends meet, yet energy companies are enjoying soaring profits. On Monday the Secretary of State got the big six energy firms, which between them control 99% of the market, into the same room. With them were consumer groups such as Which? and Consumer Focus. It was the ideal opportunity to get a grip on spiralling energy bills, but what was the big idea? What was the bold plan? What was the new policy?

We were given two words that will strike terror into the hearts of the big six energy firms, two words that will give reassurance to millions of families worried about how they are going to heat their homes this winter: “Go compare”. I honestly thought that the Prime Minister was going to come dressed as the opera singer Gio Compario and force the summit’s reluctant audience to endure a chorus. He might as well have done, for all the good that came out of it. Meanwhile, the Secretary of State could only look on—as the Prime Minister spoke and the public relations shots were taken—reduced to the role of the Prime Minister’s meerkat.

[Mr Charles Walker (Broxbourne) (Con)]

Does the hon. Lady agree that we should have been increasing generating capacity and building more nuclear power stations over the past 15 years?

[Caroline Flint]

That is why, as we left office, we set in train the opportunity to put in place a more balanced energy generation selection for everyone, and that is why many of those policies are now being carried forward by the present Government.

But let us talk about this winter, this week, as the cold snap hits, and about the prices that families up and down the country are facing. Let us talk about the outcome of that energy stunt. There will be no overhaul of the energy market to break the stranglehold of the big six, there will be no radical simplification of the tariffs available, and there will not even be a pause for thought about whether cutting winter fuel payments for pensioners is the right thing to do, even though the Prime Minister accused Labour of lying when we warned, before the general election, that the Tories would cut them. The only message was: go compare. However, people can only go and compare if they have easy, accurate, transparent information on pricing, which we do not have. The number of tariffs on offer has risen from 180 three years ago to more than 400 today: there were more than 70 new tariffs just this year. That does not help consumer choice; it hinders it.

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

My constituents, when they look at this vast array of different tariffs, step back and think, “Well, what’s the point? These six firms are effectively in cahoots anyway. They are almost operating a cartel.” They think, “Why bother wading through all this treacle and looking at the different tariffs, because we know that we’ll switch to one company and then, two minutes later, it will up its prices too.”

[Caroline Flint]

My hon. Friend makes the point that many of our constituents are making about mis-selling, and the barrage of information that does not allow them to make a clear choice. If there are too many tariffs that are complicated to understand and difficult to compare, people cannot make informed decisions about which deal would be best for them.

[Sajid Javid (Bromsgrove) (Con)]

The right hon. Lady will be aware that energy prices soared in Britain between 1997 and 2010. Heating oil prices increased in real terms by 130%, gas prices by 71% and coal prices by 61%. Does she think that that inspires confidence in her approach?

[Caroline Flint]

That is one of the reasons why in 2007 we started discussions across Europe, as part of the new third energy package, to ensure that national regulators had more powers and to introduce more competition and transparency. That is what my right hon. Friend the Member for Doncaster North (Edward Miliband) has been calling for ever since he was Energy Secretary, including now, as leader of the Labour party. It is interesting that we are only now beginning to see signs that the Government are getting behind the Miliband deal. [Laughter.] It is absolutely true.

The Secretary of State likes to lecture us about the need to check and switch, but what does his own Energy Minister say? Earlier this year he poured his heart out to the Select Committee on Energy and Climate Change about his struggle to find a cheaper deal. He said:

“I went on line to compare my tariffs and I was so confused by the options that I decided to stick where I was”.

That is what is happening to our constituents up and down the country. If the Minister himself cannot work out how to get a better deal, what hope is there for the rest of us? No wonder 80% of people are paying more for their energy than they need to.

[Caroline Dinenage (Gosport) (Con)]

I recognise the passion with which the right hon. Lady speaks. I share her passion, because many people in my constituency, particularly pensioners, have been struck with fuel poverty. However, I am beginning to ask myself whether she has been asleep for the last 13 years as prices have gone up. This has not suddenly happened overnight; the problem has got increasingly worse over the last 13 years. What does she say about that?

[Caroline Flint]

I am afraid that the problem has got even worse in the last year. Prices have been going up, even though wholesale prices have been going down. In its recent reports Ofgem has quite rightly complained about the way the energy big six blame wholesale prices when they put their prices up, but when wholesale prices go down they are not as quick to send them down the other way. It is just not good enough.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

Does my right hon. Friend agree that shopping around, as people are being told to do, is a totally hopeless choice when they are suffering so badly, in many different ways, from rising prices, and not just fuel prices? Given the profits that the energy companies are making, does she think that they should make a contribution by cutting prices?

[Caroline Flint]

Absolutely, and that is in our motion today. Every Member of this House has a chance to vote to urge the energy companies to share some of their profits with the people who are their customers and to get prices down. As my hon. Friends have said, the problem is that even when people try to find a better package they do not get the right information.

[Mr Mike Weir (Angus) (SNP)]

Are things not, in fact, even worse than that? People can reduce the amount that they pay by switching only if they pay by direct debit, which acts against those on the lowest incomes who do not have bank accounts, and those of our constituents who do not wish to set up direct debits as they want the ability to decide which bills they pay when, in these difficult times.

[Caroline Flint]

Absolutely. There is no point in the companies having a system that does not recognise the situation of ordinary families. The National Pensioners Convention talks about the fact that fewer than six in 10 pensioners have access to a computer to go online. It is not fair or right. The onus should be on the companies, not the public. However, all the Secretary of State could do this week was blame the public: “It’s your fault you’re not getting out there and getting a better deal. It’s your fault you’re not saving yourselves £200 a time.” He has got a lot to answer for, because he has just sat back and let people suffer.

[Andrew George (St Ives) (LD)]

The right hon. Lady bemoans the unfairness in the direct debit discounts and the way in which those suffering from fuel poverty are treated by the system—there is also an issue with rising block tariffs—but all those things happened in the 13 years of the Labour Government. She is absolutely right to raise those important issues, but what did her Government do in that time to address them?

[Caroline Flint]

For a start, we had the most ambitious programme to help people in fuel poverty deal with their bills—the Government are cutting those measures—but we also started discussions across Europe about having Europe-wide legislation to tackle some of those issues by not only giving greater powers to regulators but ensuring more openness and transparency. I will talk about this more later, but I am sad to say that we are seven months overdue in implementing that legislation and putting into statute powers that we can use to control parts of the market. Perhaps the Secretary of State will say something more about why the package that my right hon. Friend the Leader of the Opposition was negotiating when he was Climate Change Secretary has not been implemented.

Research published by the consumer group Which? showed that when people contacted the big six energy firms to ask how they could save money—that is, when they made the effort that the Secretary of State lectures us about—a third of them were given misleading advice. Either those customers were deliberately misled or the tariffs were so complicated that not even the staff selling them understood them. Can we imagine any other product or service where we would accept four out of five customers being overcharged—not just once, but time and time again—and nothing being done about it? When four out of five families are paying over the odds for their electricity and gas it shows how out of touch this Government are to lecture people about shopping around.

People do not want a Government who blame them for the fact that their energy bills have gone up. Families and businesses that do the right thing, work hard and play by the rules cannot understand why this Government are not only allowing electricity and gas companies to increase bills by so much, but seem to be apologising on their behalf. On Monday the Energy Secretary told the “Today” programme:

“Energy companies are not the Salvation Army”,

and said that he expected them to

“earn respectable returns for their shareholders”.

We know that the energy companies are not the Salvation Army, but it should not be Government policy to drive people into the arms of the Salvation Army either.

[Stephen Barclay (North East Cambridgeshire) (Con)]

Can the right hon. Lady explain why, in 2000, the Labour Government set a 10-year target of securing 10% of electricity from renewables, with a starting point of 2.7%, yet failed to achieve it, adding only 6% in 10 years? In 2009 the current Leader of the Opposition set a legally binding target of 31%—in other words, signing us up to deliver 21% extra when we had already failed to achieve the 10% target in the preceding 10 years. Could she please explain that?

[Caroline Flint]

I am happy to support the Labour Government’s ambitious plans to be at the forefront of supporting renewable energy—and also, I should add, cracking the whip to make the energy companies play their part. Part of the problem is that the energy companies seemed to be on a mission to make us use more energy and pay more, rather than helping us to reduce our energy consumption and therefore pay less. We have nothing to apologise for on that front. What we are talking about today is what is happening this week, as the frost hits, and this winter, when people will face not only high energy bills but higher food prices, and wage freezes in the public and private sectors, in a country where unemployment is going up and people are feeling the squeeze on all fronts.

The question is: what can this Government do about that now? The answer, from Monday’s energy summit, seems to be: precious little. We do not think that this Government are doing enough. On Monday the Secretary of State could not bring himself to question whether it is right, at a time when millions of families and businesses are struggling with energy bills, that energy companies should be enjoying soaring profit margins, which are up more than eightfold since June. We do not think that it is, which is why we welcome The Sun’s “Keep it Down” campaign, and why we said that the Government should have used Monday’s summit to tell the energy giants to give up some of their profits and cut bills this winter. Was it any surprise that the BBC correspondent reported that the energy companies were “delighted” with the outcome of the summit? Well, they would be, because they were not asked to do anything.

[Jim Shannon (Strangford) (DUP)]

Does the right hon. Lady agree that the energy companies need to be regulated, and that, along with regulation, we need initiatives to reduce the supply of energy that they get, over a 12-month or even a 24-month period? Does she also agree that such arrangements would need to be regulated and guaranteed under legislation? Regulation of the companies and a reduction in the supplies that they give out, guaranteed by legislation, will be the way forward.

[Caroline Flint]

We are clearly on record as saying that we need to reform this distorted market. We need openness and transparency, and we need simpler tariffs. It is not enough just to tell people to navigate themselves around the increasing number of available tariffs that are no good. This is also about breaking up the big six and opening up the energy market to new suppliers. We are clear about that, and today we are forcing the Government to tell the House whether they, too, are clear about it.

[John Robertson (Glasgow North West) (Lab)]

Has my right hon. Friend had a chance to look at John Hills’s report on fuel poverty? He talks about the thousands of people who will die from hypothermia this winter. Does not that make any arguments about who is at fault completely superfluous? The fact is that we have to prevent those people from dying. What are the Government going to do about this? Are they going to put profit before people’s lives?

[Caroline Flint]

I was pleased to be able to have a meeting with John Hills this morning to discuss his report. I would not want to make a direct comparison in this regard, but it is telling that more people die of cold in the winter than die on our roads. This is about recognising that, while certain actions will take time, we need to determine what can be done here and now. The sad thing is that Ministers are lecturing families and firms about insulating and saving, even though they have cut Warm Front by 70% and will not give anyone any information about their green deal for homes, which will not be ready for another year anyway. Labour invested more than £300 million in Warm Front during our last year in office, helping families to keep warm and save energy. We helped home owners on modest incomes to modernise their heating systems, but today that scheme has a budget of just £110 million, and it is due to end in April 2013. The Government could take action right now: they could also stand up to the energy companies and tell them to help people to help themselves. In doing that, they could perhaps save some lives.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I agree with my right hon. Friend that we should be challenging the big six over their excessive profits. She is also right to point out, in relation to the Government’s responsibilities, what Warm Front did to reduce fuel poverty. What does she think about the Government’s cutting of winter fuel payments and replacing social tariffs with a poorly designed system? We must press the Government about those changes.

[Caroline Flint]

My hon. Friend brings to the House the expertise of a public health expert, and she makes an excellent point. How people live, and the homes and communities that they live in, are important to their physical well-being. For example, 80-year-old widows will lose £100 this winter that would have helped to heat their homes. And by the way, the Prime Minister had the brass neck to tell the public to check out free insulation, but he forgot to say that the insulation schemes run by the energy companies exist only because Labour legislated to require them to spend £300 million every year on reducing fuel poverty.

[Robert Flello]

My right hon. Friend will recall, as will most Members when the Government take us back to the 1980s, that it was Edwina Currie who said that pensioners had to stay in one room with a flask beside them, knitting themselves scarves and hats to keep warm. We are going back to that same territory, are we not?

[Caroline Flint]

I am afraid that Edwina Currie was in the news again only last week, when she said that she was not aware of anyone who could not afford to eat. People up and down the country are, however, facing the choice between keeping warm and having a hot meal. The sad thing is that many older people often make such sacrifices and keep quiet about them; they suffer on their own. In the voluntary sector, we are also seeing cuts to the services that support those people and help them to get access to their rights and to the deals that they deserve. This is a sorry tale of a sorry Government.

[Guy Opperman (Hexham) (Con)]

May I draw the attention of my right hon. Friend to the report on fuel poverty by the Office of Fair Trading, which was published this week? She asks what is being done. The report described the stopping of practices by BoilerJuice—something that was set up on her watch—which allowed only one company to be in a position to market its products, namely DCC. Will she “go compare” that?

[Caroline Flint]

Whatever we do in public policy, the important thing is always to see whether it is hitting the mark and working as best it can. Does that mean that policies always stay the same? No, it does not.

I thank the hon. Gentleman for calling me his right hon. Friend, but I must challenge him and the Secretary of State over Labour’s record on supporting families coping with their energy needs. I challenge the Secretary of State to deny that the Decent Homes programme, which involved the modernisation of 1.5 million homes, reduced energy consumption. I defy him to say that the code for sustainable homes did not improve the energy efficiency of new properties. I defy him to say that Warm Front did not reduce energy bills for more than 2 million households. I also defy him to say that the car scrappage scheme did not remove hundreds of thousands of old cars from Britain’s roads and replace them with more fuel-efficient vehicles with lower emissions. I challenge him to own up to the House today to the fact that the regulations that his Government are introducing, seven months after they were required, arise from the third energy package agreed by my right hon. Friend the Member for Doncaster North when he was Secretary of State for Energy and Climate Change. Yes, it was Labour that agreed the legal agreement across the European Union to make the gas and electricity markets more competitive, to give new powers to the regulator, to reveal the financial records of the energy giants and to put in place a more competitive market that new suppliers could enter. The role of this Government, 18 months into office, is to delay the process of implementation.

Perhaps the Secretary of State is not just the Prime Minister’s meerkat; perhaps he is also the Chancellor’s poodle. Following the Osborne doctrine, which states, “We are going to cut our carbon emissions no slower, but no faster, than other countries in Europe”, perhaps he now believes that, as the Chancellor said,

“a decade of environmental laws and regulations are piling costs on the energy bills of households and companies.”

Perhaps that is why, this week, the Secretary of State failed to stand up to companies over pricing, why he failed to express the anger that the public feel towards the energy giants, and why he meekly agreed to let the energy giants pledge not to raise their prices over the winter only after they had already increased them.

People expect, and deserve, a Government with the courage to stand up to powerful vested interests. This Government cannot even stand up to their own Back Benchers. A survey last year showed that, in spite of the overwhelming scientific consensus, one third of Tory MPs are climate change deniers who doubt the existence of climate change and its link to human activity. As ever, we are particularly grateful to the hon. Member for Mid Bedfordshire (Nadine Dorries) for the expertise that she brings to all matters scientific. On Monday, she solved an issue that has evaded scientists for generations when she told Radio 5:

“You can’t put solar panels on children’s shoes.”

I am glad that that thorny issue has been resolved once and for all, but this is all part of the background to the comments of the Chancellor at the Tory party conference, when he openly attacked low-carbon businesses to get cheap applause from Tory delegates. The truth is that this Government are not only out of touch but wedded to an out-of-date orthodoxy which, for too long, has allowed the City and companies such as the privatised electricity suppliers to do what they want at the expense of everyone else.

[Sammy Wilson (East Antrim) (DUP)]

I note what the right hon. Lady has said about her support for the Climate Change Act 2008, but will she spell out for us what the cost of the renewables obligation has been for electricity consumers in the United Kingdom this year?

[Caroline Flint]

What will be the cost if we rely on fossil fuels for ever more? What difficulties would that create, in terms not only of fuel costs but of security of supply? I refer the hon. Gentleman to a report that I believe came from both Ofgem and the Department of Energy and Climate Change last year, which outlined that something less than 5% of the price of bills was connected to investment in renewables. Of course we have to look for a balance, but I am focusing on something that we should all be concerned about. Even the Government have admitted that people are paying too high a price for their bills because these tariffs are sold in a misleading way so that people do not get a decent deal. On top of that, we have only the six big energy giants in the market, which needs to be broken up and radically reformed. That is something we should focus our attention on, along with help to people and businesses to make their homes and businesses more energy-efficient so they can pull down the costs of energy over time. There is no going back, however, to an old system of energy supply; that will not help anyone.

[John Robertson]

What does my right hon. Friend say to people in the poorer parts of my constituency where energy efficiency will not work? People can do nothing with the housing they have got, but they have to live somewhere. The thing that makes the biggest impression on them is the price. If they are going to get screwed by the price from the energy companies, they are going to have to work out how they are to live. What do we do with people like that? We can talk all we like about efficiency, but it does nothing for these poor people.

[Caroline Flint]

We stand up for them. We stand up for them when they are not getting the best deal they can for their energy. We also stand up for them by ensuring that low-income homes are supported through Government schemes, whether that is Warm Front or the winter fuel allowance for older people, but those are being cut by the Government. That is what we do and what we look at. In the long term, we look at how we live our lives and where we live and, with Government leadership and support, we help business to do the right thing to help people not to be behind the curve on energy efficiency and lowering bills. We also look at what happens now, which is why our motion demands that energy companies use some of their profits to help people, particularly the most vulnerable in our communities.

The Government do not understand the reality for families who struggle to pay the bills at the end of the month or the reality for vulnerable people who must make choices about whether to heat their home or have a hot meal. The same applies to families who believe in greening their homes, do their recycling, have low-energy light bulbs and have insulated their homes, yet still find that under the complex, distorted tariffs they pay more for every unit of energy they use—not to mention the businesses trying to keep their head above water because of an austerity programme that is not working for Britain.

[Robert Flello]

On that specific point, families face a double whammy, as not only have their own gas and electricity bills gone up, but the businesses that supply them with food and other services have seen their bills go up.

[Caroline Flint]

Yes, and all this takes place in an environment in which unemployment is going up and growth is going down. This toxic cocktail of Government policies is not only not helping us get to a better place for our economy, but is actually making it far worse.

[Anne Marie Morris (Newton Abbot) (Con)]

Does the right hon. Lady share my particular concern for the south-west, given that if we add energy bills at an average of £1,300 to the water bills at £517, people are looking at spending 8% of their average income on utility bills?

[Caroline Flint]

The hon. Lady speaks up for the south-west and I know that she has raised questions a number of times about water in the south-west. Again, however, I would have to say that she should speak to her leader and to the Secretary of State about what they are doing to challenge these utility companies over how they supply, and she should recognise the difficulties faced across our country. She also needs to recognise particular difficulties within regions as well as within the country.

[Stephen Barclay]

A central theme of the right hon. Lady’s remarks seems to be gas prices and bills for consumers. Will she remind us how much gas bills went up in real terms between 1997 and 2010?

[Caroline Flint]

I understand that the wholesale price has gone down from its peak in 2008 by two thirds; in fact, wholesale prices have been going down in the last month. That poses the question: why do we hear from the energy companies when they say that prices are going up, but when the prices are going down we do not hear from them so loudly? Ofgem has said it is not good enough that when the energy companies claim that wholesale prices are going up, the price to consumers goes up like a rocket, but when they come down, the price comes down like feathers. The truth is that it is a complex market and it is difficult. We are not an island that can control everything, but we should control the way in which the energy companies are expected to satisfy us and the public about how they run their tariffs, and they should open their books to show transparency so we can see at what price they buy and at what price they sell, to ensure that we get a better deal.

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

Unemployment is at the highest level for 20 years, we have an austerity programme that makes the eyes water, inflation at over 5% and on top of that we face the biggest squeeze on living standards in a generation. Is it not imperative that the Government do something about rising energy prices, which do more than anything else to harm families’ budgets, making it hard for them to keep up a decent standard of living?

[Caroline Flint]

I agree with my hon. Friend. Given all the spin before the energy summit on Monday, it was disappointing that all that came out of it was that letters would be written to 8 million households telling them to check, switch, insulate and save. I am sorry, but that is not good enough. It is hard to check, switch, insulate and save when it is so incredibly difficult to navigate a way through the tariff system and people are never quite sure, even if they get what looks like a good deal, whether it is going to be a good deal down the road. That is why some of the tariffs that are fixed for 12 months have been so disappointing; many people have realised that they are not as good as they were claimed to be.

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

Before I came to this place, I worked for Citizens Advice, so I know that energy poverty has led to one of the greatest increases in inquiries. At the time, I argued for the introduction of a mandatory social tariff on behalf of those in the fuel poverty group, removing them from the market that was clearly not working. Would the Labour Front-Bench team agree with such a radical proposal?

[Caroline Flint]

We had something like that, but I am afraid that the present Government have taken it away. If we want to get to the root of the problem, we have to think about radically reforming how the energy market works. We have to create a dynamic and more open energy market that deals with climate change and operates in the interests of the consumer, not the vested interests of the few.

At the Labour party conference, my right hon. Friend the Member for Doncaster North called for reform to the energy market to end the dominance of the big six and get a fairer deal for the people of Britain. While the Government have been failing to act to prevent sky-high energy price rises, Labour has been leading the debate and is coming up with radical ideas to reform our energy market and deliver significant reductions in gas and electricity prices for millions of consumers. Our plans would provide immediate help to millions of families now and reform the energy industry to provide a new bargain in the future.

[Laura Sandys (South Thanet) (Con)]

The right hon. Lady is making a critique of the current regulatory regime, which was the Labour Government’s regime. What we are doing is reforming the electricity market and there is also Ofgem’s retail market review. Those are the steps taken forward, and we will ensure that they deliver value for the consumer. The previous Government published 32 Green Papers and consultations and passed two pieces of legislation, so there was a lot of inactivity over the past 13 years.

[Caroline Flint]

I think I have already said that, back in 2007, we embarked on securing Europe-wide support for reform of the energy market. I am afraid to say that the negotiations on which the leader of the Labour party led have yet to be implemented. They are seven months overdue; they could have been implemented in this country seven months ago, but it has not happened yet. We are calling for further radical restructuring: we have argued for the energy giants to put all their power into a pool, but we have not heard that echoed by the Government. We have made many demands for transparent data to go to the regulator, but again we have not heard that echoed by the Government.

[Laura Sandys]

rose—

[Caroline Flint]

I will continue to expand on my theme a little, if I may, but I will be happy for the hon. Lady to intervene again if I have time.

If we want to get to the root of the problem, we must talk about reform, and our plans would provide immediate help for millions of families. First, we must deal with the sheer number and complexity of energy tariffs, which are extremely confusing and unfair. They hit loyal customers and penalise those who use less energy, and they really must be reformed. We propose a simple new tariff structure, which will be clearer and fairer and which will help all energy customers to get a better deal. It would work like a phone bill, with a daily standing charge and a cost per unit for the energy used.

Simplifying the pricing of energy would make it much easier for people to compare deals, work out which is the cheapest for them, and ditch the ones that are ripping them off. We need to get rid of expensive primary units and unregulated standing charges, so that people are no longer penalised for being low energy users, which is quite ridiculous. Instead of his “Check, switch, insulate” mantra, could the Secretary of State not try “Simple, honest, straightforward”? That might work better for customers.

What about redress? I understand that only two days ago, on breakfast TV, when asked about our proposal for a thorough investigation of past mis-selling and compensation for customers who have been ripped off, the Secretary of State suggested that that was not worth doing because it would delay other reforms. Labour Members will accept new protection measures as they are introduced, and we agreed that that should happen throughout Europe when we were in office. However—let me challenge the Secretary of State by repeating this—we are saying today that a full investigation into past mis-selling must be initiated, and that those who have been ripped off must be fully compensated.

[The Secretary of State for Energy and Climate Change (Chris Huhne)]

In fact, what I said was not worth doing was referring the matter to the Competition Commission, because of the delays that it would involve.

[Caroline Flint]

I am not sure whether that means that the Secretary of State now supports our demand for a full investigation and redress for consumers who have been ripped off.

[Chris Huhne]

I announced some weeks ago that we were considering redress for consumers. Moreover, we have said that it should not be just a question of a rap across the knuckles or indeed a fine, but that there should be a possibility of redress for consumers as well.

[Caroline Flint]

Obviously we will explore that in a little more detail, but I think it is clear that those who have mis-sold a package must pay back to people what they have lost through that, and must pay them compensation. It is clear that the fines are not working, because every time a consumer organisation conducts another survey, it finds more evidence of mis-selling. I think that this is quite straightforward, and I do not see why we need to go on talking about it. Let us just get on with it.

[Albert Owen (Ynys Môn) (Lab)]

Does my right hon. Friend agree that the Energy and Climate Change Committee, of which I am a member, should be praised for initiating the current inquiries? Already four of the big six have decided to stop doorstep selling, and we need to push that further. The Secretary of State knows that these companies are on the run; now he must put the boot into the big six, and ensure that our customers receive the compensation that they deserve. We need not measly words, but action.

[Caroline Flint]

My hon. Friend is entirely right, and I pay due respect to all the members of the Select Committee. They have done fantastic work on our behalf, highlighting some of the problems caused by the operation of the energy market and energy companies. It is about time that the Government stood up to the energy giants, because this is not good enough. I do not know how energy chief executives can go on television and brazen it out, talking about what their companies are doing for customers, when 80% of people are not on the best deal for them, and mis-selling appears to have reached the level that is being discussed in the Chamber and beyond. It is a disgrace, and the very least that those companies should do is fess up and pay back.

[Ian Mearns (Gateshead) (Lab)]

It is not just the mis-selling itself, but the fact that it has taken place within the confines of what is clearly a rigged market, that is such an utter disgrace. It is clear that the levels of profit per customer in all the companies in the market are rising very quickly and will fall very slowly, and that is of concern to every Member in the House.

[Caroline Flint]

My hon. Friend is right. People are not stupid, but sometimes I feel that the leaders in this country treat them as if they were. That certainly seemed to be the case on Monday, after the energy summit. People feel distrust, and they are right to feel distrust because of what has happened to them.

I am sure that we all have stories of our own experience. For instance, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), tried to work out what was the best tariff for him, and then gave up on it. Yet people are being blamed for sticking to the same supplier because they too have given up, although some of those whom we represent have more stresses to deal with in life than we have. Spending half the day sorting out an energy bill—if they can devote that much time to it—is just one item in a long list of things with which they are having to cope, and they are not being helped by the policies of this Government.

[Pat Glass (North West Durham) (Lab)]

It is all very well for the Prime Minister to tell people that they should insulate their homes. It is true that they should do that, but some of the poorest people in the country live in private rented accommodation. They turn up in my surgery all the time. There are some excellent private landlords, but there are also many who are simply not interested in insulating their houses, and do not care how high their bills are.

[Caroline Flint]

We have been campaigning for something to be done about that from 2016, but I understand that the Government do not intend to do anything until 2018, and that too is a disgrace. We must also look much more closely at what happens to housing benefit in the private rented sector, and ensure that that sector is not left behind. We should consider incentives, but we should also consider introducing a bit of stick where it is necessary.

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

One in four children in Swansea currently live in absolute poverty, which means that every day a choice must be made between eating and heating. Should the Government not put at the top of their agenda the opportunities at their disposal to target support at those in greatest need, particularly households containing children in poverty?

[Caroline Flint]

I agree. There are measures that Government can take. However, they can also show leadership and exert moral pressure on the energy companies to be fairer and consider sharing some of their profits with those who are most in need, at the very least.

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

The Secretary of State has focused on the fact that switching suppliers might save people as much as £200. Is that not a bit rich, given that the energy companies’ profit per person is £125? Most people will never get around to switching, and meanwhile the big six are raking it in.

[Caroline Flint]

If it is true that every customer who followed the Energy Secretary’s advice could save £200, why do the companies not make it easier for customers by simply reducing their prices? The latest report does indeed show that their profit margins are £125 a head, up from £15 a head in June. If that does not set the alarm bells ringing in Government, I do not know what will.

As Members have pointed out—including, to some extent, Government Members—reforming the way in which energy is priced and sold will only ever work if there is genuine competition in the energy market. There is no such competition at present. The market is dominated by just six firms, which supply more than 99% of electricity and gas.

[Damian Hinds (East Hampshire) (Con)]

Will the right hon. Lady give way?

[Caroline Flint]

No. I will not take any more interventions, because I want to leave time for other Members on both sides of the House to contribute.

The problem is that when wholesale prices go up, so do people’s bills, but when wholesale prices come down, bills do not. That is because of the lack of transparency in the market. The companies that generate energy sell it to themselves, and then on to customers. If the few big dominant firms were forced to sell the power that they generate to any retailer, companies such as supermarkets and others could come into the market, there would be more competition. and the upward pressure on prices would be eased.

In the long term, however, the only way in which we will deal with rising energy prices is by investing in new renewable sources of energy. The challenge is clear. A quarter of our generation capacity will close in the next 10 years, and we need to attract some £200 billion of investment. If we do not do that, energy bills may rise further still, by hundreds of pounds a year.

As a result of the uncertainty this Government have created, the UK is falling behind with investment in new low-carbon generation. Investment that should be coming to the United Kingdom, supporting jobs, growth and industry in this country, is now going overseas. Last year, when we left office, the UK was ranked third in the world for investment in green growth. Today, because of the choices made by the present Government, we have slipped 10 places to 13th, falling behind countries such as Brazil, India and China. That is why the Chancellor was wrong when he said the UK should not try to get ahead of other countries in developing our green industries; we should do that. We should be ambitious for our country; we should be a world leader on the green economy. That is good for consumers because in the long run it will bring down prices. It is good for our environment because it gets our carbon emissions down. It is good for our energy security because it means we are less affected by events overseas. It is good for our economy too, because it creates jobs and supports growth at a time when we need that more than ever.

I am afraid that we have a Government who are out of touch and unable to stand up to powerful vested interests on energy prices on behalf of the people of this country. They are out of touch when they tell people that they are to blame for rising energy bills. They are out of touch when they cut help for pensioners at a time when prices are rising and a cold winter is on the way. They are also out of touch when they insult people by saying “Check, switch” and “insulate to save.”

The public will check; they will check how their family voted at the last election and they will switch to Labour—as Liberal Democrat voters did in their droves in May. They will try to insulate themselves from the hardships this Government are raining down on them, and in a few years they will save themselves and this country from this terrible coalition.

The public do not need lectures from Government. They want leadership, and today there is a very clear choice before the House: vote to stand up to the energy companies and take action; vote for simpler and fairer tariffs; vote for justice and redress for the victims of mis-selling; vote to open the books and shine a light on how energy is bought and sold; vote to break the stranglehold of the big six and create an open and competitive energy market; vote to tell the energy companies to use their profits to cut bills now. I commend the motion to the House.

14:51

[The Secretary of State for Energy and Climate Change (Chris Huhne)]

The right hon. Member for Don Valley (Caroline Flint) brings a wealth of Government experience to her brief, and I congratulate her on her appointment and on securing today’s debate. She has a particularly difficult Opposition Front-Bench role as her boss, the Leader of the Opposition, was the former Secretary of State for Energy and Climate Change. He held that post for almost two years, and presided over the last Government’s energy and climate change policies. It is his legacy that I am having to deal with.

As we did not hear much from the right hon. Lady about that legacy, I would like to remind her of it. First, we inherited a situation whereby we ranked 25th out of 27 European Union member states on renewable energy. No turf was turned for any new nuclear power stations. There was no progress on that throughout the 13 years the Labour Government were in office.

[Several hon. Members]

rose—

[Chris Huhne]

Carbon capture and storage is a crucial technology if we are to ensure that the coal mines and miners in this country have ongoing employment, but in 2007 the Peterhead project was cancelled, despite the competition, with the consequence that we have now further delayed addressing this issue.

[Several hon. Members]

rose—

[Chris Huhne]

There was not a single comprehensive energy saving package throughout the time of the last Labour Government, whereas in our first year in office, we have proposed in the Energy Bill a comprehensive package to make sure that householders can save energy, so that we end the scandal we inherited from the right hon. Lady and her colleagues of householders in our country spending more on their energy every year than people do in Sweden, where temperatures are 7° lower than here. That highlights the waste we inherited.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. If the right hon. Gentleman does not wish to give way, he cannot be made to do so. I ask Members to be patient with him.

[Chris Huhne]

I will happily give way in a moment, but having listed a few legacy issues that we are attempting to deal with, I should make one final point. The leader of the Labour party held this portfolio for almost two years, but only now that he no longer has any power to do anything does he keep coming up with interesting ideas. He recently came up with the interesting idea—I do not agree with it but it is an interesting proposal—that the energy companies should be broken up and should no longer be vertically integrated. However, I can see no such proposal in the Opposition motion. Why is that? Is the right hon. Lady already resiling from the proposal that her boss made just a few weeks ago?

Indeed, I read this motion very carefully expecting, as usual, to come across a number of points on which we could disagree, but I and my ministerial team have consulted, and we cannot disagree with it. We will not oppose it. I hope that the right hon. Lady asks her boss whether she was right not to propose that key idea he made a few weeks ago.

[Huw Irranca-Davies]

rose—

[Chris Huhne]

I am happy to give way to the hon. Gentleman, who, sadly, has lost his Front-Bench role dealing with these issues. I, for one, thought he performed his duties rather well.

[Huw Irranca-Davies]

I thank the right hon. Gentleman for his civility. However, he is rewriting history yet again. What did he and his party do throughout the previous decade and longer when we were establishing the consensus on the need to build new nuclear? Also, would he care to comment on the fact that when we left office this country was one of the top five most attractive countries in the world for inward investment on renewables?

[Chris Huhne]

We do not need to go as far back as that. As the hon. Gentleman knows, the coalition reached an agreement which said that, given the overwhelming support for new nuclear from the Opposition and the Conservative party, it has a part to play. I refer him to my recent speech at the Royal Society in which I addressed how we intend to make sure that we do not repeat the mistakes on new nuclear generation that, sadly, so many Energy Secretaries made in the past.

[Several hon. Members]

rose—

[Chris Huhne]

I will make a little progress before giving way again.

Across the country, rising energy prices are hitting households hard. On top of increasing petrol and food costs, many households are facing an increase of more than £100 in their annual dual fuel bills. For those who are struggling, it can seem as if bills simply keep going up. I am sure that all Members will join me in expressing concern about that, but sympathy from the sidelines is not enough. It is our responsibility to do everything we can to help. That is why we are focusing on the things that will make a difference both this winter and in the long term.

First and foremost, consumers need to know how they can cut their energy bills right now. We need open and honest information, so people can see the savings they can make by checking their energy deal, switching tariffs or suppliers, and insulating their homes. One of the positive things to come out of Monday’s energy summit was a commitment from the energy companies that, as part of the voluntary agreement, they will notify all their customers when there is a cheaper tariff than that which they are currently paying. That is a step forward. It is not the end of the story, but it is a step forward.

[Mr Weir]

Does the right hon. Gentleman agree that the choice of language is important? He says that we can reduce bills by switching and insulating, but is it not the case that, given the massive rise in energy prices, if people switch or insulate they may stop the rise being so big, but bills will keep rising? That is why people are being hit so hard. Wages are not rising, but bills are. Unless we can reduce bills, we will not help the situation.

[Chris Huhne]

That is a very good point. It is certainly the case that over the past year there has been a substantial increase in world gas prices because of the high growth in the far east, the demand for gas and the Fukushima nuclear accident. That substantial increase in gas prices has inevitably fed through to bills, but I think that people understand that, by getting a grip and comparing tariffs, they can curb that increase, and sometimes offset it entirely.

Ofgem is the independent regulator, and I have a lot of respect for the work it does. It has found that people could save £200 by switching, and I should point out that an additional £100 is available for simple energy insulation steps.

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

One of my constituents has taken the trouble to analyse each section of his bill. He found that although the gas price—the actual energy price—had reduced from being 62% of his bill to 42%, his bill had increased. When he interrogated his supplier he found that the profit level it had built in had a 9% increase. In reality, it had taken that money, which was not demanded of it for energy sources, and put it into the profit level. That is why bills are increasing.

[Chris Huhne]

I agree with the hon. Gentleman, which is why we are happy not to oppose the motion. I agree that there are signs in this market of anti-competitive behaviour and we need to get a grip on that, which is exactly what this Government are doing in supporting what Ofgem—the independent regulator—is doing.

[Several hon. Members]

rose—

[Chris Huhne]

I will make a little progress before I give way.

Our approach means working together across the consumer groups and the energy industry to get the message out about checking, switching and insulating. Earlier this week, my right hon. Friend the Prime Minister and I brought the energy suppliers, the consumer groups and Ofgem together to do precisely that. In the new year, Citizens Advice will co-ordinate a “Big Energy Week” campaign, and energy suppliers have put together winter help packages for consumers, which I am sure other hon. Members will welcome.

[Geraint Davies]

The right hon. Gentleman is saying that he wants to be a champion of consumer rights. He will be aware that the primary consumer watchdog on energy, Consumer Focus, which has mandatory statutory powers, is being abolished by his Government and those powers are being absorbed by Citizens Advice, which has enough on its plate with changes in legal aid, cuts and all the rest of it. Does he not accept that that change will disempower energy consumers, at least over that period of change, and that the powers of Consumer Focus are set in statute in a stronger way than those of Citizens Advice, which is a charity?

[Chris Huhne]

I do not agree with the hon. Gentleman on that. I care as passionately as he does about consumer rights on this issue. I spent some time on the board of Which?, the consumer association, so I will not be second to anyone on those particular issues. My experience—perhaps his differs—is that many of my constituents go first and foremost for advice on these issues to their citizens advice bureau, so that is an appropriate place to situate such advice.

When the coalition took office, some 400 separate tariffs were available. That is also part of the legacy we inherited from the time when the right hon. Lady’s boss was Secretary of State for Energy and Climate Change. This coalition Government have, in our Energy Bill—now the Energy Act 2011, as it received Royal Assent yesterday—taken powers to force companies to give straightforward information about cheaper tariffs. We are also working with Ofgem to cut the number of tariffs and make it easier to compare them. According to Ofgem, only 15% of households switched gas supplier last year and only 17% switched electricity supplier. Switching should be fast and easy, and we are cutting the time it takes to switch to just three weeks—that is another change that this Government have introduced. In addition, Citizens Advice and Ofgem announced record funding from suppliers for the “Energy Best Deal” campaign, which helps vulnerable consumers to shop around for the best deal.

[John Robertson]

rose—

[Chris Huhne]

I cannot resist, although I hope that the hon. Gentleman will be raising a matter concerning fuel poverty. I wish he would because I will be able to respond.

[John Robertson]

My speech is full of stuff on fuel poverty, but I wish to pick up on one of the points that the Secretary of State made. He said that Sweden was using less energy than the United Kingdom, but that is wrong. According to the Swedish Government’s own figures, Sweden uses twice as much energy as this country does, and the cost is more. In addition, according to the International Energy Agency, Sweden’s energy use is substantially higher than that of the UK. I do not suppose he meant to mislead the House, but I think he must get his facts right.

[Chris Huhne]

The hon. Gentleman needs to examine the situation for households. It is clearly the case that Sweden has a lot of hydroelectricity and a lot of industries are very dependent on it. My point was about households and the household use of heating, which is key.

Millions of households could save just by switching tariffs or payment method. From now on, suppliers will write to customers to tell them about these savings—that is another outcome from Monday’s energy summit.

[Alex Cunningham (Stockton North) (Lab)]

rose—

[Ian Lavery (Wansbeck) (Lab)]

rose—

[Mr Weir]

rose—

[Chris Huhne]

I am going to make a bit of progress before giving way again. The hon. Member for Angus (Mr Weir) has already intervened once, so he will have to wait until I have taken interventions from some of the other hon. Members.

This winter, energy bills will show customers how to save money, encouraging them to call their supplier and check online for savings. They will also have access to advice.

[Caroline Flint]

The Secretary of State makes much of the fact that people will be able to save if they switch. What about the people who cannot use direct debit? What about the people who have not got access to the internet or those who, even if they did, would find it difficult to navigate their way through?

[Chris Huhne]

The sort of people the right hon. Lady is talking about are the sort of people we are particularly targeting with our warm homes discount. I heard some of the interventions from Labour Members with mounting surprise, because one of the things that this Government have done, of which I am very proud, is to concentrate help on those most in need—those most vulnerable to rising fuel prices. Through the warm homes discount we have altered the previously voluntary arrangement. I say to Labour Members that their Government operated a purely voluntary arrangement with the big six, so cosy was the relationship between the big six and the right hon. Lady’s boss. It was a voluntary, grace and favour arrangement, whereby support was provided for the most vulnerable. We did not have any truck with that. We decided that we were going to legislate on this, which is exactly what we did. As a result, we will have a two thirds increase in the support made available for these social discounts compared with what was available under the previous Labour Government. So on the matter of fuel poverty, we have been doing exactly the right thing, which is to concentrate support where it is most needed and to make sure that that support is available.

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

The Secretary of State is making an excellent point about targeting resources where they are necessary. Will he congratulate Cornwall council and other councils that are taking exactly that approach and working in partnership with the voluntary sector to provide free insulation and other ways of helping people in fuel poverty to stay warm this winter?

[Chris Huhne]

I certainly will congratulate the hon. Lady’s local council and every council, of all parties, on that work. I hope that we can maintain a cross-party and consensual view on this. Many councils, some Liberal Democrat-led, some Conservative-led and some Labour-led, have been pioneers in this area, and I want to see them do more. Leading on that is really important for our constituents, and it is something to which I pay great tribute.

People can save money on bills, but they can also save by using less energy in the first place. Far too many UK homes are not properly insulated. Loft and cavity wall insulation can save more than £100—we are talking about very simple changes. The big six energy suppliers, which supply 99% of UK households, all offer free or cut-price insulation, yet many householders still have not taken up the offer. So from December, 4 million of the most vulnerable energy customers will receive letters to tell them they are eligible for free or heavily discounted insulation to their loft or cavity walls. Many of these people will not necessarily save energy because they are currently too cold and keep their bills down. By having that insulation, they will be able to increase their comfort, and that is a very good thing to get through an extremely tough winter. The right hon. Lady is absolutely right to say that one of the scandals in this country, which underpinned the work of the Hills fuel poverty review, is that 25,000 people die each winter because of the cold. We have to deal with that. As has been pointed out, it is a multiple of the number of people killed on the roads and it is a scandal that across this House—I am not going to cast further aspersions on the record of the previous Government—we have not tackled this issue with more vigour until now.

These letters will direct people to a dedicated independent helpline, as part of our programme to ensure an extra 3.5 million homes are properly insulated by the end of 2012. Next year we will also be rolling out the green deal to help even more households save money through energy efficiency.

We must also make sure that help is getting to those who need it most—the most vulnerable households. As I pointed out, discounts have risen very sharply under the coalition, and the extra support will be available this winter. We are requiring energy companies to provide help to about 2 million low-income households through the warm home discount.That is a discount of £120 for 600,000 of the poorest pensioners—substantially more than they have been getting until now. We are spending £110 million on heating and insulation for low-income and vulnerable households through Warm Front.

[Caroline Flint]

Is it not the case that only about one in 20 pensioners will benefit from the warm homes discount, whereas our social tariffs went to all vulnerable households? In addition, there are cuts of £100 in the winter fuel allowance for those over 80 and cuts for older people of £50. This all adds up when one takes into account the VAT increases and everything else that people have to pay the price for under this Government.

[Chris Huhne]

The right hon. Lady again makes a point about winter fuel payments which I should have picked her up on previously. She may not be aware of this, as she was not in the Department previously, but we have adopted precisely the policy of the previous Labour Government on winter fuel payments. We have left it completely unchanged. They increased winter fuel payments on a temporary basis and then proposed to bring them down, and we have kept exactly in line with that policy, so I am in no position to accept lectures on this matter from the Opposition as we are implementing the policy that they agreed.

Of course, cold weather payments will also be paid to households in areas with extended periods of very cold weather. Part of the green deal scheme will be designed specifically to provide affordable warmth to low-income, vulnerable households through heating and insulation measures. Those policies will make a difference this winter, next winter and every winter thereafter. However, we also need to take the right long-term decisions so that energy does not become unaffordable in future. We need to keep the lights on in the cheapest, cleanest way and to make sure that households get the best deal in the long term as well.

[John Pugh (Southport) (LD)]

The Secretary of State may be aware that north of my constituency a find of 200 trillion cubic feet of shale gas has been announced. That will make an enormous difference one way or another if it is genuine. Would he like to comment on that and the difference it might make to prices in future?

[Chris Huhne]

I am grateful to my hon. Friend for that question. Our overall energy policy is designed to be robust in the face of considerable uncertainties in relation to technologies and what is likely to happen to the price of particular fuels. If it transpires that the early indications we have received from Cuadrilla about the size of the find under Lancashire are correct, there will clearly be an impact on gas prices within the UK. We have already seen that gas prices in the United States are half of those in the UK and the rest of Europe and are even lower than the prices for gas in the far east. This is a very important development and all our policy framework is designed to make sure that we can provide affordable, clean electricity at the cheapest possible price to British consumers in the long run. If that means cheap gas, then obviously the technological imperative is to go forward with carbon capture and storage so that we can use that gas in an environmentally friendly manner. That is precisely why that is so important.

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

Will the Secretary of State give way?

[Chris Huhne]

I must make a bit of progress with my speech; otherwise I fear we will be here all night.

Over the next 10 years, we need £110 billion of investment in power plants and another £90 billion of investment in energy infrastructure to avoid the risk of black-outs. If we do not invest now to reduce our energy use and our dependence on fossil fuels in the long term, we will have to rely on ever more expensive imports. That will leave us at the mercy of global oil and gas prices and at the mercy of events in very volatile parts of the world. We have only to look at what has been happening in Libya and the rest of the middle east to see that. The impact on energy security and household bills will be worse. This is a very important way of insuring our country against the sort of economic shocks that we can otherwise expect.

That four-pronged strategy of energy saving, renewables, new nuclear and carbon capture and storage is absolutely essential.

[Luciana Berger]

rose—

[Chris Huhne]

Is the hon. Lady about to ask about carbon capture and storage perhaps?

[Luciana Berger]

I thank the Secretary of State for giving way. He said that energy saving was one of those prongs, and on energy saving he said only a moment ago that the Government are introducing the energy company obligation, which will replace Labour’s carbon emissions reduction target and community energy saving programme. That ECO pot is not going to go just to homes in fuel poverty but will be split, with some money going to subsidise able-to-pay households. Will he tell us how much there will be in that ECO pot?

[Chris Huhne]

We will be bringing forward the consultation document on the green deal and the ECO subsidy shortly, and all those issues will be addressed. Clearly, we have to make sure that we are getting value for money on both the carbon reduction side and in reducing fuel poverty because they are both very important.

I want to make some remarks on carbon capture and storage, which was raised in Prime Minister’s questions. Despite the fact that all the parties have worked extremely hard on the first carbon capture and storage demonstration project at Longannet, we have not been able to reach a satisfactory deal, as the Prime Minister pointed out. We will not, therefore, be proceeding with the project. That decision is purely about the viability of that particular project and is not a reflection on our commitment to the CCS programme; indeed, hon. Members will have heard me commit us to that very clearly a moment ago.

The long-term need for CCS remains as strong as ever. We will continue working across Government to start a more streamlined selection process as soon as possible and £1 billion will be available, as it was allocated in the comprehensive spending review, for that new process. Over the coming weeks, we will ensure that the lessons from that first process are fully learned and we now know that commercial-scale CCS projects are technically viable and are likely to be financially achievable. We also know more about the best way to procure these first-of-a-kind projects. Our findings will be published and made freely available on the Department of Energy and Climate Change website to help to speed up deployment of CCS both here and abroad. We will study those lessons closely as we develop the forthcoming CCS road map setting out our vision for CCS deployment.

[Caroline Flint]

I thank the Secretary of State for referring to the situation with carbon capture and storage projects around the country. Will he explain to the House how the Government will look to use the great deal of work and research that have been done at the plant in Scotland to make sure that the endeavours, hard work and ingenuity there are not lost but are supported?

[Chris Huhne]

I am grateful for that question. It is absolutely right; we have learned an enormous amount from that. A lot of work has gone into the negotiations and a lot of good engineering work has been done with the front-end engineering and design studies. They will all be published, if they have not been already, and will be made available to everyone. We are absolutely confident, as a result of this process, that we are able to go ahead with the CCS project within that budget. Unfortunately, at Longannet the difficulties were specific to that project, including the length of the pipeline between Longannet and the reservoirs, as well as other issues concerning the rest of the plant such as its upgrading to comply with the large combustion plant directive. As a result of the knowledge that we have acquired in that negotiation and as a result of those feed studies, we are confident that we will be able to take a project forward.

[Mr Weir]

Earlier in his speech, the Secretary of State referred to the disgraceful decision of the previous Government to abandon the gas CCS project at Peterhead, but are not this Government doing exactly the same with Longannet now? It was chosen as the only viable CCS plant in the competition, as no one else came forward. By abandoning it now, is he not putting back CCS development and ensuring that its much talked about exportable technology will not be developed in this country?

[Chris Huhne]

No, I disagree with that. I think that we have a very good track record at a number of our leading universities, with Edinburgh being first and foremost amongst them, of work on carbon capture and storage. One lesson that we have learned from the negotiations is that we can build a commercial-scale CCS plant with £1 billion. Indeed, we have had a very clear indication of interest back at Peterhead from Scottish and Southern that it would be prepared to do that with consortium partners. That is clearly going to be an offer that other contestants will have to beat, so for all the reasons that I have given and that I have explained at considerable length, we are determined that we should be successful with CCS technology. It is disappointing to me personally and to many others that we were not able to proceed at Longannet because of the specific problems there, but that certainly does not mean that we are shelving CCS.

[Andrew George]

I appreciate that my right hon. Friend is giving the House the benefit of time and his advice on the issue. Nevertheless, there will be concern about the impact that that outcome might have on the time scale for the delivery of an effective CCS programme. To be clear, is he saying that the difficulties at Longannet were primarily financial or technical? Does that raise a question about the viability of the technology, or can he reassure the House in that regard?

[Chris Huhne]

I can reassure the House that on the basis of the feed studies, that does not raise questions about the generic technology. What arose were questions related to the specific costs of employing the technology at Longannet, given how far away it is from the reservoirs and so forth. Those were the issues. We are confident that we can procure a CCS commercial scale plant within that £1 billion. That is what we intend to do.

[Ian Lavery]

A billion pounds was allocated to the CCS project at Longannet. I am amazed by what was said at Prime Minister’s Question Time and by what the Secretary of State has just said. That it is not going to happen. Projects 2 to 4 were already in the pipeline—excuse the pun—and I believe there are a number of interested parties. Will the £1 billion allocated for Longannet be available for one of those projects or will it be available across the board? Will the right hon. Gentleman confirm that it will be committed to CCS with coal, or could it be gas?

[Chris Huhne]

Let me say clearly that one of the things we will do is attempt to align our deadlines on this with the European Commission’s new entrant reserve competition. One of the conditions of that competition is that the CCS plants have to be up and running and ready by 2016. That is in answer to the earlier question about the deadline. We do not foresee a slippage in deadlines.

There is money available from the European budget to support those projects. Money will be available. That £1 billion from the UK Treasury is secure. In addition, there may be help for running costs from the electricity market reform contracts for difference. With all those things we ought to be able to make sure that we get commercial-scale carbon capture and storage up and running. The projects that have been proposed to the Commission are a mixture of coal and gas. We want to make sure that we are doing both.

I hope the House will come away knowing that we are fully committed to the programme and the technology. What happened at Longannet is a disappointment. We would have liked it to go ahead if we could have done it within the affordability envelope that we had and if we had not hit those specific project problems there, but we will now go ahead elsewhere and we are confident that we will be able to get the commercial-scale CCS.

Our proposals to reform the electricity market—I have already mentioned contracts for difference—will deliver the best deal for Britain and for consumers because they will keep prices down and ensure that consumers are protected. We are working on giving Ofgem powers to force companies to give money back to consumers if the companies break the rules. That is the point about redress that the right hon. Lady mentioned.

[Caroline Flint]

Will that include customers who have already been victims of mis-selling or is the policy only for those who might be misled in the future?

[Chris Huhne]

The right hon. Lady knows that unfortunately it is a strong principle right across the House, and I am sure she will agree, that we should not have retrospective legislation. Legislation is for matters going forward. I agree that it would have been good if we had had legislation allowing for redress some years ago, but we have been in government only since the last election. For 13 years that was not done by the Labour Government.

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

Did the Secretary of State raise the issue of mis-selling at the energy summit? It seems to me that he probably was not there long enough to do so.

[Chris Huhne]

The hon. Gentleman is quite wrong about that. Mis-selling is clear. Ofgem had already tackled that with substantial fines and with the public reputational risk. As a result of the mis-selling that some of the companies were discovered to have engaged in, a number of them have said that they will not go down the doorstep route. There is therefore clear action on that already, but I agree that what should happen is not just a question of fines or making sure that the companies get the rap—[Interruption.] I have raised the matter with the companies and with Ofgem. It is important to make sure that there is also the possibility for Ofgem to provide redress to consumers who have lost out. That is an important principle. All of us on the Government Benches will want companies to rise to their responsibilities.

We are also working to open up the energy market to smaller companies. In the past, regulation stopped independent suppliers serving more than 50,000 customers. We have already raised the ceiling to 250,000 customers, and we are working with small suppliers to make it easier for them to comply with regulation.

Global energy prices are beyond our control, but we are doing everything we can to help households with their energy bills this winter. On tariffs, bills and insulation, we are making it easier for people to save money and save energy. Together with consumer groups and industry, we are working to improve the offer to consumers. We are taking action to help the most vulnerable households to cope with rising bills and inefficient properties. From the green deal to the reform of the electricity market, we are making the right long-term decisions to ensure warm homes and affordable, secure energy for the future.

[Caroline Flint]

At Prime Minister’s Question Time today the Prime Minister suggested that he supported the opening up of the energy market to a pool. Does that mean that the Government agree with the Labour Front-Bench team that the pool should be opened up in such a way that the big six should put all their energy into a pool for everybody to compete for?

[Chris Huhne]

I certainly agree. We have been talking to Ofgem about this and we have been talking with the big six. I found it a very interesting proposal from Scottish and Southern that it was prepared to trade a substantial amount of its electricity in the wholesale market. Scottish and Southern said 100%—of course, that is 100% of the spot market; it does not mean that Scottish and Southern is prepared to trade 100% of its electricity. The devil is in the detail. We have to make sure that the forward market is also liquid.

I am absolutely committed. I am not in favour of the Opposition’s proposal that we should refer these matters to the Competition Commission, because for two to five years that would put a freeze on the whole market. None of the big six would need to do anything at all. They would be able to put their prices up with impunity, they would be able to cut their investment, they would be able to pay more dividends to shareholders, and we would have an awful long time to wait before we had any real reform. The reality is that we think that we understand enough about what is not right in the market, at the retail end and the wholesale end, and are working very hard with Ofgem to ensure that it is put right, which is exactly what we will do.

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

Will the Secretary of State give way?

[Chris Huhne]

I am afraid that I have finished my speech, as delighted as I would have been to give way to my neighbour from Southampton.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I must now announce the result of the deferred Division on the question relating to the Adjournment of the House. The Ayes were 306 and the Noes were 95, so the Ayes have it.

[The Division list is published at the end of today’s debates.]

Before calling the next speaker, I inform Members that there is a 12-minute limit on speeches.

15:28

[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to follow the Secretary of State. I had intended to be non-partisan and speak in favour of consensus, but having listened to his opening remarks, I will find it difficult to be disciplined and keep to that line, because he rewrote the recent history of energy. I certainly take no lectures from him on nuclear power and many other things. I have stood on the Government side of the House and argued in favour of nuclear power, the base load, renewables and energy efficiency, and I see no contradiction between them. For him to try to knock the policy of the Labour party when it was in government is nothing short of cheek.

I welcome the debate because energy prices are the big issue for constituents and consumers across the country. I welcome the fact that my right hon. Friend the Member for Don Valley (Caroline Flint) chose this topic for her first outing as shadow Secretary of State. She gave an excellent overview of what has happened in recent weeks.

I did not want to be partisan, because the issue is too important for that, but when people criticise what happened in the past 13 years, I must remind them that, since 2009, there has been a trend of high gas and electricity price rises. The rise in 2008-09 was seen as a one-off resulting from a peak oil situation. In 2009-10 prices came down considerably. In 2009, gas prices rose by 51% in a single year and electricity prices also rose considerably, but the following year, when the wholesale price was half what it had been at its peak, prices came down by only 6% and 9% respectively. We have seen since then a trend of double-digit rises that are hurting every household in the country. That is why the House is right to debate the matter and look for ways to help.

I am very disappointed with the summit. I tabled a question last Friday, without knowing that there was to be a summit, asking when the Secretary of State last met the big six energy companies. He has partly answered that question, but I am disappointed that he did not ask them whether they would freeze their prices in future and what they would do to bring them down. The duty of the Secretary of State is to put the consumer’s view to those companies.

Our constituents are right to be annoyed by the fact that those companies’ profits have increased in the past few months from £15 to £125 for each household. I want to make it clear that I am not against energy companies making profits or having healthy balance sheets, because we need them to reinvest in our infrastructure as we move to a low-carbon economy, but I find it very upsetting that they claim that the wholesale price is high and put their prices up, but when the wholesale price comes down, the retail price does not follow suit. Our constituents are paying for that very dearly. As my right hon. friend said, that is the rocket-and-feathers concept—prices rocket after the wholesale price increases, but they come down very slowly.

[Jonathan Edwards]

As a proud Welshman, like myself, is the hon. Gentleman not perplexed that Wales, despite being a net exporter of electricity—we export twice what we consume—has a level of household energy poverty at 30%?

[Albert Owen]

I am a fellow Welshman, but my energy policy is different from that of the hon. Gentleman. Wales is a net exporter of energy because Wylfa nuclear power station, which is in my constituency, generates 30% of Wales’s energy needs. If that was to go, we would be in a difficult situation. However, he is right to point out that some regions of the United Kingdom that generate energy pay more in the retail price for their energy. The energy companies will tell us—I have raised this as a member of the Energy and Climate Change Committee—that that is because of transmission, but those areas, which are often on the periphery of the UK, generate electricity and send it to the national grid, but the consumers in those areas pay more for it. That is totally wrong and something we all need to work together to eliminate in future.

I wish to concentrate on two issues. The first is the reform of the regulator. I would like the regulator to have more teeth. That is not just my view. I can remember the Prime Minister, when Leader of the Opposition, saying that the regulator needs to get to grips with the energy companies and ensure that they deal with price rises. I agreed with him then, and I agree with that statement now. That is also why I am disappointed that there was a high-profile energy summit in No. 10 that resulted in these very tame reforms, if indeed they are to come about.

Ofgem has already suggested that we introduce greater accountability, greater transparency and simpler tariffs, and the Secretary of State was wrong about the time scale, because I believe that in the past year the number of tariffs has gone up considerably from 180 to some 400. I am not making a political point, because I know that many people, such as the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) of whom I am very fond, have phoned up energy company call centres and tried to switch tariffs but found it extremely difficult to do so. They have spoken to people at call centres who, despite representing and working for the companies, do not themselves know the tariffs, so the system really needs to be simplified to ensure that people understand them and can make a choice.

Even if everyone were to switch to a cheaper tariff tomorrow, they would still in a year or two’s time be paying more for their energy, so switching is a peripheral issue. We want the energy companies to divvy out some of their profits to help customers directly or to build infrastructure for the future—[Interruption.] Somebody shouts, “They are,” but they are not using their profits to a considerable degree.

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

rose—

[Albert Owen]

The hon. Lady is trying to intervene. Would she like to intervene on that point?

[Dr Coffey]

Yes, I would. I appreciate that the hon. Gentleman is a little sore because his island is not going to get a new nuclear power station.

[Albert Owen]

It is.

[Dr Coffey]

Well, I apologise, but who does the hon. Gentleman think is going to pay for it? It will be the energy companies. They are paying towards the construction of new nuclear power stations.

[Albert Owen]

I am sorry if the hon. Lady was not listening, but I believe that we will have a new nuclear power station; the consortium, Horizon, is working towards that. Issues in Germany might affect its balance sheet, but it is committed, as the Labour Government were, to the project. Work is being carried out, and I support the site that has been allocated.

When huge profits are made, the customer should not be punished, as they have been, with high rises in their gas and electricity bills. If the hon. Lady thinks the opposite, she is in a minority in the House, because we have seen excessive profits.

[Dr Coffey]

Will the hon. Gentleman give way?

[Albert Owen]

No, I am not going to give way again. I was talking about excessive profits, but I am going to develop an argument about the off-grid, which nobody has touched on so far.

When we talk about energy prices, and about double-digit rises for people with the big six energy companies and for the 99% of retailers who are on-grid, we should also consider those who are off-grid. They are not a small minority, because a considerable number of households are not connected to the grid and have experienced—I have seen evidence from constituents—increases of about 33% in the price of liquefied petroleum gas. The cost of oil has also gone up considerably, so I welcome the fact that the Office of Fair Trading is looking into the matter, but it will not be enough just to refer it to the Competition Commission; there needs to be direct action.

I should like a windfall tax. I am not afraid to use that phrase, and neither is the Chancellor of the Exchequer, who in his Budget introduced a fuel duty—a windfall tax—to help people who were suffering then. The Government should do exactly the same for domestic energy users and households. The excess profits of energy companies should be used to help build an infrastructure, for example by extending gas mains, so that people off-grid have the opportunity—the choice—to go on to mains-supplied gas and obtain the same prices as those who are on-grid.

Indeed, we should go further. I would link off-grid issues to reform of the regulator, because the regulator should have responsibility for those who are off-grid as well as for those who are on-grid. The priority of the regulator, in its terms of reference, is to protect the consumer, yet those who are off-grid receive less protection, so I am asking for the equalisation of protection.

The Secretary of State will remember that I asked him about that when he appeared before the Energy and Climate Change Committee, and I asked the head of Ofgem, too. The head of Ofgem said, “That’s a matter for the Government”, and the Secretary of State said, “It’s a matter for the regulator.” Well, I should like to invite both of them for afternoon tea and to sit them down in a room, because people off-grid are losing out considerably while the Secretary of State and the head of Ofgem have different opinions of their remit.

The solution is simple and it could be implemented very quickly. The Government could give powers to the regulator, and the people off-grid could have protection equal to that for those who are on-grid. The 33% increase that I heard about from a constituent happened in summertime—in August—and it is not sustainable in the rural areas that are not isolated and that contain decent-sized hamlets, small villages and sometimes even small towns.

We need to be radical in our reform. Of course I agree with the Secretary of State and the regulator when they talk about simplifying bills and about greater transparency by the energy companies, but we have to go a step further and give the regulator real teeth so that it can deal with these situations. That is important to every Member of this House and every constituent we represent. We should never forget that those who are off-grid are paying considerably more than those who are with the big six.

I support many of the measures that are being proposed by the Government for electricity market reform, but they are all about the medium and the long term and, in the short term, people are being really hurt by their bills when they receive them. We, as the House of Commons, the Government and the regulator need to be working together for the short term. I would like to believe that the measures that came out of the summit will make a huge difference to our constituents, but that will not happen in the short term. The House of Commons—I very much welcome this debate—must fix its mind on the short term to help each and every household in the United Kingdom with their energy bills in future. Yes, there will be peaks and troughs with the prices of fuels and external issues that affect the price of energy—we all understand that—but we need to have a fair system so that when prices do come down the regulator can look at the books and say, “Yes, prices for consumers should come down by X amount as well.” Ofgem tried to do this and produced a report, but the energy companies argued with that process.

This is not anti-business or anti the big six; it is pro-consumer and pro our constituents. We all have a duty to stand up and protect their interests. The regulator needs to be beefed up, it needs to have more teeth, and it needs to be more proactive—but so do the Government. It is important to have this debate not to score political points but to put the welfare of our constituents first. They will be anxious this winter given their experience of such cold weather in the past year, and they want certainty that the House of Commons is on their side.

15:42

[Guy Opperman (Hexham) (Con)]

I genuinely believe that this winter there will be choices between heating and eating for individual families up and down the country. The fuel poverty rate in the north-east is approximately 24%; we have the second highest rate in the country. Clearly, that applies in relation to the big six, but I particularly want to speak about it in relation to heating oil and liquefied petroleum gas. I pay tribute to the hon. Member for Ynys Môn (Albert Owen). Over the past year, he and I have debated, very much with common cause, the issues of fuel poverty and heating oil, and I am delighted to follow his eloquent and well-made speech.

My constituency is the second biggest constituency in the country, at 1,150 square miles, and it does not just face problems of rural fuel poverty. The town of West Wylam, which is a suburban part of Prudhoe, is in an area that has fundamental problems of fuel poverty, and it has perfectly normal residential housing: this is not just about a farm way out west. It is not simply a problem for rural dwellings. One and a half million dwellings are dependent on heating oil. On top of that, significant amounts of LPG are used. We are talking not about a small number of people but a very significant number who are greatly affected by this, which is an important problem throughout the north-east.

I will focus on the role of the Office of Fair Trading, which I believe has done good work. Its report of September this year on Boilerjuice was a success. The report published only yesterday on off-grid energy, about which I met the OFT at approximately 12 o’clock today, is well worth reading. It is a doughty read at 352 pages, and it would be a lie if I said that I had read every single page, but I am working my way through, and none of my copy will go for fuel at the end of the day.

The OFT’s investigation into off-grid energy is a market study. Those who analyse what the OFT does need to understand that a market study does not necessarily lead to a formal investigation. As a first point I invite the ministerial team to consider that, although clearly it is not fundamentally within their remit.

[Karl Turner]

The hon. Gentleman is making a powerful speech on behalf of his constituents. I wonder whether he will support the Opposition motion.

[Guy Opperman]

The hon. Gentleman obviously did not hear what the ministerial team said earlier, which addressed that exact point.

The OFT report is a market study, but I seek a formal investigation where there is a reasonable suspicion that the law has been breached in relation to the Consumer Protection from Unfair Trading Regulations 2008. I suggest that that applies to pricing practices, particularly when there is a varying price after a customer has placed an order. In my constituency, there is ample evidence that that has happened.

[Sarah Newton]

I apologise that I was not here for the first part of my hon. Friend’s speech, but an urgent matter called me out of the Chamber. The experience that he so vividly describes in his constituency is echoed in Cornwall and across the south-west. I, too, welcome yesterday’s OFT report. It says specifically that there is an opportunity for us to go back to the OFT and make the case for a referral to the Competition Commission to look further at the issue of pricing, which he has raised. Will he join me in suggesting that Members whose constituents are affected by this should join together to make representations to the OFT for such a referral?

[Guy Opperman]

I totally endorse that point, particularly in relation to pricing practices and the considerably enhanced prices charged by many heating oil suppliers. I have done quite a lot of research into this matter. In Hexham constituency the price of oil rose from 41p to 71p per litre between September and December last year. In that time, the wholesale price of oil went up only by about 10%.

In my constituency there are roughly 16 to 18 heating oil providers. However, 11 or 12 of those are controlled by one company. DCC Energy, an Irish-based company, has bought up many of the individual suppliers throughout the country. It operates heavily in west Wales and has been prosecuted there in relation to a trading standards case. It also operates to a considerable extent in Scotland. In Northumberland and throughout the north-east it has a substantial presence. I accept that there is competition in the sense that there are about five genuinely independent companies providing heating oil. However, the other dozen or so are providing heating oil from one global source. There is nothing wrong with that, but when one adds up the figures, it means that one company has 69% of the providers and the multitude of other companies represent 31% of the providers. That should be investigated by the OFT, and it should result in a competition inquiry. If that case does not give the suspicion of price fixing, I do not know what does.

[Andrew George]

The hon. Gentleman is absolutely right on that point. Across the country as a whole, a little under 30% of those who depend on oil for central heating are in fuel poverty, and they are primarily in rural areas.

With regard to the OFT’s report published yesterday, does the hon. Gentleman recognise that it found that the terms of contracts may not be entirely consistent with existing consumer protection? The OFT states that it will examine the

“clarity and fairness of termination rights”

and engage with suppliers to discuss how to proceed. Does he think that regulation is required, or should the OFT continue to pursue some sort of voluntary agreement ?

[Guy Opperman]

With respect, I would say that the answer is somewhere in between. There cannot be regulation without submissions being made and investigations taking place. It is incumbent upon us not just to get upset about how our constituents are being affected by heating oil prices but to make representations to organisations such as the OFT. We must also invite the Energy and Climate Change Committee to investigate off-grid energy, which I very much hope it will do.

[Albert Owen]

I am pleased to help the hon. Gentleman by saying that we are going to have a further inquiry into the retail market, in which we will examine off-grid energy.

[Guy Opperman]

I am most grateful, and I hope that as part of that inquiry the Committee will examine the weighty report that the OFT has provided, as well as specific submissions from individuals and organisations that, like the previous three speakers, can give specific examples of price fixing or the appearance of price fixing. That is in the context of DCC, the company that I am particularly concerned about and have to deal with, recording operating profits of approximately 19.9% on an ongoing basis. I find that figure hard to square with the one given by the managing director, who when questioned in The Sunday Times said that the operating profit was only 2%—but I have taken my figure from the published accounts.

In Hexham five independents operate—WCF, Par Petroleum, Wallace Oils, GB Fuels Ltd and Rix Petroleum. I urge individual Members to draw to their constituents’ attention by every possible means, as I do for each and every constituent who is faced by heating oil problems, which independents operate in the constituency, so that they are in a better position to get a fair price.

I want to trumpet the great success of the way in which certain communities, such as Tarset, Allendale and Humshaugh, have come together and produced their own price comparison sites. For example, there is Humshaugh village shop, which is run as a co-operative. It was set up by the local community and is financed and run by the 60 people of Humshaugh. Every Monday they publish the prices available from all the genuinely independent local heating oil suppliers. Individuals can either go to the shop’s website or—this addresses the point that was raised about people who do not have internet access—see the prices in the village shop throughout the week. Everybody in the village can then assess who is providing oil locally. Such ideas need to be taken forward.

I welcome the fact that the OFT report indicates that there are problems. However, I would ask the OFT to go further, not least because the report shows that when a company is one of a multitude owned by a larger company, it is obliged to give people who telephone it specific information about who its ultimate owner is. That needs to be monitored, because it is not necessarily taking place. My researcher phoned one of those only yesterday and was not given that information, as should have happened according to the OFT report. I urge the various Committees involved to examine that point.

There is also tremendous difficulty for those who wish to compare prices themselves, because heating companies have no obligation to tell people the price that they are offering. Unless people ask to buy, they are not necessarily given the price. With respect, the Government can do something about that, and I invite them to sit down with individual suppliers, particularly the larger suppliers, and make that point very clear to them. If people ring up and ask for a price, they should be told it rather than the company withholding it.

[Pat Glass]

I am very grateful to my constituency neighbour for giving way, as we have very similar constituencies and face similar issues. Is it not also true that the price quoted when someone rings up is not necessarily the price that they are charged when the oil is delivered two weeks later? Last winter, as the hon. Gentleman pointed out, the cost of heating oil almost doubled in the space of a few weeks. Someone could order heating oil and be quoted 40p a litre, yet get a bill for 71p a litre two weeks later.

[Guy Opperman]

The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry) is not the only one who has been carrying out research on websites. Let me cite the interesting efforts to prove the hon. Lady’s exact point undertaken by the hon. Member for Brecon and Radnorshire (Roger Williams), who ordered more than 2,000 litres of heating oil at a price of 40p a litre—again, from DCC—and received only some of the delivery, at the outset, at that price. Later that December, when the remainder was delivered, the price was 65p per litre—an increase of 25p per litre. I applaud his efforts in this House to publicise that, and previous efforts to deal with the problem, as well as the work of The Sunday Times.

I conclude by saying that I endorse much of the motion.

[Sarah Newton]

One of the next steps identified by the OFT was for the Government to take, because it acknowledged that people who use heating oil or LPG—or microgeneration, which the report also covers—cannot get dual fuel deals because they are off the grid, and furthermore, they are not eligible for the excellent new £125 warm home discount. This group of people, even if they are in absolute fuel poverty, cannot access some of the very good measures that the Government are introducing. May we ask the Government to consider that specific group of people, and see what could be done to help them?

[Guy Opperman]

I am most grateful for my hon. Friend’s intervention, and I endorse her point.

It is incumbent on us all to go back to our constituencies—not, as was once said, to prepare for government, but to prepare our constituents for the winter.

15:54

[John Healey (Wentworth and Dearne) (Lab)]

It is a pleasure to follow the hon. Member for Hexham (Guy Opperman), who pointed out some important flaws in a market that should be fully competitive but at present does not best serve consumers.

People will be pleased to hear the Secretary of State backing the Labour motion but greatly disappointed that he has little to say that will give them any comfort or relief from the high and rising pressure of energy bills.

I want to talk about and draw some conclusions from the experience of a constituent who came to see me: Mr Terry Tomes of Denman road in Wath upon Dearne. Mr Tomes is on disability living allowance. He had a prepayment meter to try to control the costs of his energy bills, but he found himself with a debt to npower for gas and electricity of nearly £100. He was in such desperation about that that despite it being mid-winter, he had stopped using the gas entirely. I draw two conclusions from Mr Tomes’s experience: first, this is a system that requires much clearer and fairer pricing and regulation for consumers; and, secondly, the regulator, the energy companies and, above all, the Government are failing consumers across the country.

They are failing consumers in three ways. First, they are out of touch. People simply cannot believe their ears when they hear the Secretary of State say in answer to the question of high energy prices that consumers are to blame for not shopping around. If people are not online, if they are on prepayment meters, if they do not have full bank accounts, and if they are unfortunate enough to call, according to the recent Which? survey, the one in three energy company advisers who do not give accurate information about their charges, they are simply not able to shop around as the Secretary of State suggests. Even the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) is not able to do so, as in June he told the Energy and Climate Change Committee:

“I went on line to compare my tariffs and I was so confused by the options that I decided to stick where I was”.

The Government are out of touch—that is the first way in which they are failing consumers.

[Ian Lavery]

To put a bit of humility into the debate and to cut across party politics, the fact of the matter is that fuel poverty is on the increase. Last year, 36,700 pensioners died because of cold-related problems. That is 13 per hour. Does not that fly in the face of the austerity measures? Older people cannot access the right tariffs and they cannot pay their bills. How are they expected to pay their bills? How are they expected to look at different tariffs and access all the information that Government Members have talked about? Is it not right that we focus on those people as a matter of urgency to try to reduce the number of elderly pensioners who die because of fuel poverty?

[John Healey]

My hon. Friend is absolutely right when he says that, for many, high energy prices mean a choice between eating and heating, and, in some cases, a choice between life and death, particularly in a harsh winter.

The second way in which the Government are failing is that they are scrapping some of the important Labour schemes to make homes warmer and bills lower, particularly the Warm Front scheme. You will know as well as I do from your experience in the Treasury, Madam Deputy Speaker, that over a decade, the Warm Front scheme helped more than 2 million households with their bills and insulation—it helped to make their homes greener, warmer and cheaper to run. This year and next year, that scheme will have a third of the budget that it had under the previous Labour Government. From 2013, it will be scrapped altogether.

In my constituency of Wentworth and Dearne, more than 3,000 households have benefited from that scheme in recent years, including pensioners, disabled people and young working families. One of my most recent visits was to Nicola Savage and her partner, Dan, who have two young kids. They had problems heating their home in Swinton, but the Warm Front scheme helped to replace an old back boiler with a new condensing unit. As Nicola told me at the time, “This makes a huge difference to us. When you switch it on, the house gets warm quickly and it stays warm.”

[Andrew George]

I believe that the previous Government were well intentioned with regard to the Warm Front scheme, but when I visited my constituents who benefited from it—there is no question that they benefited—I found that most of them paid twice as much as they should have done. I do not know who pocketed the benefit of that system, but my constituents could have paid half the price to a local supplier. The scheme was certainly not fit for purpose.

[John Healey]

I do not know whether there is anything peculiar about the contractors and suppliers in St Ives, but that is not the general experience or track record of the scheme throughout the country, and it is not the experience of most hon. Members on both sides of the House.

[Sarah Newton]

Will the right hon. Gentleman give way?

[John Healey]

I will not give way for the moment.

The third way in which the Government are failing is that they are letting consumers down by allowing the huge hike in energy costs and bills, which are up 20% in the past year, as we have heard. In six months, there has been an increase of £175. The Secretary of State, who knows the cost of speeding, is not in the Chamber at the moment, but for his benefit, £175 is the price of about three speeding tickets. Every time a family in this country switches on the heating or the lights, the Government are letting them down—and those with the lowest incomes and the poorest households are being let down the most.

Mr Tomes, who could afford £10 a week on his gas, found that he was paying £3 a week just for the gas debt charge, which was taken directly through the meter. The average cost for using the gas each week was £2.30, but the standing charge was £3.31. In other words, he was paying more for his standing charge than for the gas that he used. Why is the system penalising the poorest and benefiting the better-off? Why is it failing those whose consumer power is weakest while reinforcing the market position and choices of those who have money and confidence and can get online? In particular, why is it penalising low users of energy while rewarding higher users? Why are low users, such as Mr Tomes, paying more and losing out more?

The answer is that all the major energy companies have a two-charge system. They justify it by saying that one charge covers the fixed costs of supply while the other covers the variable costs. That means that every major energy company either has a standing charge plus a unit rate or a higher-tier tariff up to a certain threshold and then a lower-tier second tariff beyond that. As a result, the less energy used, the greater the part of the bill that goes to the standing charge, fixed part or higher-tariff component of the costs, which means that low-use households pay more for each unit of energy that they use. Which? has calculated that low-use households pay 23% more for their gas and 15% more for their electricity, and of course low-use households generally tend to be low-income households as well. The system is therefore socially and environmentally regressive. Its reform is well overdue, and it is time for the Government and the regulator to act.

The action needed is clear: we should require energy suppliers to recover a far greater proportion of their costs from the unit rate of energy. To make energy bills clearer and fairer, I propose to the Minister a five-point plan—[Hon. Members: “Hooray!”] They are in vogue at the moment. First, we should abolish variable tariffs for the same energy supply. Secondly, we should require all tariffs to have the same format—a daily standing charge plus a clear cost per unit, including all the discounts. Thirdly, we should restrict standing charges only to cover the costs of the gas and electricity network. Fourthly, we should cover all other costs, including the costs of the Government’s climate change or social policies, through the variable charge, not on a per-customer basis, as is currently the case. Fifthly, to make these changes, we should use Ofgem’s current powers to regulate standing charges, under licensed conditions, plus the energy company obligation.

Those changes would make the system clearer, making it easier for people to compare suppliers’ prices at a glance, and also fairer, so that low-income, low-use households would not have to pay significantly higher prices for the energy that they need. Those changes would be right in practice and right in principle, because climate change and social equity policies are best and most effective when they are more specific and selective in their application rather than having a general application. The costs of climate change should bite more strongly on heavy users, while the cost of supporting poor households should be borne more heavily by higher-using households that earn higher incomes.

Ultimately, people do not have the choice not to consume energy. As a service in a full-scale market, energy is a special case. That places a special responsibility on the Government to do more to protect consumers, who must have the energy that we all depend on.

16:11

[James Morris (Halesowen and Rowley Regis) (Con)]

It is a pleasure to follow the right hon. Member for Wentworth and Dearne (John Healey), who made a powerful case on behalf of his constituents and made some valuable points.

This is an important debate, because as I know from talking to my constituents in the west midlands, people are genuinely concerned about rising utility bills. As other hon. Members have pointed out, including the Secretary of State, fuel poverty urgently needs to be addressed. The west midlands as a region has the greatest proportion of people in fuel poverty in England, at 22.5% of the population or some 500,000 people. Around 20% of my constituents—7,500 people—could be defined as being in fuel poverty. This issue therefore needs to be tackled urgently. It has been around for a while: it has not suddenly emerged in the last 18 months, although I accept that genuine spikes in fuel prices have made the situation more difficult.

The Government need to respond—and they are responding—with a mix of policies. Both short-term and long-term policies need to be deployed to tackle the entrenched problem of fuel poverty and the situation that we face. However, there is no silver bullet, as it were, that could be fired to solve some of the difficult problems that we face from rising fuel prices. I know that hon. Members on both sides of the House have made some valid points; I am bucking the fashion by not having a five-point plan—because a number of the issues are interlinked. We live in a society where our houses lose energy very rapidly—something about our housing stock is weak in that regard—which is why I am supportive of the Government’s initiatives in the green deal, which I believe offers a comprehensive solution to improving energy efficiency. The green deal will also have the side benefit of potentially providing important jobs in the area of the black country that I represent. I know, having talked to many local organisations and people in the Rowley Regis area, that there is particular enthusiasm for the green deal. We need to tackle energy loss in our housing stock.

I also welcome other initiatives that came out of the summit that was held earlier in the week. The big six energy companies have a responsibility to communicate information to their customers in a much more targeted way, so I welcome the announcement that they are to write to the 4 million most vulnerable energy consumers about the opportunities that are available for home insulation. That strikes me as a fundamental responsibility, and the big six need to concentrate on the way in which they communicate basic information to some of the most vulnerable in our communities.

Just as we need to tackle the problem of energy loss in our housing stock, we also need to focus on unnecessary energy use. This is not about going around lecturing people on how they should heat their homes, but I know that the Government are committed to introducing smart meters, which will make a fundamental difference. This is a long-term project, but, as I have said, we need short-term and long-term measures to address these questions. Smart meters will introduce a major change in the way in which people consume energy, and they will certainly help them to have a clearer idea of their family or individual energy use.

The Secretary of State and others have also raised the broader strategic point that we face major issues of energy security in Britain today. The fact has been well documented that Britain is very vulnerable to energy price shocks, and our dependency on imported gas and oil has given rise to energy security issues. This is a macro question, and it is imperative that we diversify our energy sources. Hon. Members have talked about the use of nuclear power, as well as other forms of low-carbon energy and renewables, over the next 10 to 20 years. This is critical; we are not going to solve the problems affecting our most vulnerable residents and consumers unless we are clear about dealing with the diversity of our energy supply and the problems of energy security. Those factors are critical to the debate.

Other hon. Members have mentioned tariff complexity. This brings us back to the responsibilities of the big six energy companies. The market is too complicated. There are too many tariffs and it is confusing for consumers. I agree with the right hon. Member for Wentworth and Dearne that those who suffer most from this tariff complexity are the most vulnerable of our residents.

[Laura Sandys]

May I add that it is not only the most vulnerable people in society who do not understand the tariffs? In fact, very few people understand them. A fundamental problem is the idea of a unit. I do not know what a unit is. I do not know whether my hon. Friend knows what a unit is. We must start using language such as “an hour’s use of a bulb”, or some other form of consumer language. Companies need to be much less old fashioned, and much better at consumer communication. They need to communicate the value of the units and what we are paying for them.

[James Morris]

My hon. Friend makes an important point. The energy companies need to simplify the tariffs, but as she says, the language used to communicate also needs to change. The big six have a responsibility for communicating information in a way that is comprehensible and does not distort consumer choice. That is a fundamental issue. Ofgem has a responsibility here and the Government need to ensure that they keep the pressure on it continuously to monitor how information is distributed within this market to ensure that it is a truly competitive one. Ofgem must be on top of this, constantly monitoring to ensure that we get simplification both of the tariffs and of the information sent to consumers.

In the short term, as other hon. Members have mentioned, it is critical during the lead-up to this winter to maintain the winter fuel and cold weather payments, and to implement the warm home discount. Those are important short-term measures to maintain the situation and ensure that our most vulnerable residents are not put under pressure as they seek to heat their homes during what might be a very difficult winter.

[Mr Nigel Dodds (Belfast North) (DUP)]

The hon. Gentleman is making a considered speech, dealing with all the elements involved in this complex issue and specifically mentioning winter fuel allowances. On behalf of all our constituents, especially the vulnerable elderly, does he think it is good enough for the Government to say, “Because Labour was going to cut the winter fuel allowances for the over-80s and the under-80s, we are simply following suit”? Do we not owe it to our vulnerable elderly people at this time to ensure that those winter fuel allowances continue at their previous level?

[James Morris]

The right hon. Gentleman makes a good point, but the Government had to make some decisions about spending and they matched what the previous Government had proposed for the winter fuel allowance. I think that was a fair and reasonable decision.

[Sarah Newton]

On that point, many more pensioners will benefit as a result of the warm home payment. Is it not a huge problem for pensioner households that many elderly people do not really understand all the benefits to which they are entitled. Year after year, Age UK runs campaigns to demonstrate how many millions of people are not collecting all the benefits to which they are entitled. If they did, their household incomes would improve and they would have more money. It is important that in talking specifically about winter benefits, we should remind our constituents to make sure that they claim all their benefits. They should go down to their citizens advice bureau, Age UK or the local Age Concern and get a benefit check so that they receive all the money to which they are entitled.

[James Morris]

My hon. Friend makes an important point about the collection of benefits available. There is an issue about pensioners and other groups not knowing which benefits are available.

The Government are taking some short-term measures, but it is important to note that they need to take long-term measures because this problem will not be solved by a single silver bullet. The Government are going in the right direction. This debate has provided a useful airing of views across the House about how we tackle this important problem.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before I call the next speaker, I remind the House that the convention is that interventions should be short. Also, when addressing the House, a Member is supposed to address all of it, including the Speaker in the Chair, and not turn away so that the Speaker cannot attract the Member’s attention should it be necessary to do so.

16:19

[Sammy Wilson (East Antrim) (DUP)]

I am pleased to take part in what I believe is a timely debate. There is general concern about the size of the energy bills that are hitting people right across the country. This is happening in the context of rising profits for the energy companies, while—despite what the global warmists are saying—we are increasingly having cold winters, which mean an increase in people’s energy bills.

As I have said, the debate is timely because there is a general feeling that the Government may not be giving these matters the priority that they deserve. When a Secretary of State dismisses the problem by saying, “Well, phone around and find out what the alternative costs are”, when energy companies are given a slap on the wrist but there is no real outcome, and when we are told, “Just grin and bear it, because some of this has to be done to save the world”, it is understandable that people should detect a degree of complacency.

This is a particular issue for us in Northern Ireland. First, the profits of Northern Ireland Electricity have risen by 68% over the past year, which is commensurate with the increases in the profits of the big energy companies in Great Britain. Secondly, energy prices in Northern Ireland are about 14% higher than the average in Great Britain. Thirdly, fuel poverty in Northern Ireland is well in excess of the average in the rest of the United Kingdom, affecting 43.7% of households in comparison with the UK average of 21%.

[Jim Shannon]

My constituents spend 10% of their incomes on fuel, and 44% of them are experiencing fuel poverty. Strangford has the second highest level of fuel poverty in Northern Ireland. Does my hon. Friend agree that the Government’s decision to reduce the winter allowance will have an unfair impact on people in Northern Ireland, as against the rest of the United Kingdom?

[Sammy Wilson]

Yes, and I shall say more about that later.

Part of the problem is a direct result of Government policies that have an impact on households and businesses throughout the United Kingdom. About 50% of those who are in fuel poverty in Northern Ireland are over 60, but just as worrying is the fact that 27% of those who will find it difficult to pay their fuel bills—who will be, as we loosely term it, in fuel poverty—are in work. They are going out every day to do their business, and their wages are so low that they still find it difficult to pay. That is another reason for my belief that the debate is timely and will resonate throughout the United Kingdom.

I will not repeat all the many causes of the problem that have already been mentioned today, but I think it worth drawing attention to the way in which large energy companies have used the prices of raw materials to raise the prices that they charge consumers, and the fact that—as a number of Members have observed—there is not the same flexibility when prices fall. That is one of the reasons for the level of profits that companies are experiencing. As many Members have pointed out, in the short term some of those profits could be used to deal with the problems.

A second cause is lack of investment. Because of that lack of investment and because of the demand that exists, prices are bound to be fairly buoyant anyway, and there is a captive market. A third—I suspect that many people will secretly agree with this, but will not be prepared to say so openly—is the impact of the Government’s climate change policies. When we say that because we want a low-carbon economy we will charge those who use carbon-based fuels in ways that cause carbon dioxide to be released into the atmosphere, and when we say that we will introduce policies to stop that happening, we cannot run away from the fact that such action will have implications for people’s fuel bills throughout the United Kingdom. The facts are clear. This year, simply to deal with the renewables obligations, being forced to purchase electricity from renewable sources has added £1.8 billion to the cost of producing electricity, and by 2020 the cost will be £6 billion a year. According to the Department’s own estimates, domestic consumers will face a 33% increase in the cost of electricity and non-domestic consumers such as industry will face an increase of 43%.

I support the motion, but it makes a rather glib reference to climate change. Many people will feel that they can agree with such sentiments, but behind them is the reality of what will happen to fuel bills: people will pay more for their energy. Denmark, not our country, has the highest costs per unit and the highest fuel bills, and Denmark produces 20% of its electricity from wind power. That is the highest proportion in Europe. The lowest costs are in France, which produces 75% of its energy from nuclear power.

[Mr Robin Walker (Worcester) (Con)]

Does the hon. Gentleman agree that the fact that France has the lowest energy costs serves to highlight that Governments of all colours have been short-sighted in not investing in new nuclear before, and that we ought to be going ahead with new nuclear now?

[Sammy Wilson]

I absolutely agree. I have consistently supported that, and back home have received some criticism for doing so, as people ask, “Are you therefore saying we should have a nuclear power station in Northern Ireland?” If it produces cheap electricity and deals with some of the problems people in my constituency face, of course I am happy to support that—although whether there are sufficient economies of scale in the Northern Ireland market to support a nuclear power station is another matter.

I agree with the hon. Gentleman about the short-sightedness of previous Governments, and I welcome the Secretary of State’s U-turn. Although he tried to cover that up today, he has clearly performed a U-turn on this issue. When he was in opposition he opposed nuclear energy, but now that he is in government he supports it, although he adds about 100 caveats to that support—the conversion process may take a little longer than we expected.

Reference has been made to the possibility of huge shale gas finds in Lancashire. The relative costs of electricity generation are as follows: 2.2p per kW for gas-fired electricity as against 7.2p per kW for offshore wind farms. Offshore wind is therefore three and a half times more expensive.

We say that we want 30% of our electricity to be generated by offshore wind by 2030, but that has implications for consumers across the United Kingdom. Regardless of our views on climate change, there ought to be some honesty in this debate. I do not know what the impact on global temperatures might be if we were to decarbonise our economy and reduce our CO₂ emissions, which account for 2% of the world’s CO₂ emissions, by 10% or 20% by 2020, but there will be a price to be paid by each of our constituents, and we ought to make that clear.

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

Does my hon. Friend agree that the increase in fuel prices will lead to many of our elderly and disabled people, who need heating most of all, not being able to afford it?

[Sammy Wilson]

Now that I have had my say on this particular part of the motion, I want to discuss some of the ways we can deal with the situation. We need to consider three periods. There are things we can do in the short term. Hon. Members have asked why pressure is not being put on the big energy companies to ensure that some of the windfall profits—I do not care what we call them, but we are talking about the increased profits—are redistributed in the form of lower prices. I understand that these companies have to make profits. If we want investment in the infrastructure for the future, there is no point saying that we want to strip profits from the companies that are going to have to make that investment. The question is whether those profits are excessive and whether, at this particular time, some of those profits should be going back to consumers. That could be in the form of price reductions, greater transparency about what is available or any of the suggestions that have been made, but the issue must be dealt with.

The second issue to address is that of winter fuel payments, which was raised by my right hon. Friend the Member for Belfast North (Mr Dodds). Those payments have been reduced and it is not good enough for the Government to say, “We’re following the same policy as the party that used to be the party of government.” As I pointed out, part of this problem has been caused by Government policy and so it is essential that we find some way to help the most vulnerable. Of course it is going to cost money but this issue needs to be addressed.

In the medium term, we must examine how we help people to reduce their energy bills. That could be through what we in Northern Ireland call the warm homes scheme, but what the rest of the United Kingdom calls the Warm Front scheme. The warm homes scheme was introduced by my right hon. Friend and it has gone from strength to strength. It has taken a lot of households out of fuel poverty, although I take the point made by the hon. Member for Glasgow North West (John Robertson), which is that it does not matter how much is spent on some homes as there will not be a significant reduction in the energy people use so fuel poverty will remain. The warm homes scheme in Northern Ireland has not just been a way of dealing with the social problem of fuel poverty; it is labour-intensive and so has been a useful scheme in creating local employment—it has a high local multiplier effect—at a time when we are looking for opportunities.

In the longer term, we have to be realistic about green policies. I welcome the Chancellor’s remarks that we should not be pursuing policies on decarbonising the economy if they place our economy at a disadvantage compared with others across the world. While the European Union is preaching about reducing carbon emissions, the German Government have a much more realistic view. They are actually investing in 20 coal-fired power stations and in nuclear, because they want to find ways of producing cheap energy. In the long term we have to look at our investment priorities and whether we are following the correct policy. If, in the long term, we wish to invest in that way, we need to consider how we are going to deal with the consequences.

16:38

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

It is always a pleasure to speak in these debates. The usual faces are here—the people who regularly show up when we discuss fuel poverty in Westminster Hall—and it is a pleasure to be debating with them.

I was intrigued by the shadow Secretary of State’s reference to meerkats. I always think of them as cute, cuddly animals that cover the ground quickly, which may be an appropriate description of the Secretary of State. My dog’s favourite toy is a meerkat, as was seen at last week’s Westminster dog of the year show. The right hon. Member for Don Valley (Caroline Flint) later asked what we are going to do about the situation. Given the fantastic adverts—dare I say it?—we are going to stand up for the consumer; anybody who watches “Meerkat Manor” will know that meerkats stand up and look around. I am not going to be overly critical of what the previous Government did, although it is a bit of a cheek to ask what this Government are doing given that no nuclear power stations had started being built under them.

We need to be constructive because this issue is very important for our constituents. That is the key point that we need to unite behind, and I am pleased that there will not be a Division on the motion.

I want to tackle something that came up in my exchanges with the hon. Member for Ynys Môn (Albert Owen), who is no longer in his place. I know that he is an absolutely fantastic champion on behalf of those in fuel poverty—especially for off-gas-grid households. I am not suggesting that the energy companies should be encouraged to make excessive profits; I think we should be critical friends to them, but we do have to be friends to them because this country needs £100 billion to be spent on energy infrastructure over the next 10 years, and it is absolutely right that that will come partly from the profits that those companies will make. I understand that, in effect, consumers are the people who make the profits for the companies, but, like anything else, if it comes in tax, it still comes from consumers—from our constituents. Let us not kid ourselves that we do not ultimately have to pay, together, for the infrastructure that our country desperately needs.

I welcome the contributions that were made by my hon. Friend the Member for Hexham (Guy Opperman), who also is no longer in his place. He, too, has been a doughty champion for off-gas-grid households. Earlier today, the hon. Member for North West Durham (Pat Glass) and I were at a briefing about the Office of Fair Trading report that I have here. It is quite a weighty document, but it is double-sided, so the OFT was trying to be friendly to the environment. Members should read the report because, although the press notice did not make it sound very exciting, when one digs into it, one finds quite a lot that will prove very useful.

The hon. Member for North West Durham had an exchange with my hon. Friend the Member for Hexham about another issue that has been raised today—the OFT and how people were quoted one price and then expected to pay another. I am pleased to report that Carmarthenshire county council has successfully prosecuted a supplier for that practice. If we believe that that is happening in our areas, we must make sure that our county councils or city councils take full advantage of that ruling and ensure that they go after the suppliers that behave inappropriately towards our constituents at their most difficult time of need.

Let me mention some of the other contributions that have been made, including that of the right hon. Member for Wentworth and Dearne (John Healey) and the interventions from my hon. Friends the Members for Truro and Falmouth (Sarah Newton) and for Halesowen and Rowley Regis (James Morris). It is important that we make sure that our constituents are fully aware of the opportunities to seek advice on these matters. I thought that the criticism made of the Prime Minister and the Secretary of State was a bit of a shame because I feel that there has been a genuine attempt to say to people, “There is information out there and there is an opportunity to switch, and we are going to try to make it easier to do so.” They will encourage people to do that. People do not need to pay a standing charge if they wish to receive gas from companies. If one is a low user, it makes sense not to want to pay that.

I was at a dinner last night with the hon. Member for Ellesmere Port and Neston (Andrew Miller) and we were talking about energy challenges for the next 30 years. People from the royal academies were saying that it was ridiculous that the pricing and tariff systems seem to incentivise greater use rather than less.

To return to being a critical friend of the energy companies, there is one practice that I know that my hon. Friend the Member for Battersea (Jane Ellison) would have intervened on me to make a point about if she were here, so I shall do it for her. I am talking about the practice whereby people pay so much a month by standing order or direct debit. I happen to know about this because I end up dealing with this situation for my mother—this might embarrass her. I work out that she somehow seems to be £400 in credit even though there is no way she is ever going to consume that much, but the company keeps taking the same sum each month if not increasing it. So I have to make the phone call once or twice a year and a big cheque comes back.

I experienced similar behaviour when I spoke on the phone with a very pleasant customer service adviser who was trying to persuade me that, for no particular reason, I would double the amount of gas that I would use in the next year. However, I was able to convince her that if she did not leave my standing order as it was, I would change supplier. We all know that that argument encourages companies to listen a bit more. I put out a call today to energy companies to be friendly to their consumers and to work on these issues. I say to them, “Do not use your consumers’ direct debits or standing orders as cheap ways of borrowing, but help people to make sure that they are paying what they need to.” I am not saying that people should be given false prices so that they end up with a huge bill at the end of the year. Energy companies need to make sure that the scheme works as it should, so that MPs do not have to keep writing to the companies to ensure that such practices are not tolerated.

[Jim Shannon]

In my constituency, and I suspect in many constituencies across the whole United Kingdom, elderly people come to me and ask, “Should it be oil? Should it be electric? Should it be coal?” Does the hon. Lady share my concern that there should be no penalty for those who want to transfer from one energy source to another? If after a year, or perhaps 18 months or two years, they want to transfer back, there should also not be a penalty from the energy company.

[Dr Coffey]

I thank the hon. Gentleman for that intervention. The reason I am hesitating is that I probably need to think about it a bit more. There is undoubtedly a significant capital cost for switching between fuel sources. If one has a coal boiler and switches to a gas or oil boiler, there is a significant capital cost to that. I am not clear what is being done at present, but energy modelling should make it possible to model the prices and understand the impact.

[Jim Shannon]

I thank the hon. Lady for her generosity in allowing me to intervene again. An example would be gas from different companies—we have two gas companies in Northern Ireland, and there are different electricity companies. The change should not be so costly. Sometimes unnecessary penalties are included.

[Dr Coffey]

In that case, I misunderstood the hon. Gentleman’s original intervention. He makes a fair point. In discussions with the OFT we particularly focused on off-gas grid households and the terms and conditions that people sign up to unwittingly. Various regulations protect consumers from unfair trade contracts, but those can be complicated. There should be as few barriers to switching as possible. I hope the Government’s actions earlier in the week will lead to that in Northern Ireland, as well as in Suffolk.

The House has heard more today about off-gas grid than it has for a while, but it is fair to say that those who do not have access to mains gas have considerably higher costs than they would if they had access to it. The percentage in fuel poverty is even worse. The hon. Member for St Ives (Andrew George) referred to that in the context of Cornwall. According to the latest statistics that I saw, 23% of oil consumers are in fuel poverty, as opposed to 10% of those on mains gas and 13% of those on electricity. There are other heating sources, including liquefied petroleum gas.

Let me complete my comments on heating oil. The OFT study found that the market has been generally competitive. I know that came as rather a surprise to some Members, especially the statistic that 97% of households that are affected have access to four or more suppliers. The OFT said that it would share that information with us so that we can make it as widely known to our constituents as possible.

One aspect that the report did not cover but which we can help with relates to intelligent consumers. That is where buying groups come into their own. There are several such groups around the country. I commend one village in my constituency, Boyton, which has a scheme that covers every single household. People in every household are made aware of the scheme when they move in. That is a little better than my own village, where there are several buying schemes, but my landlady forgot to include me in the one over the summer, so I will have to shell out next month. It is important that villages and parishes can reach out to their neighbours and make sure that they are fully aware and take full advantage of the opportunities.

Reference has been made to the Energy and Climate Change Committee’s 2010 report on fuel poverty. One of its recommendations was particularly useful for those buying oil, but unfortunately it was batted off to the Treasury. Many consumers, if they are organised, buy their oil in the summer when prices are lower because of seasonal pricing. A plea has been made that the Secretary of State should speak to the Treasury to see whether there might be an opportunity for pensioners to receive winter fuel payments at different times of the year so that they match outgoings for the purchase of oil.

I also inadvertently misled the hon. Member for Strangford (Jim Shannon) when I said that electricity companies automatically give a dual fuel discount to those people without access to gas. That is what I had been told by one of the big six energy companies. It turns out that only two of the big six do that, EDF Energy and E.ON, so that is something else that the other companies could do.

Another important consideration relating to off-gas-grid households is that many of the things the previous Government rightly did to focus on updating equipment meant that a lot of the money for Warm Front was directed at houses that had gas. In a way that makes sense; if significant energy reductions can be achieved by focusing on certain households, that is a good use of money. Anyone who wants a return would see that as a good use of capital. However, it meant that, in effect, many households missed out. We all know that older housing stock is much more difficult to treat, which is why I have made the plea before, and will make it again, that the Government should ensure that they do not forget rural households when trying to ensure that we all benefit from energy efficiency measures.

I have been using my iPad in the Chamber today in order to contribute to the debate. I have been able to check that rolls of Wickes ultraseal premium draught excluder—other DIY suppliers are available—cost a grand total of £3.49. I will take advantage of that this weekend, because I used it last year to provide extra seals for doors and windows in my house and I saw my consumption of gas fall by 18%. For £3.49, that is quite a good return. I encourage anyone and everyone to use the cheapest and simplest measures, such as draught excluders and the closing of doors, in older properties. I am not being patronising or saying that people must sit in front of one little heater; I am simply saying that there are some simple things we can do to ensure that we use less energy and that there are cheap and low-cost solutions.

I agree fundamentally with something that the hon. Member for Ynys Môn mentioned earlier. I feel very strongly that Ofgem should take ownership of all gas consumers. The Office of Fair Trading has done a good job with its inquiry, but people have to go to their trading standards officer and go down all sorts of other complicated routes.

I have just realised that I am out of time and must sit down.

[Madam Deputy Speaker (Dawn Primarolo)]

Exactly. I remind Members that the wind-ups are due to start at 6.30 pm and that a large number of Members still wish to speak. It is not compulsory to take the full 12 minutes or necessary to take interventions. Please bear in mind the number of Members who wish to speak.

16:53

[John Robertson (Glasgow North West) (Lab)]

I will try not to use the whole 12 minutes available, as in many ways my contribution will be a repeat of a speech I gave in an Adjournment debate not long ago. I have listened intently to all Members who have spoken, particularly the hon. Member for East Antrim (Sammy Wilson), who said that he wanted honesty in the debate. Having heard history being reinvented and regurgitated so many times by Members on both sides of the House, I think that honesty is sometimes the first thing that goes out of the window.

I declare an interest as chair of the all-party group on nuclear energy. Interestingly, Labour Members used to raise the issue of nuclear energy much more often than the then Opposition, who ran away and hid every time the word “nuclear” came up. I am sure that the hon. Member for Angus (Mr Weir) will say, “And I wish it had just stayed that way.”

I can tell the Secretary of State, who unsurprisingly is not in his place, that doing nothing and giving up on things is just not an option for people. My predecessor in representing my constituency, the late Donald Dewar, once said:

“Cynicism, together with unrealistic expectation, are the two great bugbears of politics.”

Those words were ringing in my ears when I heard about the energy summit at Downing street. The cynicism is to think that there is nothing we can do to regulate prices, and the unrealistic expectation is the Secretary of State’s thought that asking those in fuel poverty to use less energy is a solution to the situation; it obviously is not.

The average household has seen energy costs rise by about £300 in the past year, and Ofgem announced last week that the profit margin for energy companies has risen to £125 per customer, from £15 in June. With 13,500 pensioner households in my constituency alone—it has one of the highest concentrations of pensioners in Europe—and with the highest number of single women pensioners in the entire country, according to the Library, Members will understand why this issue is of grave importance to me as a local MP, and why I raise it today as I have on other occasions. As Members can imagine, my constituency surgeries are currently dominated by this issue.

According to official figures, 65% of single pensioner households and about half of small pensioner households in Scotland were classified as poor in 2009, making them more likely than any other type of household to be affected by rising energy prices.

When I was first elected in 2000, four out of five single pensioner households in Scotland lived on an annual income of £15,000 or less; today that figure is 60%— admittedly lower than the percentage when I was elected, but the level is still unacceptable. According to Scottish Government figures, almost one quarter of single pensioner households and one fifth of smaller pensioner households in Scotland are deemed to be in extreme fuel poverty, which means that they spend more than 20% of their disposable income on heating their homes. In addition, in Scotland 8% of pensioners live in absolute poverty and one in 10 over-65s are classified as materially deprived. Members will therefore understand why I keep telling people that we are on the verge of a fuel poverty crisis.

What causes fuel poverty? There are three root causes: low incomes, poor housing and, most of all, high energy prices.

[Nick Smith (Blaenau Gwent) (Lab)]

My constituency is 1,200 feet above sea level, its winters can be bitter, and the latest figures show that it has 40 excess winter deaths every year. Does my hon. Friend agree that the Government have failed to stop the super-profits of some energy companies, and do not have a coherent plan to help families with their fuel bills this year?

[John Robertson]

I thank my hon. Friend for his intervention, and I will come on to the points that he makes, but to answer his last point, I sometimes wonder whether the Government are helping the energy companies make those obscene profits, rather than stopping them.

[David Mowat (Warrington South) (Con)]

I hear the hon. Gentleman’s comment on super-profits, but perhaps he will tell the House which way he voted on the windfall tax proposed on this side of the House on those same energy companies. They are making a 60% return on capital employed in a medium-sized field in the North sea, while the people whom he criticises today in the retail sector are making much less. Which way did he vote, and why has he changed his mind?

[John Robertson]

The hon. Gentleman is talking about a completely different area. I will talk about windfall taxes later, but suffice it to say that that proposal would have stifled what we were trying to do at the time. The hon. Gentleman thought that that was a good idea, but that is because he was on his side of the House and I was on my side of the House.

Eradicating fuel poverty involves tackling all three of the root causes that I mentioned. I have some sympathy with the energy companies as regards prices rising as a result of the influence of the wholesale energy market. As a member of the Energy and Climate Change Committee, I am fully aware that wholesale prices have risen by 30% this year, but I am also aware that they are lower than a few years ago. According to Bloomberg, in autumn 2008 the wholesale price for our gas hit prices of 70p a therm, compared with 59p a therm today, showing that wholesale gas prices have dropped by 15% since then. Similarly, prices in the wholesale electricity market reached £120 per megawatt-hour in autumn 2008; today, they are £51.20 per megawatt-hour, which is less than half the price back then.

As a result, there is great suspicion by many, including Ofgem, that the big six have not been passing on wholesale market price reductions. Surprise, surprise! As far as I am concerned, these are anti-competitive acts, especially towards smaller energy companies. Chapter II of the Competition Act 1998 prohibits the abuse of dominant position in a market by one or more undertakings which may affect the trade within the UK. According to the competition law guidelines,

“Conduct may be abusive when, through the effects of conduct on the competitive process, it adversely affects consumers directly (for example, through the prices charged) or indirectly (for example, conduct which reduces the intensity of existing competition or of potential competition). A dominant undertaking is under special responsibility not to allow its conduct to impair undistorted competition.”

I have previously accused the big six of acting like a cartel on many occasions. That is supported by the nature of the recent price rises, whereby tacit collusion appears to be taking place as the big six followed one by one in raising prices at a similar rate, following a price leader. Overall, it is debatable whether that accusation would be upheld in a court of law, but it is a fair political point to make.

The Government have not pursued every angle on energy prices, especially as one of their current positions is to say that pensioners in Glasgow and the rest of Scotland should use less gas and electricity this winter. According to the findings of the Hills fuel poverty review, which is out today, 2,700 people will die in England and Wales as a result of this year’s energy price rises by the big six energy companies. Should these people really take the advice of the Prime Minister and his Secretary of State to use less energy? I am sure that the Minister will have a copy of the review, and I suggest that he study it. The fact that so many people will lose their lives as a result of energy price rises means that we have to consider this seriously. I do not make that as a political point but as a point about human beings.

[Ian Lavery]

It was said earlier that probably 36,000 people died last year as a result of cold-related illness. My hon. Friend said that 2,700 people will die because of the price increases. Is that in addition to the 36,000?

[John Robertson]

Yes. According to the Hills report, that will happen because of the increases. My right hon. Friend the Member for Wentworth and Dearne (John Healey) said that that means that in every constituency in the country, four people will die for that reason. That bears thinking about.

I would like VAT on utility bills to be zero-rated, but as far as I am aware there is an EU law against that. It is a matter for next week’s debate—perhaps it will be raised by Conservative Members—which I will probably ignore of course. I should like the Government to reverse the cut in the winter fuel payment. We heard earlier that they were going to maintain the level established by the previous Government. However, the previous Government had a record of consolidating the money at the end of the financial year, and we will never know whether they would have consolidated the £100 level because we did not win the election, unfortunately. As a result, elderly people in this country are now suffering.

Early-day motion 2279, which I signed last night, asks the Secretary of State, or Ofgem at the very least, openly to consider imposing a financial penalty on energy suppliers for anti-competitive behaviour in the energy market—or at least to remind energy companies of their social and competitive responsibilities and the consequences if they forget them. At times it feels as though Ofgem and the Government offer too many carrots and not enough sticks to the big six. Ofgem can impose a maximum financial penalty of 10% of an energy company’s turnover if it is seen to act anti-competitively. I suggest that it has been proven that that is happening. However, in its 11 years of existence, Ofgem has not once levied the maximum fine on an energy company.

If such a fine was imposed, the money could be collected by the Treasury and put in the Consolidated Fund, and the Prime Minister could tell his Chancellor to redistribute it to the hard-pressed customers in our constituencies this winter. How much would a 10% financial penalty raise? According to the Library, using the revenue figures for 2009-10, we could raise £9.5 billion from just three of the big six, with £2.4 billion coming from British Gas alone. Alternatively, a collective penalty levied on the total sales of gas and electricity to the domestic sector, which were £27 billion in 2010, would raise £2.7 billion. Clearly, money could be raised to help people this winter not through a windfall tax, but by using the enforcement powers that are already there. However, there needs to be the political will to do that, and to ensure that our irregular regulator is doing all it can.

Furthermore, I strongly suspect that behind these price rises we will find that the companies have grossly failed to stockpile energy reserves and to hedge adequately against future price rises. There may be a number of reasons for that, but I think that one is ineptitude. I also think that the answer lies in the fact that they have no incentive to do so.

I try to represent my constituents at all times. There is a group of people in my constituency who cannot access the internet in any way. Glasgow has the lowest uptake of internet access of any city in the country. We also know that very few elderly people are connected to the internet. Therefore, despite the calls from the Secretary of State and the Prime Minister for people to go and find something cheaper, those people are left with what they have got, particularly those who live in houses made of concrete blocks that cannot have cavity wall insulation or any other energy efficiency measures installed. There are 400 tariffs for them to choose between, if they can understand them. The Minister could not, and I am not surprised. Left to their own devices, those people will have either to continue as they are or to switch the heating off. Consequently, 2,700 people in England and Wales will be added to the statistics, including people in my constituency.

17:08

[Steve Baker (Wycombe) (Con)]

I am sure that all Members are here today for the same reason: our constituents are struggling with the excruciating price of fuel. I will explore three practical points that might help, if the Government will allow me. The first relates to supply and the other two to upward price distortions that I believe could be removed or alleviated.

Shale gas has been mentioned and I will not go over the same ground. It seems that we have vast, abundant and cheap sources of gas in this country. We should be going through a shale gas revolution. I was glad that the Secretary of State spoke relatively warmly of the resource earlier, but I noticed that he moved quickly on to carbon capture and storage. I would like to bring to the House’s attention an article in The Wall Street Journal today entitled, “EU Weighs Pullback on Cutting Emissions”, which has the subtitle, “Commission’s Energy Department Urges EU to Reconsider Energy Transition Absent a Broader Emissions Deal”. I hope that the Secretary of State will not crucify the British people upon a cross of carbon, because if we can have a shale gas revolution I certainly hope we will. The imperative to produce cheap energy is clear, and many Members have set out the case with great talent and passion.

[Sammy Wilson]

I hope that the hon. Gentleman noticed that the Secretary of State talked about the capital cost that carbon capture and storage would add to a power station that had to use it. He talked about a figure of £1 billion plus the running costs afterwards, which would add significantly to the costs of producing energy from gas.

[Steve Baker]

I am very grateful to the hon. Gentleman. It seems that these days we throw billions around casually, but those are enormous sums of money.

I turn, then, to more billions that are being thrown around. I have learned from Matthew Sinclair’s “Let Them Eat Carbon” that the EU emissions trading scheme is costing European consumers €15.5 billion a year and British consumers €2.2 billion a year. It seems to me that if we are truly concerned about what the poor and the strivers are paying for energy, we should look extremely carefully at such distortions to market prices. I note that because the carbon price collapsed under the EU ETS, we are now looking at a carbon floor price of £30 a tonne. Having tried to introduce a particular market-based mechanism and found that it does not work, we are now introducing a particular piece of price fixing. I am not at all convinced that that is a good idea.

Traditionally, Governments have interfered to pick winners, but it seems that at the moment they might be interfering to pick losers. I note that under feed-in tariffs, onshore wind receives £45 per megawatt-hour, whereas solar panels receive £400 per megawatt-hour. I am not sure those prices are a good use of taxpayers’ money, or of the system of feed-in tariffs, in the context of the shale gas resources that exist. I might go so far as to say that we seem to be entering some kind of Hegelian dialectic, in which on one hand we agonise over the price of energy and on the other hand we implement Government policies that seem deliberately to elevate energy prices, in the hope that some synthesis will emerge.

[Dr Whitehead]

Before the hon. Gentleman gets completely carried away with the shale gas paradise, does he not understand that it is an unconventional gas supply and therefore very expensive to extract? Does he also understand that Deutsche Bank, in its recent review of energy prices, stated that unconventional gas supplies in Europe would have no discernible effect on future gas supplies, because of increasing demand across European and north American markets as a whole?

[Steve Baker]

I think perhaps the hon. Gentleman and I will have to put our researchers in a room and have them fight it out, because my information is that the Deutsche Bank report has stated that a quarter of UK households could be driven into fuel poverty by being priced out of the market; that the most effective policy to bring energy costs down would be to abandon our unilateral renewables obligation, which would save 15% on costs; and that shale gas utilisation would save a further 15%.

[David Mowat]

It is not true to say that shale gas is more expensive than conventional gas. In the US, gas prices are now 50% of those on the European hub. That is a huge and unprecedented thing to have happened, and it is why the US is about to become a net exporter of gas. It has decoupled gas and oil prices due to shale gas. I am not saying that we can do that easily, but it has happened in the US, and it is wrong to say that shale gas is more expensive than other methods.

[Steve Baker]

I am grateful, and with that I will perhaps move past shale gas. My point was that there are enormous, abundant resources of shale gas. Of course there are problems, but as an engineer I just see problems to be solved and risks to be mitigated. I think we should get on with it. We must also remember the points that I touched on about the price distortions that we are deliberately introducing into the market, including the subsidising of large corporations through surplus permits to emit, which have a market value. Such distortions in the market tend to push prices up.

Of course, prices are expressed in money, and I wish to move on to my favourite subject—the distortions that have been introduced to the market through the financial system. I have a wonderful chart before me that prices crude oil from a base figure of 100 in 1945. It shows that the oil price has only been high and volatile since 1971. The two lines—one is US dollars and one is gold grams—are coincident until 1971, but once we came off Bretton Woods and the dollar was decoupled from gold, oil prices were suddenly high and volatile. I showed the chart to an EU energy regulator and he was astonished because all the main events in the history of crude oil prices are simply missing from the price in gold.

Let me move on to the chart that shows crude oil simply priced in gold and blown up. We can see that oil in gold is cheaper now than it was in 1950 and that the oscillations have been pretty much around the same mean. I have other charts relating to gold and they show that gas prices are cheaper today in gold than they were in 1994.

It seems to me that if we are serious about energy prices, we ought to be asking serious questions about the value of money. Right now, one of the biggest problems we face is that “Helicopter Ben” Bernanke is printing dollars and distorting energy prices worldwide. That brings us back to the imperative that has been discussed: people will be in fuel poverty, choosing between heating and eating.

I ask the Government to consider how we can deliver a shale gas revolution. I want them to consider along with the EU Commission whether we should continue aggressive green policies in isolation. I want them to consider those policies and whether it is sensible to keep pushing up prices. Finally, I want them at least to consider some of the monetary effects on energy prices that, in my view, are now crucifying us all.

17:16

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

I am pleased to have managed to catch your eye, Mr Deputy Speaker, to be called to speak in this important debate. In the UK, 6.4 million homes are in fuel poverty and that number continues to rise. That is the number of households spending 10% or more of their income on their energy bills.

There are two key factors: energy prices and household incomes. Fuel prices continue to rise at astronomical rates and Government policies have left families in this country seriously squeezed. At the same time, the six most dominant energy firms, which, as I understand it, control 99% of the market, have seen their profits increase to £125 per person. That is absolutely scandalous. The figure has increased from £15 to £125 since June, so no wonder our constituents are seriously concerned about those companies taking them for a ride. My own father—who is a constituent of mine—calls it daylight robbery. Given what my hon. Friend the Member for Glasgow North West (John Robertson) has said, I think that is worse than daylight robbery. It goes beyond robbery with violence and is tantamount, to me, to corporate manslaughter. It is estimated that 2,700 people will die this year as a result of the increase in fuel prices. That is an absolute disgrace.

It is important to recognise that, in the last quarter alone, such profits equate to billions of pounds. It shocks me to hear the Secretary of State defend the energy companies, saying that they are not the Salvation Army. Is it not time that we looked at this carefully? People are deciding between eating and turning the central heating on, so it is perhaps time for a little philanthropy from those companies.

The Government’s rhetoric is not good enough. We are most certainly not “all in this together”. It is not enough for the Prime Minister to arrange a publicity stunt with the energy bosses and then tell my constituents to shop around, switch energy supplier, insulate their loft spaces and save. It is dreadfully patronising to those people who have already attempted that but have found navigating the system extremely complicated. Indeed, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) experienced that when he attempted to change suppliers.

The Government could call for an investigation into allegations of mis-selling, but they have not done so. Consumers who have been ripped off by companies should be properly compensated. In my view, that is the type of thing that the Secretary of State should have said when he addressed the House from the Dispatch Box. The Government should tell energy companies to use their soaring profits to help families and businesses with crippling energy bills.

We need a mandatory social tariff. Energy suppliers should be forced to charge less to their most vulnerable customers, and I am confused as to why the Prime Minister did not ask for that in his energy summit. The Government need to stand up to the powerful vested interests in the energy industry, and to provide help, rather than patronising people. They are out of touch. Cutting support for the most vulnerable is absolutely appalling, which brings me on to the winter fuel allowance.

The Prime Minister’s decision to cut the winter fuel allowance will affect thousands of pensioners, including many hundreds in my constituency—[Interruption.] The Minister says something from a sedentary position that I cannot quite make out, but I wish he would listen and allow me to make the points that I want to make, because if he did so, he would learn something about real people in my constituency, who are suffering quite severely.

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I am grateful to the hon. Gentleman for giving way. The reality is that the allowance was introduced by the previous Government on a temporary basis. For the year after the election, no money whatever was allocated to it. The allowance was a temporary measure, and this Government have continued the policy of the Labour Government. We have not cut it; that is what the previous Government planned to do.

[Karl Turner]

That is absolute nonsense. This Government are running the country, and winter fuel payments have been cut by £50 for over-60s and by £100 for over-80s.

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

Once again, the Minister has given an alibi. If the previous Labour Government planned what he says they did, he could change it. It is very simple.

[Karl Turner]

That was my point—the Government are in charge.

Labour’s Warm Front grant has helped more than 2 million vulnerable households in England since its inception in June 2000, but this Government are phasing it out completely.

[Dr Thérèse Coffey]

Will the hon. Gentleman give way?

[Karl Turner]

Not at the moment.

As I have said, household income is a key factor in fuel poverty, but the Government’s economic record on that makes grim reading. Unemployment in Kingston upon Hull East is currently about 11.5% and it looks set to increase. The Chancellor’s mistake with the VAT increase costs the average family £450 a year and a pensioner couple £250 a year, which is on top of the ever-increasing cost of energy. In addition, food inflation is at 6.2%.

Energy prices and the greed of the big six is forcing households throughout the country into fuel poverty. Their greed is akin to the greed of the bankers. A profit margin of £125 per person when families are facing a choice between a decent meal and a warm home is utterly irresponsible. The energy companies have been increasing their profits substantially while preying on people who have no choice but to buy from one of the big six.

The Prime Minister’s energy summit represented a demonstrable failure to act. All we heard from the Government on Monday was their intention to write to those who are struggling, encouraging them to switch to a new deal. It is patronising to suggest that many have not already done this. According to the Government, if energy bills are too high, the customer is to blame. It is absolutely shameful. The Government desperately need to get a grip of these companies and take some positive action. I welcome the fact that Government Members will be supporting the Opposition motion today, but as my right hon. Friend the Member for Don Valley (Caroline Flint), the shadow Secretary of State, has said, people need warm homes, not warm words, from this Tory-led Government.

17:25

[Damian Hinds (East Hampshire) (Con)]

I am grateful for this opportunity to make what I intend will be a brief contribution to this important debate. It is timely because, as so many hon. Members have said, this is a matter of the first importance to so many of our constituents and many of the most vulnerable households. Again as has been said, many are making a choice between heating and eating. However, as the Financial Times pointed out last week, on trends that we have seen, it would not be too long before the average household is at risk of falling into fuel poverty. I know that Members on both sides of the House want to get to grips with this problem, so it does not have to be a party political issue. I am afraid, though, that in her opening remarks, the right hon. Member for Don Valley (Caroline Flint) made it so.

There is much merit in the Opposition day motion, and the Government Front Bench team have said that they will not be opposing it. I do not suppose that it would be in order for me to suggest amendments at this stage, but long as the motion is, I think that it would benefit from the insertion of seven words. The first line reads:

“this House believes that the energy market does not serve the public interest”.

I would suggest inserting after “energy market” the words: “that we, the Labour party, presided over”. The Government took office after a Government who allowed extensive fuel poverty to persist, who failed to get to grips with the complexity in the market, who had no green deal and who were well off the pace on nuclear power, and all that time of course the now Leader of the Opposition had more than a passing association with energy policy. By contrast, the coalition Government have come in with bold plans to address all those issues.

There are important community-based initiatives, such as oil clubs, which have been mentioned once or twice, and organisations such as Greening Petersfield and Greening Alton and Holybourne, in my constituency, which are working with some of the most vulnerable people to take sensible, simple measures to better insulate their homes and to save money. Although there are many aspects to this debate, I want to talk briefly about just two: first, the implication of the green deal for the prices that, in particular, the most vulnerable people are paying and the need to ensure that they share in the benefits of the green deal; and, secondly, the need to tackle market complexity.

I welcome the green deal hugely. It is an innovative approach to this practical issue and could contribute to employment and growth—it is investment in the truest sense of the word. However, we need a few reassurances, particularly on how small businesses will share in the work and on how the quality of workmanship will be guaranteed. Specific to energy prices, however, I hope that the Minister will say something about how the green deal will work for people on pre-payment meters and about how the interest rate regime will ensure that those households and consumers considered the “highest risks” will not be effectively priced-out of the benefits arising from the green deal.

[Luciana Berger]

We fully support the green deal, which we piloted when Labour was in government in the pay-as-you-save scheme. I share the hon. Gentleman’s concerns about pre-payment meters and interest rates, which were two points that we laboured in the Committee stage of the Energy Bill, sadly without getting answers. I know that I should be making a short intervention, but I would like to return to his point about the community element. We sought in Committee to secure lower administration charges for those smaller businesses, community projects, social enterprises, charities and co-operatives that want to take part in the green deal, but the Government rejected our amendments. Will the hon. Gentleman ask them to reconsider that?

[Damian Hinds]

The fact that the hon. Lady made those points does not make them bad points, and there will be further detail to come. Things do not necessarily have to be on the face of the legislation. As the green deal is introduced, I am sure that ensuring that the most vulnerable households share the benefits will be high on Ministers’ list of priorities.

The second point that I want to cover briefly is about complexity in the market. We know that there are hundreds of tariffs on the market—one of which, slightly inexplicably, involves getting a free football shirt. In some ways, complexity in the energy market is a reflection of increasing complexity in consumer markets in general. Those visiting the Sainsbury’s wine aisle now need to take a Hewlett Packard scientific calculator to work out the best deal, whereas those looking for a savings account or a credit card deal need to spend quite a long time working out the best deal in the first place and, more importantly, need to be sharp and ensure that they cancel it at the right time to get the savings. Things are becoming harder for consumers, but they are especially difficult with energy because it is that much less tangible and has that much more complexity to it.

[Justin Tomlinson (North Swindon) (Con)]

I congratulate my hon. Friend on making an excellent speech. On empowering consumers, one of the challenges is that most people are incentivised to switch accounts when their prices are hiked, only to find a few weeks later that their new supplier has also hiked its prices. Does he agree that one solution would be to block price rises for new customers for the first six months after signing up to a new tariff?

[Damian Hinds]

My understanding of the recent Ofgem announcement is that there is some provision for ensuring that what it calls innovative price tariffs must have a fixed element to them—funnily enough, I was just coming to more or less that very point. I welcome Ofgem’s new requirement for a single, simple tariff per payment type, but we need to ensure that that does not beguile us. I used to work in the hotel business, and anyone who has ever stayed in a hotel might be familiar with the rack rate. That is the price pinned on the back of the door, which is nominally a perfect reference price that people can use to compare hotels. The problem is that hardly anybody pays the rack rate; rather, all the competition centres on the other rates. That does not mean that such rates are a bad thing, but we would not necessarily be able to say that we had thereby solved the problem.

When it comes to solving the problem, we have to remember that the comparison websites—all the puns about meerkats and Go Compare were getting a bit much earlier—are commercial enterprises. Although they allow people to compare, the click-through payments that they receive mean that they have an incentive for screen biasing. The Consumer Focus code and accreditation are welcome, but that is not quite the same thing as ensuring that comparison sites operate absolutely perfectly in the public interest. I hope that it might be possible to consider a new model of comparison websites to sit alongside those that already exist, which would be broadly modelled on a website called Lenders Compared. I do not know how many hon. Members are familiar with Lenders Compared—probably not that many—but it was set up as a result of the Competition Commission investigation into high-cost lending and enables consumers to compare the cost of various home credit operators and others.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I am listening carefully to what the hon. Gentleman is saying, some of which I agree with, but I wonder whether he will take up the point that my hon. Friend the Member for Glasgow North West (John Robertson) made about many people on low incomes, particularly those with disabilities, not having access to websites. I met a constituent this week with a visual impairment who is finding it extremely difficult to get information that he can access easily.

[Damian Hinds]

The hon. Lady is absolutely spot-on; indeed, I was just coming to that point. There are organisations and individuals who assist people with such matters, and a simple comparison mechanism could be very useful for them, too.

I raised the question of how many hon. Members had heard of a website called Lenders Compared. I suspect that the answer is not many, which illustrates a problem. It is all very well having a pure comparison website, but if no one has heard of it and no one looks at it, it is not doing its job. Such sites therefore need some marketing spend behind them. I suggest that Ministers might have a discussion with the industry about creating such a service, to be funded by the industry itself. People might ask why the industry would want to do that, as it would cost it money, but I think we might be surprised at how much it might be willing to consider, if not fully welcome, such a proposal, because of the pay-per-click marketing fees that it would save as a result of that tranche of its business going through such a site. So, that is my suggestion du jour for Ministers. I am grateful to you for calling me to speak, Mr Deputy Speaker.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I am going to try to fit in as many speakers as I can. I am therefore reducing the time limit to eight minutes, with the usual extra time for interventions.

17:35

[Pat Glass (North West Durham) (Lab)]

Thank you for calling me to speak in this important debate, Mr Deputy Speaker. This subject is of huge interest to the energy-consuming public, and these are matters of real fear and anxiety to many of them. We should remember that many of these British companies that are making big—even obscene—profits right now are the same utility companies, energy companies and communications companies that used to be owned by the British people. Whatever artificial market situation successive Governments put in place to try to manage those companies’ profits and markets, they continue to operate as a virtual oligopoly. There are few suppliers in the market, and entry into that market is virtually impossible. Those suppliers’ actions therefore have a disproportionately negative impact on prices.

The bottom line is that those companies were nationalised for a good reason—namely, to stop them using their strategic position to drive up prices. Ironically, we now find that our most strategic energy, water and communications companies are foreign-owned and are demonstrably using their position to drive up huge profits for a small number of senior staff and shareholders. We have moved from a position in which all of us owned and benefited from those companies to one in which only a small number benefit massively while the rest of us lose out big style.

I am not suggesting that we should renationalise those companies, but the present situation is clearly not working for the consumers of this country. It needs urgent reform. I am really pleased that the Government are supporting the Opposition’s motion today, including the part that calls on them to

“reform the energy market to break the dominance of the Big Six by requiring them to sell power into a pool, allowing new businesses to enter the market, increasing competition and driving down energy bills for families and businesses”.

To me, that means breaking up the big six, and I hope that that will be the Government’s policy. I also hope that the Opposition will hold them to account on that.

It is the greed of those energy companies that has brought about this situation. This year, they have fallen over themselves to announce big increases. British Gas went first, increasing its gas prices by 18% and its electricity prices by 16%, but that was quickly followed by similar increases from Scottish Power and the other four. This might not be a cartel as we know it, operating in smoke-filled rooms, but it appears to be a cartel that operates by watching Sky News to see who is going to go first before rushing in with similar price increases. To me, that is still a cartel, and it is the British consumer who is losing out.

British Gas defends its massive price increases and blames us, the customers. It tells us that we are not paying enough to reflect the increased cost of gas and electricity on the wholesale markets, and that that will depress its profits for the first half of this year. Not surprisingly, organisations such as Consumer Focus and Which? disagree with that, telling us that wholesale costs have actually gone down and are still about one third lower than their 2008 peak, yet the energy companies’ profits have risen substantially over the same period. So, costs on the wholesale market have gone down, and energy profits have gone up. For example, British Gas has had a 44% increase in its gas profits and a 21% increase in its electricity profits. Last year, British Gas’s residential business—not its whole business; just the residential part—made £740 million profit. I am not against companies making a profit, and I believe that everyone is worthy of their hire, but that is obsessive, and it is the poorest people in this country who are paying most.

All that leaves British energy consumers facing massive increases in the cost of energy at a time when wages are being frozen, food prices are rising, petrol and diesel prices are soaring and travel costs are ever increasing. About 9 million households in Britain face an average dual fuel increase of £190 a year. We were told last week that the energy companies made £120 profit from the average family on a dual fuel deal, increasing from £15 in June this year. That is nearly a 700% increase for the average family.

The Prime Minister’s response, therefore, is disappointing to say the least. He had the energy companies in on Monday, but instead of showing them the instruments of torture, he seems to have introduced them to the tea and coffee-making facilities. It is just not good enough. We desperately need the Prime Minister to start taking these people on. It was an opportunity wasted.

[Nic Dakin (Scunthorpe) (Lab)]

My hon. Friend is making a powerful argument to show how these massive energy cost rises are having an impact on the individual consumer. Does she agree that there is also a negative impact on British business, particularly on high-energy-using British manufacturing businesses, so it is yet another struggle for them in these difficult times?

[Pat Glass]

I agree, and it is not just businesses either; it is schools and colleges, too, that are being driven hard by these increases.

The Energy Secretary’s response has been equally disappointing. He has given us a White Paper on reform of the electricity market, but in my view, it is big on complicated legal mechanisms while saying nothing or very little about the impact of these increases on households. He has given us a list of his meetings with small providers and he has launched yet another Ofgem review into energy prices—the 18th such review so far. Personally, I do not find that impressive; I think the Energy Secretary should be doing more.

Finally, we are moving towards another winter and the nights are drawing in with temperatures beginning to drop. My constituents are telling me in my surgeries—not just now and again, but every time—that they are having to choose between putting the gas on or feeding the kids. Frankly, in the sixth biggest economy in the world, nobody should have to make that choice. I am pleased that the Government are supporting the Opposition motion, but they need to get a grip on this problem—and fast.

17:42

[Andrew George (St Ives) (LD)]

It is a pleasure to follow the hon. Member for North West Durham (Pat Glass) in the light of how this debate has developed and evolved. She has made a constructive and considered contribution to a debate that is going to conclude with a clear consensus, whereby this Parliament can move forward and encourage the Government to do a great deal more.

[Ian Lavery]

rose—

[Andrew George]

I do not think I have said anything yet, but I am happy to give way.

[Ian Lavery]

I thank the hon. Gentleman for giving way. Is he as surprised as I am that Government Members are supporting the Opposition motion when it is highly critical of many aspects of energy prices and Government policies?

[Andrew George]

No, I am not at all surprised that the Government have decided that, on balance, looking at the motion—it could, of course, be tinkered with—it says a lot of the right things. We need to start coalescing around the issue to move it forward effectively in the interests of the nation. My concern is that we started this debate in the customary and traditional manner of a yah-boo pantomime. There is a sense that we are obliged to endure the opening of Opposition day debates in that way, so I am pleased that we seem to have moved on from the traditional type of exchanges—when we hear the trading of “It’s your fault” followed by “No, it’s yours”, which takes us nowhere and certainly does not impress the country as a whole—and identified areas on which we can agree. That is what the country wants us to do. Rather than wasting our energy—if Members will excuse the pun—on the yah-boo pantomime, we should build on the constructive speeches made by Members in all parts of the House today. Given that there is a great deal of agreement among us, we must ask what it is that we all agree we can do.

I accept that my right hon. Friend the Secretary of State is a self-declared ambassador for the sharp-elbowed middle classes who will be scrutinising their bills, understanding what they mean, and chopping and changing on a regular basis, but the fact is that 60% of the population do not do that. Although it was rightly said at the energy summit that there should be a more transparent and effective way in which consumers could become informed and make informed choices, the fact is that many people lead busy lives, cannot penetrate the opacity of the bills with which they are presented, and do not understand how choices can be made.

I may not be a member of the sharp-elbowed middle classes, but I am so busy doing my job that I know more about my constituents’ finances and bills than about my own. I never get around to dealing with these issues, and I would not recommend anyone to follow any of the financial decisions that I make about my own life. I am sure that many other Members have the same problem.

The right hon. Member for Wentworth and Dearne (John Healey) referred to a five-point plan. Usually three is about as much as we can count up to in the Chamber, but five is very helpful. He spoke of the need for greater transparency, and the possibility of regulating standing charges. I think that that idea should be thrown into the melting pot, and I hope that the Government will consider it.

Others, including the hon. Member for Ynys Môn (Albert Owen), suggested that, given the profiteering of the big six, a windfall tax should be introduced. We know that we cannot opt, as a country, for a Soviet-style state-owned energy system—and there is no appetite for that in any part of the House—but the fact is that, although the system will of course continue to be in private hands, we need to do something about the profiteering. The idea of introducing a windfall tax, or threatening to introduce one if the energy companies do not start demonstrating that they are prepared to provide a genuine and a better service rather than simply putting money into the pockets of their shareholders, might also be thrown into the melting pot. We need to do more to incentivise fuel efficiency, which is not something that energy companies favour at present. They want to sell their energy and do not necessarily want people to conserve it, and we need regulations that will encourage that to happen.

Earlier, I mentioned rising block tariffs, which exist peripatetically more or less throughout the industry. I hope that the Government will think about those, because they plainly disincentivise fuel efficiency in the domestic market. Many other Members have mentioned key meters and pre-payment arrangements, and we should also consider special groups such as park home owners. The hon. Members for Ynys Môn and for Hexham (Guy Opperman), among others, made telling references to off-grid energy and, in particular, to the LPG market.

We should not ignore a minority group, namely the rural poor, and in particular the fuel-poor in rural areas. We should bear in mind that 29% of households with oil-fired central heating are in fuel poverty. It is clear from the position in my constituency—it includes the Isles of Scilly, which means adding a further 20% to the LPG costs—that many people are struggling to pay their fuel bills in rural as well as urban areas. The Office of Fair Trading report is of course welcome. It suggests that most customers now sign two-year exclusive contracts with their supplier. That is the maximum time allowed following the Competition Commission investigation. Under those contracts, the supplier usually retains ownership of the tank, which makes it hard to switch supplier if prices rise. The Government must keep an eye on that.

In debates such as this we always hear from the climate change deniers—the environmental equivalent of deficit deniers. The balance of opinion in peer-reviewed science is clear, however: if we do not address this issue, there will be significant economic costs and impacts for future generations. We must deal with it; we cannot simply close our eyes.

I understand that the Government will make an announcement on the renewables obligation certificates review shortly. I hope we get a significant degree of parity between Scotland and the countries south of Hadrian’s wall in respect of ROCs. In my constituency, we have the first commercial-scale wave hub in the country, and I give the previous Government great credit for having invested in it. Although it is based just outside my constituency, the wave hub itself lies within it. It is important that we have measures that encourage such initiatives, so I hope that we have a favourable outcome to the ROCs review.

This has been a constructive debate, and I hope we can take the key issues forward constructively with all parties engaged.

17:51

[Alex Cunningham (Stockton North) (Lab)]

This debate covers the important topics of rising energy prices and their effects. The combination of a sharp rise in energy prices and an economic downturn has resulted in families already feeling the pinch. The coming winter is predicted to be the coldest on record, yet there is no substantive action from the Government. We must challenge that, or many more people will suffer.

I am proud of Labour’s record in office on energy issues, and especially on fuel poverty. We ensured that support was focused on the most vulnerable groups. The winter fuel payments were introduced by Labour, and they have helped more than 12.7 million people in 9.2 million households to keep their homes warm. Warm Front was the Government scheme for the fuel poor, and it has helped more than 2 million vulnerable households across England since its inception in 2000. I was very disappointed to learn that the current Government are phasing that programme out, thus ending 30 years of Government-funded programmes. The north-east led the way in many of those endeavours. There were tremendous schemes in my area, Stockton-on-Tees, as well as in Redcar in Cleveland, and in Newcastle and Gateshead. However, as the hon. Member for Hexham (Guy Opperman) said earlier, fuel poverty levels are still high in our region.

Labour also started the process of energy market reform, which would have opened up the market to new entrants, thus increasing competition and thereby giving consumers greater choice. To ensure that that was not merely an empty gesture, we wanted to back it up with tough legislation to protect consumers from the vested interests of the big six energy companies. However, it seems that this Tory-led Government are showing their true colours. They are siding with big business over ordinary people by failing to take on the big six at the very time the country needs them to take decisive action in order to stop many ordinary families plunging into fuel poverty and debt.

Perhaps the Government are ready for action, however. I, too, am delighted that they have decided to accept our motion. It recognises that the forecast of a cold winter and the cuts in Government support will lead to millions of people struggling to heat their homes. The Government accept that tonight, and I hope they are going to do something about it. More importantly, their acceptance of the motion means they agree that we need to break up the dominance of the big six by requiring them to sell power into a pool to allow new entrants into the market. Does the Minister plan to announce tonight that the Government will compel the big six to pool their energy, thus driving down prices?

What are the Government’s plans? We need to see people get help with their energy bills—this is such a basic need—so that they are not pushed into financial hardship. I wish to concentrate my remarks on fuel poverty. Lower bills are always the answer. The best way to reduce fuel poverty is to put money in people’s pockets, but this is not just about excessive energy prices; it is also about more fundamental issues, such as the poor-quality heating and insulation in too much of the country’s housing stock, and low household income.

I know that the energy suppliers have a responsibility to play a substantial part in helping to eradicate fuel poverty through meeting the cost of energy-efficiency measures, but the Government have a tremendous role to play too. Under the last Labour Government, we saw tremendous success for the Warm Front programme and initiatives such as the warm zones, with which I was personally involved. Millions of homes benefited from the schemes, with well-insulated homes and efficient boilers saving individual households hundreds of pounds a year. There was an extra dividend of better health, thanks to people living in warm, dry homes. I well remember taking executives of the then Lattice Board, the parent company of my employer, Transco, now part of the National Grid Company, to visit houses in Thornaby on Tees, in my neighbouring constituency. One resident invited the executives to feel the wall and said, “Its warm, isn’t it? It used to be stone cold.” We had a warm zone fan there.

Sadly, the Tory-led Government have not seen fit to build effectively on what was achieved under Labour, when the number of people in fuel poverty tumbled from more than 5 million to slightly over 1 million. Since then, the price rises, some of them justified but others doubtful, have meant that that figure has rocketed upwards and we are back to having the disgraceful number we inherited from the Tories in 1997. Yes, we had success, with people in my local Stockton-on-Tees borough council area faring better than most, but still some of the hardest to heat homes with solid walls remain cold, with families and individuals unable to afford their energy bills even before the recent hikes in prices. According to statistics from the Department for Communities and Local Government, more than 1.3 million children are estimated to be living in the coldest, worst-insulated homes. That is truly shameful in 21st century Britain.

The energy companies have obligations to consumers and manage them in different ways, with mixed success, often through no fault of the companies themselves. Many of the schemes require further investment or match funding by the local authority, and failure on its part to find such funding means that the very schemes to improve people’s homes and cut their fuel bills simply cannot go ahead. That will occur more in the future as the Government’s huge cuts to local authorities restrict their ability to invest in this vital work.

We need to see a change in the Government’s proposals to make homes more energy-efficient. We must ensure that the resources the energy companies are compelled to spend on these measures are properly targeted at those in greatest need in the homes hardest to heat, without there being a need for councils, or perhaps housing associations, to find match funding they simply do not have. Energy companies do work hard to try to meet their obligations and some achieve the necessary credits, doing so more efficiently than others by taking advantage of their massive size and buying power. We can all understand their taking that advantage, but perhaps it is time to look at a way in which each company would be responsible for a financial commitment to energy-efficiency schemes, rather than meeting specific energy targets. This is perhaps a personal view, but is there not a case for companies to pay a fixed levy, based on turnover and profitability, directly into an independently managed fund, which would ensure that all that hard cash finds its way to the households that need it most and that we get the best value for money?

MPs should be under no illusion: many ordinary families and pensioners in Britain are facing incredibly tough times at the moment. The toxic combination of rising unemployment, rising food and fuel prices, the increase in VAT and the freezing of wages leads to ordinary people facing a huge struggle just to make ends meet. The cost of a typical dual fuel bill has increased by 48% since 2007, meaning that energy bills are now one of the single biggest outlays a household faces. The latest fuel poverty statistics show that 5.5 million households in the UK cannot afford to heat their homes adequately. It is time to change. The bills need to be cut now and the big six need to become many more.

18:00

[David Mowat (Warrington South) (Con)]

I will speak as briefly as I can about three issues: unconventional gas, fuel poverty, and what we should be doing about the big six—or, perhaps more pertinently, what we should not be doing.

First, I do that think that unconventional gas is a panacea, but the Government need to take it a little more seriously than they have up to now. There has been a lot of discussion about wholesale gas prices rising and getting bigger and bigger, but that is not wholly true. It is true in Europe but it is not true across the world. In the US, the Henry Hub market for wholesale gas is now 50% of the level that it is in Europe. If we were purchasing gas at that price here, we could cut all fuel bills by one third immediately. That has been achieved by a remarkable technical innovation to do with fracturing and horizontal drilling, which is probably the most significant change in the energy industry in the past two decades. It has not happened here yet and there is some way to go before we can say that it will happen here, but both the industry lobby and, frankly, the green lobby are very suspicious of unconventional gas. In my view, that is why the Government need to take it seriously. The US has been able to generate more energy from gas than from coal, and that has a massive impact on its carbon emissions. The quickest way for anybody to reduce carbon emissions is to replace coal with gas as soon as possible. I would like to see that point taken more seriously, and it is not true that gas prices are increasing everywhere worldwide—they are not.

Secondly, we have heard a lot about fuel poverty and there have been some very powerful speeches, particularly from Opposition Members, on this issue. I have heard the figure that 2,700 deaths are the result of fuel poverty each year. That is a terrible statistic and is one that we all need to take seriously.

We missed the opportunity a decade or perhaps two decades ago to embark on a programme of cheap nuclear power in the way that France did, and frankly we are paying the price for that now. However, I believe that both sides of the House voted for the Climate Change Act 2008. It may well be that we need that Act and that it is the only way forward, but we need to be clear about the implications, because whichever way one looks at its requirements, it puts up the cost of energy. That might be right, but putting up the cost of energy in that way increases fuel poverty at the margin, all other things being equal. We talk about CCS, wind power and solar power, all of which cost more than gas and other methods, and it is very important that we fully understand that they do not come cheaply. We need to be very careful, as we legislate more for targets of 80% reductions by a certain date, that we understand what we are doing.

Finally, I want to talk about the big six. As has rightly been said—I heard it said recently—most of those companies are now foreign owned. The other thing about the big six is that we require them to spend £200 billion in our country in the next 15 years. They can choose whether they do that or not, but if they do not, we will face a bigger problem here than fuel poverty: the lights will go out. Coal stations will be coming off stream in the next three or four years and nuclear is coming to the end of its life. We face a very serious issue here in a way that no other country in Europe does and, as far as I can see, the only way we can deal with that is through massive investment—some of which, perhaps unfortunately, is going to have to come from those people, who are, as has rightly been said, a cartel in some ways. I have heard language today about them; indeed, I think I heard an Opposition Member accuse them of criminal behaviour and of being a cartel that had rigged the market and that should be fined 10% of turnover, which would cost them £10 billion. It is a terrible thing to accuse directors of criminal behaviour. We have no evidence of that and it is not true. We have an oligopoly and we have to manage it.

[Luciana Berger]

Four of the big six energy companies have admitted that they had been involved in doorstep selling practices that they have now had to stop because they were wrong. They were mis-selling packages on the doorstep which meant that people were paying more for their energy.

[David Mowat]

Is it the position of the Opposition Front-Bench team that the big six should be fined 10% of turnover? That was the point made from the Opposition Back Benches.

We have also heard words such as “obscene greed”. We have to make the market more competitive, and I agree with the motion that it is right that to get new entrants coming in and to make the market more transparent. It is clearly right that we make it much easier to switch between suppliers. I hope the Government make progress on that as quickly as they can.

Eight months ago Government Members voted for a windfall tax on energy companies, including one of the big six. That proposal, which was opposed by almost all Opposition Members, has resulted in fuel prices coming down for motorists, which is part of the mix. I find it a little difficult to take that the Opposition opposed that windfall tax on people who are making more money in terms of return on capital employed than the big six, and now the Opposition say that we are being light on the industry.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. We have three remaining speakers. The winding-up speeches will start at 6.30, so speeches of just under eight minutes, including interventions, should get everybody in.

18:06

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

I will try to keep my comments short. I have listened to the debate and I am seriously concerned. We seem to talking about tinkering with a market that has failed. Let us be straight about it. We are told that for the next 10 years we will be faced with volatile energy prices. Consumers are being ripped off. When privatisation was first mooted in the Chamber nearly 30 years ago, I do not believe that anybody on either side of the argument would have envisaged that we would be faced with the madness of six energy companies holding us to ransom, punitively putting up prices, while the Government stand idly by.

Yesterday I read an article about Centrica, which owns British Gas. Centrica has paid out almost £145 million in shareholder dividends, yet the average dual fuel customer will pay £1,317. I am not singling out British Gas for criticism because, in June and September, all the big six increased their energy prices. All of them are bringing misery and pain to the consumer. When I talk about misery and pain, I understand what it means. I have people coming to see me and saying that last winter, which was the coldest on record, they were sitting in their living rooms with their duffel coats on and going to bed at 8 o’clock at night, fearful that when the utility bill drops on their doorstep, they will not be able to pay it.

Fuel poverty has affected the most vulnerable in society, but it seems that we are at the tipping point where anybody on an average household income could be in fuel poverty. I think of the pensioners living in my constituency, many of them former miners with industrial diseases, who have to keep their houses a little warmer than other people do because of the diseases they suffer from. They are feeling the pain. When I read statistics that tell me that, between 2003 and 2009 in my constituency, Islwyn, there were 41 excess winter deaths, and right across my country, Wales, there were 1,700 winter deaths, I think to myself, “Why, in the 21st century, are people dying of the cold?” It is like something that we would read in Dickens, yet it is happening now.

What do we get? We get the Prime Minister, in response, inviting the big six energy companies to tea and biscuits at Downing street. Yes, I am sure that a day-long energy summit will fix a cataclysmic failure of the market, which has seen the emergence of a legal cartel, for want of a better word.

[Jonathan Lord (Woking) (Con)]

Is it not the case that over the past 10 years only 50,000-odd customers have been serviced by independent suppliers because the previous Government had so much red tape and regulation in the market? That is why we have the big six and why others are unable to get in.

[Chris Evans]

I do not agree, and I am sorry but I do not think that that adds to the debate at all. We have to deal with the here and now. The simple fact is that people’s lives are at risk because of the profiteering of six energy companies. That is where we are now and it has nothing to do with the past 10 years. People are dying because of a cartel of companies that put profit above people.

What do we do now? We have a problem in this country. The Secretary of State says, “Oh, it’s like buying a £20 toaster, or a £40 toaster.” It is not like that. If I want to buy a television, I can walk into Currys and the retailer will charge me depending on whether I want an LCD television or a plasma screen. It is not like that in the energy market. Electricity is electricity; there is no luxury version and everyone needs it. How do the electricity companies create competition? They do so by creating tariffs. In some cases there are more than 100 different tariffs. Which? magazine has reported that a trained accountant could not understand his own energy bill. What hope do elderly customers or vulnerable families have when trying to work out their energy bills?

We are faced with problems of energy security. It seems to me that we have three options. One option is a windfall tax on the energy companies. It is all very well saying that we should tax the energy companies to the hilt until the pips squeak, to use the words of a former Labour Chancellor, but that would only be a short-term solution to the problem. Judging by how the energy companies are acting at the moment, I fear that they would probably pass the costs of such a tax on to the customer.

The second option, and probably the best one, is to get more entrants into the market. I would like to see energy being sold in banks, in supermarkets, or by any lifestyle company, but the problem is that the barriers to entry are so huge that they cannot get involved. There is an absolute monopoly on the power stations, which are owned by the big six. They can charge whatever they want.

What can the Government do? They have an option. They could create a central electricity body, just as Ofgem suggested in its Project Discovery report, which would mean that there would be a single energy supplier. It could be set up not as a nationalised company, as under the old rules, but as a co-operative, with profits being pumped back into the system to improve infrastructure. These are ideas that we may have to talk about, because eventually we will have to come here and talk about our energy needs, but what can we do in the short term?

One major problem is that Ofgem has no teeth. I do not believe that the big six are particularly worried by warnings from the Competition Commission or inquiries by MPs and Select Committees. They do not care. There have been more than 18 such inquiries since 2001, and what has happened? Energy prices have still increased year on year. We must do something now. Let us give Ofgem real teeth and real powers to punish those energy companies.

I end by saying that we face something extremely serious, and we must pay it serious consideration and ask serious questions. For so many people, such as those in my constituency, it really is a matter of life or death.

16:58

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

What the public want to know, in the context of this debate and elsewhere, is why energy prices keep going up, and why we have the so-called rocket and feathers effect, whereby prices go up when wholesale energy prices go up, but they do not appear to come down when wholesale prices come down. The truth is that, in terms of our knowledge of how these things work, it is difficult to find out why—for the reason, among others, that the market is now so un-transparent and, as my hon. Friend the Member for Islwyn (Chris Evans) just outlined, so concentrated in so few hands.

It is true that the price of wholesale gas has varied over several years between about 70p and 15p a therm, but nevertheless the overall trend is up. Indeed, a recent Deutsche Bank report suggested that notwithstanding shale gas, gas prices will probably double by about 2014. It is true that wholesale prices are going up, but the increase does not bear close relation to the energy company price rises that we have seen. That is the central problem. Some 46% of our generation is by gas, the price has increased by 90% over the past 10 years, and other prices follow gas as the market maker.

All that is based on trading in an energy market that was set up 10 years ago, with 20-odd wholesalers, 20-odd retailers and little vertical integration between them. It was also established at a time of privatisation, when those companies inherited a market in which we were self-sufficient in gas and had a substantial capacity margin in electricity generation plant. Neither is now the case.

Furthermore, the market was created carbon-blind; its purpose was simply to keep trading prices down when there was no vertical integration. It did so for a while, but now we are in entirely different territory. Indeed, six large companies control 99% of the retail market and about 60% of generation, and they have some grid and transmission assets as well.

The power of such vertical integration means that the market that was created 10 years ago simply no longer works. The long-term deals that the companies set up account for almost all energy company trading, they are mostly bilateral and totally un-transparent, and energy companies trade with themselves, so it is difficult to see where the pricing goes and whether it is fair to the consumer.

More and more, the big six also hedge their arrangements on price variables, so they all mirror each other, and the result of a price increase by one is that, inevitably, other companies put up their prices, too. Increasingly, therefore, there is effectively—even if not deliberately—a cartel-type price arrangement.

As for new entrants, they are almost all retail-only, and they have to buy their power from the big six. It is a bit like encouraging corner shops to set up, knowing that they will have to get their stock by shopping at Tesco and then somehow compete with Tesco on price.

There are also still positive Government disincentives for new entrants. Small retailers, for example, are exempt from the recently increased obligation payments for up to 125,000 dual fuel customers. Above that level, however, not only is the company obligated for all levy payments, but all customers are then eligible. In other words, their 125,001st customer costs them £7 million, and on that basis no small niche company in their right mind right now will seek to exceed 125,000 customers. It is a straightforward lock-out disincentive.

Monday’s energy summit did not deal with any of those issues. We were exhorted to switch, which is a good idea, but in those circumstances, and for the reasons that I have outlined, it is of only marginal utility. Logically, one cannot keep switching and saving what is claimed—and anyway, some 80% of customers simply do not switch, leaving the big six energy companies with a huge pool of resources to draw upon in order to outcompete those small entrants on retail tariffs.

As we have heard, tariffs are hopelessly confusing. It would not be beyond the wit of the regulator or the Government to introduce mandatory simple tariffs—a standing charge and a tariff per unit used. I personally favour introducing rising block tariffs, which make lower usage levels even less expensive.

Insulation was dealt with at the summit, where it was stated that 4 million people were to get letters saying that they could get insulation free—on the basis that support from the public finances for insulation measures will disappear in 2013, after which there will be the green deal, which will provide the same insulation, but in exchange for a permanent charge on the property. I am not sure that many members of the public would automatically see that as the good deal that some people suggest.

We must deal with the market. The Government have confirmed that electricity market reform proposals are coming forward, but those proposals do not deal with the way that the market actually works. The Government put all sorts of bells and whistles on the back of the proposals—contracts for difference instead of the renewables obligation, capacity payments and so on—but they do not address the central issue of whether the market works for the future, how transparent it is, and whether other ways of trading would be more fit for purpose in this century.

We need a pool system of 100% auctions on all markets, or a single-buyer stakeholder pool. That will ensure transparency and a level playing field for new entrants and, if coupled with an obligation, will ensure an orderly dispatch of energy between wholesaler and retailer. That is not addressed in electricity market reform, but it is addressed in the Opposition’s motion. It is good to see that the Government have apparently signed up to the idea that there should be a pool, so I anticipate that they will shortly make amendments to the White Paper on electricity market reform in order to bring about a pool as the centrepiece of a new electricity market system.

We need aggressive policies on energy efficiency and insulation. We currently have no idea how the green deal will work. No funding has been identified, and it may not be available in very large quantities for the energy company obligation. On that basis, there is no real prospect of achieving the levels of insulation that we need, combating fuel poverty or pushing down bills.

Environmental measures do not account for a large proportion of bills. Indeed, last year the previous 6% level fell. The Government are stuck in a dilemma. They want the big six to undertake most of the investment of up to £200 billion in new plant and grid renewal that we will need, but unless those companies make big profits they are unlikely to undertake that investment. However, several of the companies are over-borrowed in any case. We need different sources of money to ensure the reality of a transparent and investable future.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. The wind-ups are to start no later than 6.30 pm.

18:22

[Mr Mike Weir (Angus) (SNP)]

In his opening salvo against the Labour party, the Secretary of State rightly condemned the previous Government’s decision to close the Peterhead carbon capture project. Inexplicably, he went on thereafter to pull the plug on the Longannet project, which drives a coach and horses through energy and industrial policy. We have been told for months, if not years, about the prospect of carbon capture and storage producing an export potential, but that will now be lost. After Peterhead was not proceeded with, we lost the lead on gas carbon capture and storage, and the same will happen with the Longannet project. That is a daft decision that will come back to haunt this Government.

Fuel poverty is affecting more and more of our people. A total of 770,000 homes in Scotland are in fuel poverty, and for every 5% rise in energy prices, a further 46,000 move into that situation. The last energy price rise was nearly 20%, which shows the effect that those rises have. That is an utter scandal in an energy-rich nation such as Scotland. Last week Ofgem said that the profit margin for energy firms had risen to £125 per customer per year—up from £15 in June—with the average dual fuel bill now £1,345 per year. And that cannot be considered in isolation. Just as energy bills are rising, so is the cost of road fuel, food and other essentials. This week’s inflation figures are a grim reminder of the pressures on family budgets at a time when wages are static, at best. In June I received a written answer about energy price inflation, which showed that in four of the last five years the rise in domestic energy prices had outstripped the rate of inflation, whether we use the retail prices index or the consumer prices index—and that was before the recent round of price hikes.

Last week we had the energy summit. I fully understand the need for energy efficiency, and I support it, but we must be honest and accept that the current rate of price rises far outstrips the ability of the average family to reduce their bills through greater energy efficiency. At best, energy efficiency might mitigate some of the rise. I will cite my own experience in this area. I pay for my gas by direct debit. I took measures to reduce energy consumption and managed to reduce my gas usage substantially, yet I still found that the gas company wished to increase my direct debit payment. I suspect that many families will face the same situation. I urge Ministers to watch their language when talking about the effect of energy efficiency measures, because the claims that they reduce bills may well turn out to be hollow, and put people off taking the necessary measures. A little honesty would not go amiss.

A similar situation exists with regard to switching. Much has been made of the reduction in the number of people switching. I do not find that particularly surprising, because the pool of potential switchers is bound to be reducing. Again, Ministers have to be much more honest about the effect of switching. It seems to me that unless one is on a particularly bad tariff or using a pre-payment meter, the benefit of switching will not be great. Call me cynical, but I also wonder about the apparent follow-my-leader strategy of the energy companies on price rises. Switching when one’s company raises its prices might just mean that one’s price rise is slightly delayed, until the new company gets around to doing the same. There is also evidence that many of those who switch end up on a worse deal. In that respect, I welcome the promise of more transparency. That is urgently needed on pricing and tariffs.

Another outcome of the summit was that the 8 million quarterly credit customers were written to, telling them of alternative payment methods. That is all very well, but the truth is that many of them will not want to change, because in difficult financial times many people juggle their bills, delaying the payment of one bill in favour of paying a more pressing one. Such people may not want to pay by direct debit, because they would have no control over when the money left their account.

I strongly support the effort to increase insulation, with the proviso that I have already mentioned about being more up-front about the benefits.

Although many of the factors affecting fuel poverty and energy prices are outwith their control, the Scottish Government are pushing forward with efforts to tackle this problem. As well as holding discussions with the energy companies, they have introduced an energy assistance package worth £33 million, which has helped 150,000 people on low incomes to reduce their energy bills. One in six Scottish homes have been visited for a home energy check, and almost 18,000 installations have been made. The scheme has been extended to help the most vulnerable. In addition to helping pensioners, the scheme now includes the disabled, families with young and disabled children, those with severe disabilities and the terminally ill. It is to be extended next month to people on carer’s allowance, which could benefit up to another 7,000 households. Next year the £50 million warm home fund will also be in operation to give additional help to the fuel poor.

That is in stark contrast to what the coalition Government are doing. In his comprehensive spending review, the Chancellor announced cuts of more than two thirds to Warm Front, and over the next three years, responsibility for the assistance package will pass from the Government to the energy companies.

That brings me back to the energy companies. It is easy to paint them as the unrestrained villains of the piece. However, I do have some sympathy with the position that they find themselves in. They are being told to invest in new capacity, and at the same time they are being attacked on prices. The Ofgem report shows the vast amounts that they are making in profits. I recall one particular occasion when I was on the Energy and Climate Change Committee and we had the big six before us. We pressed them on where they made their profits. They managed to deny simultaneously that they were making profits on generation and that they were making profits on selling energy. That prompts the question: where were the profits are coming from? If we are all in this together in these difficult times, as is claimed, we have to recognise that when family incomes are not rising the energy companies have to make their contribution. We have to take action to force them to reduce prices, because asking them to take action does not seem to be working.

In closing, may I ask whoever is winding up for the Opposition to explain one point about energy being pooled? I can understand it in the case of electricity, but I am less sure about how it would work in the case of gas, particularly as so much of our gas is now imported, much of it in the form of liquid petroleum gas. I cannot see how that can possibly be pooled for the benefit of gas customers.

18:30

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

I am pleased to have the chance to close this afternoon’s Opposition day debate.

This year, millions of households across our country will face a cold, hard winter. In 12 months energy bills have risen by a fifth, whereas energy companies’ profits have increased by 700% in the past few months alone. Across the country, people are struggling to keep their homes warm and the lights on, as their spending power has been squeezed. As we have heard today from many Members on both sides of the House, people are having to choose whether to heat or eat.

After hours of debate today, it is clear that the Government are not taking the action we need to make bills simpler and prices fairer. The debate has shown that there is a real choice between a Government who would rather stand alongside the big energy companies than stand up for the hard-working majority, who cut support for our constituents when they need help most, who walk away when families are struggling with higher food prices and gas bills and worrying about their jobs and their children’s futures; and a Labour Opposition who are prepared to make the tough choices, stand up to the powerful vested interests of the closed energy industry, provide real help to people this winter, and take action to reform how our energy market works for the long term.

We heard in the contributions of my hon. Friends the Members for Ynys Môn (Albert Owen), for Kingston upon Hull East (Karl Turner), for North West Durham (Pat Glass), for Stockton North (Alex Cunningham) and for Islwyn (Chris Evans) how families and small businesses in their constituencies are finding it very difficult to make ends meet. My hon. Friend the Member for Scunthorpe (Nic Dakin) highlighted in his intervention the challenge of energy-intensive industries.

Businesses and households have been hit hard by the highest level of inflation ever, crippled by the Government’s rise in VAT and squeezed by energy bill increases. It cannot be right that almost a quarter of all British households now spend 10% or more of their disposable income just to keep warm. Many Members, including the hon. Members for Hexham (Guy Opperman) and for Suffolk Coastal (Dr Coffey), also identified the additional cost challenges faced by customers who live off the grid.

My right hon. Friend the Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Glasgow North West (John Robertson) highlighted the real problem of the withdrawal of Government support. The Government are replacing the social tariffs, which provided support for vulnerable consumers, with the warm home discount, from which just one in 20 pensioners will benefit. They are leaving a gaping hole by reducing the Warm Front scheme to a third of its size but putting nothing in its place to support vulnerable people this winter, and they are reducing the winter fuel allowance by up to £100, despite promising before the election not to do so.

My hon. Friends the Members for Kingston upon Hull East and for Glasgow North West made the point that according to the interim Hills fuel poverty review, which was released earlier today, there will be 2,700 winter deaths this year as a result of fuel price increases, which is a staggering four people for each of our constituencies. This is a life-or-death issue that transcends political divides.

The hon. Member for St Ives (Andrew George) talked about the wave hub and the need to encourage renewable generation, and he is hoping for a positive outcome from the ROC review. We are, too. We share the view that if we reform the market and invest now in low-carbon energy generation, we can secure our future energy supply while creating thousands of new jobs. We know that 80% of people currently pay too much for their energy, but who does the Secretary of State blame for that? The energy companies? The bewildering array of more than 400 complex tariffs? No, he blames us, the consumers, for not switching supplier.

[Mr Dave Watts (St Helens North) (Lab)]

Is my hon. Friend aware that even when people switch, many of them find they are paying more for their tariff than they did before?

[Luciana Berger]

I thank my hon. Friend for his intervention and I shall cover that point in just a few moments.

There has been an issue with doorstep selling, which four out of the six energy companies have had to stop because it has been proven that people were mis-sold packages and were paying more than double what they were before. We know from last week’s Which? report that a third of people are not offered the best advice from their energy suppliers when they call them for advice about which tariff to switch to.

On Monday, we heard and saw all the news about the energy summit and thought that that was a great opportunity. The Government could have done something tangible to help, but all we got was more of the same. We were told to shop around, ring this number and look at that website. I looked at the DECC website to see what the exact outcome of the summit was, and it tells us:

“This winter suppliers will place a cheaper tariff signpost message on the front page of bills, encouraging customers to call their supplier or visit a website to find out if they could be saving money on their energy bills.”

We already know that many people do not have access to the internet or to websites and cannot benefit from cheaper tariffs because they do not have access to a bank account or because they are unable to secure direct debits, an issue that specifically affects pensioners. We already know that that approach does not work, but the energy summit had no outcome on simpler tariffs, improving trust, reforming the market or increasing competition. It showed an out-of-touch Government wedded to an out-of-date orthodoxy at the expense of everyone else.

In her opening speech, my right hon. Friend the Member for Don Valley (Caroline Flint) set out a very clear plan to limit energy cost increases and to support struggling households.

[Chris Huhne]

The hon. Lady mentions the clear plan from the right hon. Member for Don Valley (Caroline Flint), but will she clarify for the benefit of the House whether it is now Labour policy to break up the big six, as the leader of the Labour party suggested, or to have a Competition Commission referral? May we have some clarification?

[Luciana Berger]

The Leader of the Opposition has said that we are seeking to break the dominance of the big six. He has not explicitly said that he wants to break them up—[Interruption.]

[Mr Speaker]

Order. We must have interventions from the Dispatch Box. It is no good the Secretary of State chuntering from a sedentary position in the faint expectation of being heard.

[Luciana Berger]

The point of the debate is that we are trying to get action from the Government now, this winter. We have not seen anything from the Government that will help my constituents and those of all hon. Members. Anyway, as I shall say later, we are very grateful for the Government’s support for our motion.

First, we believe that we need an immediate investigation into mis-selling by energy companies and compensation for consumers who have been ripped off. For too many years, cold-call doorstep sales have led to hundreds of thousands of people paying more for their energy after switching to a worse deal. As I said only a moment ago, the news that four of the big six have ended that abusive practice is welcome, but questions remain about selling methods. We want an immediate investigation with proper sanctions to restore trust. The Secretary of State said before that there will be compensation for anyone ripped off in the future, but we are concerned about the thousands of people who have already been affected.

Secondly, the energy companies should use their ballooning profits to help families and businesses struggling to make ends meet by cutting their bills now. Last week, Ofgem published research showing that the average dual fuel bill is now a mammoth £1,345 per household, but at the same time energy companies have seen their profits soar, with their margin now standing at a whopping £125 per customer, up £110 in just four months. It is wrong that energy companies are raising their profits by 700% when consumers are being told that bill increases are unavoidable.

Thirdly, the Opposition believe that we need transparency, meaning that companies need to be clear and open about how much it costs them to buy their energy. Only then can customers be clear that they are getting a fair deal.

Fourthly, we want simple tariffs. We need tariffs that are fair to consumers, but that are also easy to understand and compare. Something is wrong when 70% of consumers say that they find the number of tariffs on offer confusing. A daily standing charge covering the cost of delivering energy to people’s houses and a unit price so that people can see clearly how much they are paying would mean an end to confusing charges, making it easier for them to compare suppliers’ prices properly.

Finally and most importantly, we need reform of our energy market, which for too long has been dominated by a handful of companies. At one time that seemed to be working, but no longer. It is clear that those vested interests are looking after themselves handsomely, while their customers struggle. As Ofgem has shown, and as many Members said this afternoon, as soon as the wholesale price goes up, so do people’s bills; but when wholesale prices come down, bills do not follow.

The market is broken and we need to fix it. We want all generators to sell all their power on a long-term market to any supplier. By reforming the market in that way and by opening it up, new entrants can join, increasing competition and lowering bills.

We also need action on securing our future energy supply, which means taking tough decisions now. Investing in low-carbon energy generation will create thousands of new jobs and drive our economy. However, under this Government, sadly, we are going backwards.

[Dr Thérèse Coffey]

I hear a lot of talk about the energy companies and recognise that we want to be critical friends. Does the hon. Lady think that they are producers or predators?

[Luciana Berger]

The point is that we want responsible business, which is what this debate is all about.

The challenge currently is that the Government are creating uncertainty for investors by playing political games with climate change. The Opposition do not believe that that will grow our economy. Talking down the green economy might sound good to a Conservative party conference, but what does it say to the companies that want to put their money behind carbon capture and storage or those that want to invest in renewables? What does it say to the small business owner who is thinking of providing energy-efficient goods or the manufacturer that is planning to build parts for a new generation of wind farms or solar panels? To them, talking down the green economy says: “Think again.”

We have a choice: we can be a leader or a follower. The jobs, investment and prosperity can come here, or they can go elsewhere. We want Britain to be a world leader, but for that to happen, we need a Government who get it. We have seen today that this Government do not get it.

For households in the squeezed middle, for vulnerable people and for millions of small businesses who need lower bills, now is the time to take action. Now is the time to make pricing transparent, to simplify tariffs, to tackle mis-selling, to demand that the energy companies use their profits to help to reduce energy bills this winter, and to reform the energy market. I urge hon. Members to take that action today, and I am delighted that the House supports Labour’s motion.

18:43

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I am delighted to have the chance to respond to what has been, broadly, an excellent, high-quality and wide-ranging debate. Some contributions were perhaps overly political, but for the most part they were thoughtful. That reflects the genuine concern on both sides of the House, and the fact that in every single part of the country, people are worried about fuel prices this Christmas and this winter. They want the Government and the Opposition to work together as effectively as possible to try to deal with those issues.

That is why we have said that we will not oppose the motion—I could happily have written much of it myself. The motion states that the energy market is in urgent need of reform. That is why we ignored the Labour party’s claim before the election that there was no case for reform and have started the most wide-ranging reform process of the past 20 years.

The motion refers to concerns about Ofgem’s study into prices and margins. We encouraged Ofgem to carry out that work, and it was under this Government, not the previous Government, that it was started. The motion states that

“energy tariffs are confusing and unfair”.

Everyone who has spoken in this debate has talked about the difficulty of switching suppliers owing to the complexity of the system. That is an issue on which we really want to see progress. It also calls on us “to investigate mis-selling”. We are putting that right, although it would have been within the gift of the previous Administration to have addressed it—but they did not take that opportunity. The motion asks that we apply a simple format to tariffs so that people can compare them easily. Again, that is work that we are taking forward through Ofgem.

[Mr Watts]

rose—

[Charles Hendry]

The hon. Gentleman popped in 10 minutes ago, while others have been here for five and a half hours, so I shall not give way to him.

The motion calls for the publication of trading data, but Ofgem, under this Government, have now engaged forensic accountants to untangle the accounts of the big six. It also refers to breaking the dominance of the big six, but it is this Government who have started to facilitate the process by which smaller companies can enter the market and by which power generation can be auctioned off by the major companies. The hon. Member for Liverpool, Wavertree (Luciana Berger) asked whether the Government were going to stand alongside the big six. I think that we have shown, through our actions, that we are prepared to tackle the abuses that were there when the leader of the Labour party was Energy Secretary, and we have decided to move things forward.

The right hon. Member for Don Valley (Caroline Flint) talked about the energy summit. I hope that, on reflection, people will realise that the messages from that summit are important to our constituents. No one is pretending that they are the full answer or the long-term answer, but all our constituents would be well-advised, in the run-up to this winter, to consider what they can do themselves to mitigate high prices. My right hon. Friend the Secretary of State has never said that consumers should be blamed for current high prices, but he has said that there are things that we can all do and which we should be doing. Ridiculing that, as she did, might be good politics, but it does not help her constituents. If the alternative that she is suggesting is that they should not check their bills—my right hon. Friend has said how valuable that has been—consider switching or insulate, under her suggestion, her constituents would suffer this winter.

[Caroline Flint]

The Opposition are certainly not suggesting that people should not try to get the best deal. The problem is, as has been amplified today, that they cannot find the best deal when they try. The Secretary of State said in his opening speech—if I heard correctly—that the letters that people receive will tell customers what is the cheapest deal for them. Will they get that specific information or will they just be asked to ring a number to check?

[Charles Hendry]

It will be a combination. That information will be on their bills if it is believed that they could be on a cheaper tariff. We advocated such a measure while in opposition, but it was rejected by the then Government. Also, letters specifically suggesting that someone would benefit from changing will be sent to them when the company believes that they could be on a lower tariff.

In addition, we need to focus on the economic realities. The hon. Member for Ynys Môn (Albert Owen), to whom I respond with the fondness with which he spoke himself, said that he was going to be political, but actually gave one of the most balanced and effective speeches of the debate. He talked about the role of the big six and the fact that we need them for the country’s future electricity and energy security. He and his constituents will know how important the two German companies, RWE and E.ON, are to the building of a new power station. He was right to say that this debate was not about whether we are pro-business and anti-consumer or anti-business and pro-consumer. We need those energy companies to invest in the future of energy generation in this country if prices are not to go through the roof because of insufficient supply.

My hon. Friends the Members for Suffolk Coastal (Dr Coffey) and for Warrington South (David Mowat) drew attention to the massive challenge and the £110 billion that has to be invested this decade in our future energy infrastructure if we are to keep the lights on. The existing energy companies are part of that process. There need to be others, but we cannot achieve that if we drive away the existing players.

The hon. Member for Glasgow North West (John Robertson), who spoke with his usual sincerity on a theme that is familiar to him, almost implied that we would be better off without those companies. However, if we drive them out, who will invest in the nuclear plants that he wants? It will be international companies that choose to make those investments, but if he says that they are not welcome here, the nuclear renaissance that he and I both want simply will not happen. If we reach a point where supply does not meet demand, the first thing that will happen is that prices will go up. His constituents in Scotland—as well as those of the hon. Members for Ynys Môn and for Islwyn (Chris Evans) in Wales—will be the worst affected by that, because they are the ones who use the most electricity, as they are often at home, owing to the conditions that he spoke about, in the coldest climates in our country. They are the people we must bear in mind for the longer term if we want to address the problem properly and effectively.

We have looked at the profits that the companies are making compared with their profits globally. Their profits in the United Kingdom are often a small part of their overall profitability. We need those investors to play a bigger role, just as we need more companies coming forward.

[Dr Whitehead]

rose—

[Charles Hendry]

I will give way if there is time later, but I want to respond to all the points that have been made.

At the end of a year when we have seen the worst nuclear incident for decades, the worst oil and gas incident and unrest in the middle east, where so much of our oil and gas comes from, it was inevitable that there would be upward pressure on prices. Looking ahead to next winter, the wholesale gas price is 40% more than it was last year, and gas makes up 40% of our generation, which makes a knock-on consequence inevitable. In the face of those global pressures, we should focus on how we—the Government, Parliament, industry, consumer groups and individual Members—can ensure that we support our constituents through this period.

I do not say this to make a political point, but we should recognise that there is a legacy issue that needs to be picked up as well. We need to secure investment in this decade at twice the rate of the last decade. We have to play catch-up, and the market reform process, which was put off for too long, now needs to be addressed. We have acted to prevent consumers from being affected by price increases that would otherwise have happened. The carbon capture and storage levy was going to be included in people’s bills; we have taken it off, saving them an equivalent of £1 billion over time. The previous Administration’s renewable heat incentive would have added an estimated £179 to annual bills by 2020, but we have removed it to ensure that we cut the impact on consumers, while the tough decision that we took on feed-in tariffs will save consumers £3.5 billion to 2020. The Labour party could not have been stronger in opposing that, but we believed that it was right to be on the side of consumers rather than wealthy investors. In the renewable obligation banding review, which we will publish shortly, we will show how we want to use those resources most efficiently and effectively to introduce the low-carbon economy that we want to see.

There has been criticism of the level of green charges—the hon. Member for East Antrim (Sammy Wilson) was one of the people who raised that—but it is sensible to put them in context. Some £20 of a typical gas bill of £600 relates to green or environmental charges, whereas £41 in an electricity bill of £500 relates to environmental charges—well under 10%—with a further £19 relating to energy efficiency programmes in the homes of some of the poorest in our communities, which is work that we should all support. In total, therefore, we are talking not about the figure of £200 that we read in the press—we have challenged the media to say why they have quoted that figure—but about £80 in a bill of £120, which is not the real reason why energy prices are being driven up. We have said clearly that we will look carefully at how those moneys are allocated to ensure that we deliver the best possible growth outcome in this country.

The right hon. Member for Wentworth and Dearne (John Healey) talked about standing charges and rising block tariffs, which the hon. Member for St Ives (Andrew George) also picked up. My concern is that switching the system would not just penalise people in the largest houses, but would hit the people who, because of circumstances beyond their control, are the major energy users. They are people who are older and at home more, and who need more warmth in the winter. They are people who have disabilities and perhaps cannot get out. They might be large families, perhaps on low incomes, or people who are out of work. In making the kinds of change that the right hon. Gentleman advocates, we would have to be very careful that they did not have a perverse consequence, and that the people who, through no fault of their own, have to use more energy—particularly heat—would not be adversely affected in the process. We will look at the ideas that he has put forward, but we need to be aware of the potential consequences.

We could have made progress on this matter earlier. My hon. Friend the Member for East Hampshire (Damian Hinds) called for greater transparency in energy bills. In the 2010 Energy Bill, we tabled new clause 4 on that subject, but it was voted down by the Labour Government. The kind of information that we will now require, proposals for which we are asking Ofgem to take forward, would have been addressed more effectively if that provision had been adopted. We tried even earlier, when we tabled new clause 4 to the 2008 Energy Bill. That dealt with environmental charges and clarity in bills, but it was voted down by the then Government.

We have heard many contributions on energy efficiency. That, too, is an area in which we could have made greater progress. We proposed the green deal in an amendment to the 2010 Energy Bill, but it was blocked by the Labour Government. We could have had 18 months more progress on insulation, on dealing with energy efficiency and on taking a long-term perspective on these issues, rather than trying to deal with them on a small-scale basis.

My hon. Friend the Member for Halesowen and Rowley Regis (James Morris) was absolutely right to highlight the important role that the warm home discount will play, and the help that it will provide. He was also right about the need to speed up the process on smart meters. We pushed for that in the 2010 Energy Bill, and I have been pushing for it since 2006. Only now are we in a position to try to take some of those measures further forward. In all those areas, we are making up for lost time.

[Albert Owen]

Will the Minister give way?

[Charles Hendry]

I will not give way, as I have several other points that I want to make, including some on the hon. Gentleman’s concerns about off-grid consumers. He said that he would like us to meet up and talk about the issues, and I would like him and my hon. Friends the Members for Hexham (Guy Opperman), for Truro and Falmouth (Sarah Newton), for Suffolk Coastal (Dr Coffey) and for St Ives, and others, to talk to me about how we should take this work forward. Important work has been done by the Office of Fair Trading, and we need to look at how to take that further. The issue that was raised about differential pricing and price on delivery has been addressed, and the OFT has said that it will continue to look at examples of market abuse.

I want to see what more we can do to develop the gas grid, because that would be of real benefit to the constituents of the hon. Member for Ynys Môn. I also want to see what additional powers would need to be taken, and where. The OFT’s report suggests that the market is working in almost all parts of the country, but we need to be certain, as our constituents face very high bills over the coming months, that we are doing this in the most appropriate way.

The role of shale gas was mentioned, but that issue will not affect energy pricing this winter. It is too early to know whether it will be a game-changer in the United Kingdom, but it could have a significant role to play. I would say to my hon. Friend the Member for Wycombe (Steve Baker) that it would be unwise to bet the farm on shale gas, unless his farm happened to be in north America and sitting on top of a shale gas deposit. However, we look forward to these technologies and the contributions that they can make as we will take forward a wide-ranging, all-embracing energy policy.

There has been a legacy of neglect. There has been a failure to secure the necessary investment in new energy infrastructure, and to address fuel poverty, which rose from 2.4 million to 3 million households over the course of the last Labour Government. There has been a failure to give consumers the clarity that they want, and to facilitate an effective changing regime, but that is now being put right. There has been an absolute failure to grip the challenges of energy efficiency. The hon. Member for Liverpool, Wavertree said that, for too long, those issues had not been addressed, and she was right. For too long, they were not addressed, but we have now taken forward many of the measures that the motion calls for—

[Mr Alan Campbell (Tynemouth) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question put accordingly and agreed to.

Resolved,

That this House believes that the energy market does not serve the public interest and is in need of urgent reform; notes with concern research by OFGEM showing that average household energy bills have risen, while energy companies’ profit margins have soared; recognises that, with a cold winter forecast and Government support cut, millions of families will struggle to heat their homes; believes that energy tariffs are confusing and unfair, meaning that 80 per cent. of people currently pay more for their energy than they need to, and that consumers who try to switch are often given inaccurate information; further believes that to tackle climate change, build a new low carbon economy and make the UK a world leader in green energy, which will bring new industry and jobs to the UK, people need to know that the energy market is fair; and calls on the Government to investigate mis-selling and ensure consumers are compensated, introduce a simple format to be applied across all tariffs, so that people can compare the full range of energy deals at a glance, increase transparency by requiring energy companies to publish their trading data, reform the energy market to break the dominance of the Big Six by requiring them to sell power into a pool, allowing new businesses to enter the market, increasing competition and driving down energy bills for families and businesses, and demand that energy companies use their profits to help reduce energy bills this winter.

Armed Forces Bill (Programme) (No. 3)

Wednesday 19th October 2011 Commons Chamber

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

That the following provisions shall apply to the Armed Forces Bill for the purpose of supplementing the Orders of 10 January and 14 June 2011 (Armed Forces Bill (Programme) and Armed Forces Bill (Programme) (No. 2)):

Consideration of Lords Amendments

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

Subsequent stages

2. Any further Message from the Lords may be considered forthwith without any Question being put.

3. The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Jeremy Wright.)

Question agreed to.

Armed Forces Bill

Wednesday 19th October 2011 Commons Chamber

Consideration of Lords amendments

Clause 2

Armed forces covenant report

19:00

[The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)]

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

[Mr Speaker]

With this it will be convenient to consider Lords amendments 2 to 5.

[Mr Robathan]

This group of amendments deals with the armed forces covenant report. Amendment 1 reflects the concerns in the other place about what some considered to be an unfortunate juxtaposition that would result from inserting the armed forces covenant report clause in the Armed Forces Act 2006 directly after section 359, which deals with pardons for soldiers executed during the first world war. This Lords amendment, which the Government accept, will have the effect of moving the clause to a different position in new part 16A to the Armed Forces Act 2006, and the new part will be entitled “Armed Forces Covenant Report”. So, for the future, the covenant report will have its own part within the legislation. I commend this change to the House.

Lords amendment 2 deals with inquests. It responds to the views expressed in this House and in the other place about the desirability of including the operation of inquests in the list of topics to be covered in the armed forces covenant report. It addresses an issue that is close to the heart of many right hon. and hon. Members. Our intention has always been that, when the Defence Secretary prepares the annual report, he should have regard to the whole range of subjects within the scope of the armed forces covenant, including the operation of the inquest system for bereaved service families.

We have listened very carefully to the concerns expressed in both Houses and we have decided to accept the amendment. In so doing, I wish to put on record our understanding of what the amendment envisages. The effects of service that the Defence Secretary could cover as a result of this amendment could encompass a wide range of inquests for both veterans and serving personnel. In accordance with his understanding of what the amendment envisages, the Defence Secretary will exercise the same discretion on this topic as on the other mandated topics—namely, he will consider which groups of service people and which aspects of the operation of inquests it is appropriate to cover in his report.

Quarterly ministerial statements on military inquests are already provided to Parliament; indeed, they have been since 2006. They are accompanied by detailed tables outlining progress in conducting an inquest for each fatality resulting from operations in Iraq and Afghanistan. Notwithstanding the wide range of potential issues, our expectation is that in current circumstances the annual report will focus on similar matters to those covered in the quarterly statements. Our understanding of what the amendment envisages is that it is intended to be broad, but that there are matters that should not be covered in the annual report.

Members are well aware that inquests and coroners are independent of Government. In so far as the Government provide a legislative framework for inquests, this is a matter for the Ministry of Justice, so I wish to make it clear that the Defence Secretary will not report on matters concerning the general operation of the inquest system, but only on those that affect service people.

It is clearly essential that investigations into the deaths of service personnel are treated equally in the annual report, regardless of where they are held in the UK. So, where appropriate, the Defence Secretary will under his general powers under this clause report on matters relating to the operation in Scotland of fatal accident inquiries into the deaths of service people. Inquests are a crucial part of how we support those who died in the service of their country. This amendment emphasises the debt we owe to the members of our armed forces who have given their lives and to their families. I urge the House to agree to it.

I deal now with the three Government amendments 3 to 5. These relate to the involvement of other Government Departments and the devolved Administrations in the preparation of the annual report. The fact that there are three separate amendments simply reflects the advice that the proposed new section of the Act was becoming too long and should be split up. It has no other significance.

During the Bill’s passage much attention has been paid to the relationship between the Secretary of State for Defence, who will be responsible for laying the annual report before Parliament, and the Ministers and Departments responsible for delivering many of the services discussed in that report. The annual report will of course be on behalf of the United Kingdom Government as a whole. However, the Government have responded to concerns expressed in both Houses, and the amendments introduce a framework enabling Parliament to be absolutely clear about who is contributing what to the report.

The Defence Secretary will in future be under an obligation to obtain the views of the relevant Departments on the matters covered in the report, and to seek those of the relevant devolved Administrations. That difference in emphasis reflects the different constitutional position. We are working with the devolved Administrations on the covenant, not imposing new duties on them. The Defence Secretary will be required to set out those views in full, or to obtain the Department’s agreement to any summary of their views. If the devolved Administrations have not contributed to part of the report, the report will make that clear.

I also draw the House’s attention to a number of undertakings given in another place on 4 October by my noble Friend Lord Astor of Hever on how the annual report will be prepared. In particular, the Government have made a commitment to consult the covenant reference group at an early stage on the issues that will be addressed in the report. The amendments, together with those commitments, underline our determination that the preparation of the annual report should be an inclusive and transparent process, so that Parliament can rely on its highlighting the key issue of the day. I commend them to the House.

Lords amendment 1 agreed to.

Lords amendments 2 to 5 agreed to.

After Clause 23

Commonwealth Medals

[Mr Robathan]

1 beg to move, that this House disagrees with Lords amendment 6.

The amendment inserts a new clause in the Bill which would permit members of the armed forces and Crown servants who are, or who have been, awarded Commonwealth medals to wear them without restriction. The debates in another place on the subject of medals leave no doubt about the emotions surrounding this important issue. The amendment raises questions about the process and rules for deciding on the acceptance and wearing of awards given by foreign and Commonwealth nations, about the position within that process of Her Majesty the Queen, and about recognising and supporting the Commonwealth.

The Government’s position on the fundamentals of how the system should work remains the same as that of the last Government, who, I remind the House, were in office when the issue of the Pingat Jasa Malaysia medal was considered. It has been held by every previous Government since King George VI established the current system. The Committee on the Grant of Honours, Decorations and Medals—the HD committee—was set up to advise the sovereign on all issues relating to honours, decorations and medals. It consists of senior Crown servants from the Departments most involved. Where relevant, the views of service Chiefs of Staff are fed in and reflected in the advice given to the sovereign.

The thinking behind this approach is straightforward. When British citizens, whether civilian or military, carry out their duty to the sovereign and to their country, it is for the sovereign to decide on the award of honours for that service. That allows us to be consistent in our response to all foreign or Commonwealth states. It prevents a situation in which, if other states were free to honour UK citizens as they chose, there might be suggestions of patronage or influence. It also means that the advice given to the sovereign about the grant of honours is consistent across Government and, as far as possible, dispassionate. Decisions on whether to reward service should not be made in the glare of public or political debate. I do not pretend that absolute consistency has been, or always can be, maintained. Sometimes exceptions have been, and no doubt will be, made. This amendment would lay down for the future a new rule about medals: that those awarded a Commonwealth medal shall be entitled in all circumstances to wear it. However, it would also apply that rule to Commonwealth medals awarded in the past, including the PJM medal.

I do not wish to dwell today on the issues surrounding the PJM or any other specific medal. The Government will remain engaged with the Lords, who have argued strongly that the present arrangements for the PJM are not right. I recommend that the House should disagree with amendment 6 as this is not an appropriate matter for legislation.

The amendment overturns past decisions made on Commonwealth medals. In doing so, it establishes the precedent that Parliament may overturn—after any length of time—any decision of the sovereign as the fount of honour. It takes away from the sovereign—and, indeed, from the United Kingdom—any control over the acceptance of Commonwealth medals in the future. It is drafted in terms which apply whenever a Commonwealth country chooses to honour members of the armed forces, veterans or other Crown servants, even if that was against the wishes of our armed forces or, indeed, the sovereign. More generally, it establishes a further precedent that Parliament can lay down and change the rules which are to be applied to decisions on the acceptance of honours. It does away with the safeguards I have mentioned, such as the need for a basically consistent approach to awards by all friendly and allied states. It takes us to a system where decisions on the award of past, present and future honours are made in the party political environment of parliamentary consideration, rather than through the largely non-political approach set up by King George VI. I believe this is wrong in principle.

In addition, the amendment would create a different principle for the wearing of medals awarded by Commonwealth nations from that which applies to those awarded by other allies. The operations in which our armed forces are involved are increasingly international, with British units working alongside United Nations, NATO or European Union partners. We could not readily explain to non-Commonwealth allies, and especially to the individuals they wish to reward, why we treat their awards on a fundamentally different basis from those offered by a Commonwealth nation. Making a distinction of this kind is not the way to reflect our respect for the Commonwealth.

No system is perfect. As my noble Friend Lord Astor has stated in another place, officials have been instructed to look at the process by which advice about the institution of medals and the acceptance of foreign awards for military service is put together, considered and submitted to Her Majesty, and at how decisions are promulgated. They will then consider whether any advice should be given to Her Majesty about the need to review the process and make changes. We aim to conclude this work before the end of the year.

Lord Astor also said that, in the light of the continued strength of feeling about the PJM, we would put in hand representations to the HD committee to reconsider the position. That is the right way to handle such matters. The wrong way is for Parliament to overturn Her Majesty’s decisions and to establish a precedent for Parliament to lay down new rules. In particular, we should not make a rule which removes all further involvement of Her Majesty and the United Kingdom from decisions on Commonwealth awards.

These awards should be made in a measured, dispassionate and independent manner away from the glare of public debate. I urge the House to disagree with the amendment.

[Paul Murphy (Torfaen) (Lab)]

I will not detain the House for long. The Minister said party politics should not be involved in the granting of awards and honours, particularly those from Commonwealth countries. I entirely agree, and I think he will agree that this amendment is intended not necessarily to change the law on these issues, but rather to bring attention to the situation with regard to the PJM medal. Our constituents have great difficulty understanding why these veterans, who are probably in their 60s and 70s and who have been awarded this medal by Malaysia, can receive it but cannot wear it. The approach is strange and very inconsistent. The Minister has said that there has not been complete consistency in the past on how these medals and awards are dealt with. I do not think for a second that a precedent would be broken here, because precedents have already been broken on who can and cannot wear particular medals.

19:15

It is also incongruous that the Australians, Canadians and New Zealanders who fought in Malaya in the 1960s and 1970s can wear the medals but our British veterans cannot. They fought the same battles and the same war, and they deserve the same recognition. One assumes that the Queen’s Governments in Australia, Canada, New Zealand and elsewhere advised Her Majesty that it would be possible for this particular medal to be worn. Indeed, I am informed that the last Governor-General of Australia was a recipient of the PJM medal and was allowed by his own Government, on the advice he must have given to the Queen, to wear that medal. It is incongruous, is it not, that the former Governor-General of Australia can wear the medal but somebody in my constituency who fought in Malaya in the ’60s cannot?

I am grateful that the Minister indicated that the Government would look again at the issue of the PJM medal.

[Mr Robathan]

The right hon. Gentleman is making an eloquent case for reviewing the entire system, and we are currently carrying out a medals review. I assure him that it is a genuine review, not a—[Interruption.] Not one as conducted by the Government of whom the right hon. Member for East Renfrewshire (Mr Murphy) was a member.

[Paul Murphy]

The Minister has already indicated that both Governments did not really resolve this issue. The previous Government examined it carefully. Lord Touhig, the then Member for Islwyn, raised it on a number of occasions, both by way of an Adjournment debate and elsewhere, but he got nowhere with the Government of whom I had been a member. Nevertheless, it is important that the Minister understands the huge strength of feeling on this issue up and down the country. This is not about taking away the powers of the sovereign and it is not about the prerogative; it is about dealing with the simple issue that veterans who fought in Malaya in the 1960s should be allowed to wear the medal which they have been allowed to accept.

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

I rise briefly to echo many of the remarks made by the right hon. Member for Torfaen (Paul Murphy). A significant number of my constituents cannot understand why they are not being allowed to wear the PJM medal. They are puzzled as they believe it to be a genuine medal, and it was gazetted as such in the London Gazette in the 1960s. I very much agree with the right hon. Gentleman, but I am persuaded by the Minister’s statement that he intends to examine the procedure by which these things are decided. I agree with him that the Lords amendment may not be the right way to address this problem. I am therefore persuaded to support the Government in voting against the Lords amendment, on the understanding that he will indeed carry out a genuine reconsideration of the process. By that means, he may well help my constituents who are puzzled by the law that says they cannot currently wear the PJM medal.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

I welcome the opportunity to discuss this amendment, and I am very disappointed that the Government are objecting to it. Lord Craig of Radley made a strong case for his amendment in the other place, supported by Lord Ramsbotham and Lord Touhig, arguing that our veterans and service personnel should be permitted to wear Commonwealth medals that have been awarded to them. It is very humbling to talk to service personnel and veterans about the experiences that have led to the awarding of a medal, and they should have the right to wear proudly the medals that they have earned.

I support the need for the awarding of medals to be fully considered by the cross-departmental Committee on the Grant of Honours, Decorations and Medals, but we cannot continue to have anomalies such as veterans being awarded a medal but not being given the right to wear it. This amendment therefore seeks to address the specific issue in relation to the Pingat Jasa Malaysia medal.

[Mr Robathan]

I know that—[Interruption.] Actually, I think it is quite gentlemanly. The hon. Lady cannot be held responsible for the actions of the previous Government because although she may have supported them, she was not in the House, but sitting next to her is someone who was doing my job not 18 months ago—the hon. Member for North Durham (Mr Jones). This was not a matter of any concern to him then.

[Gemma Doyle]

That is not an argument for not acting this evening. If the Minister will allow me to make a little progress, he will understand why we are supporting the amendment this evening. I have no desire to upset royal prerogative, and I respect traditions and conventions, but I did not come into Parliament to accept the status quo meekly—I stood for Parliament to challenge conventions that institutionalise unfairnesses such as this. As we have heard this evening, many Members in the House have recognised and acknowledged that unfairness in their support for holders of the PJM.

Colleagues on both sides of the House, some of whom have now moved to the other place, have campaigned on this issue for many years. I think that in the beginning they would have accepted the response that this was a matter for the HD committee, but now, after years of politely asking the committee to reconsider this matter, Parliament must stand up and take a lead. There cannot be many Members here who have not been contacted by a holder of the PJM who would dearly love to wear their medal. My constituent Moira Murray from Dumbarton, who served in the RAF and travelled to Malaysia to collect her medal, visited me during the summer to say how proud she would be to wear it. Moira is joined by thousands of other brave British veterans who served in Malaysia in the 1950s and ’60s who have been awarded the PJM by the grateful Malaysian nation, which was keen to recognise their contribution, but the HD committee decided that they should be allowed to accept it but not to wear it.

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

Will the hon. Lady give way?

[Gemma Doyle]

I will give way, but I hope this is going to be a different point to the one that has already been made.

[Dr Murrison]

I am very grateful to the hon. Lady for giving way but she really cannot get away with her synthetic outrage. During 13 years of her party’s Administration nothing ever happened on this. Will she at least give credit to this Administration for setting up a fundamental review of honours and decorations through the appropriate committee?

[Gemma Doyle]

I am not making party political points and this is not synthetic outrage—indeed, it is not outrage. I am putting forward quite a rational case for supporting the amendment that the Lords have put forward.

What kind of message does this send to our brave service people—“Go abroad for your active service, risk your life for others, sacrifice so much for your country and for the grateful people of another and be awarded a medal but not the right to wear it”? PJM holders might be able to accept this arrangement but, as my right hon. Friend the Member for Torfaen (Paul Murphy) has already indicated, the medal has been awarded to veterans from other Commonwealth countries who took part in the conflict, and they do have the right to wear it, unlike their British colleagues who served alongside them. Australian and New Zealand veterans are allowed to wear their medals, but British veterans are not. Given that they are all subject to the same sovereign, the Minister must be able to understand why this is perceived as unfair and anomalous.

I have written to the Minister on this matter previously and he referred, as he has this evening, to previous consideration and decisions by the HD committee. He also explained why medal holders in other countries can wear the PJM:

“Each Government applies its own rules and judgement to its own citizens and no country is obligated to follow another. This applies to medals as it applies to other aspects of public policy.”

In that case, I urge him not to hide behind royal prerogative but to take his own advice and take a Government decision. It would be helpful if he could clarify whether the discussions on medals are the ultimate responsibility of the Government, as he indicated in that letter, meaning that the Government could indeed press ahead with change, or whether it is an issue of royal prerogative, in which case it simply does not make sense to have different rules for the same medal for different countries of the Commonwealth as they are all subject to the same sovereign.

[Stephen Pound (Ealing North) (Lab)]

When I was awarded the Order of Merit, officer class, by the President of the Republic of Poland, I received, without any solicitation, a letter from Buckingham palace signed by Her Majesty’s representative saying that I could wear the Order of Merit, officer class, of the Republic of Poland anywhere in the United Kingdom. Does my hon. Friend agree that it seems a little unfair that former members of the Royal Green Jackets regiment in my constituency cannot wear the medals that they earned in conflict whereas I, without asking, have been given permission to wear the OM, officer class, of the Republic of Poland?

[Mr Speaker]

Order. The distinguished career history of the hon. Gentleman will be of continuing interest and indeed fascination, but I know that in responding, the hon. Lady will wish to remain in order.

[Gemma Doyle]

Indeed. My hon. Friend the Member for Ealing North (Stephen Pound) has highlighted why so many veterans feel that the decision is unfair.

The wearing of the PJM has been raised in the House in the past, both in Adjournment debates and in several early-day motions calling for reform of the HD committee system or requesting that the Government make representations to the committee to bring about change and ensure that veterans have the right to wear their medal. Signatories of the early-day motion included the familiar names of the hon. Member for Mid Worcestershire (Peter Luff), the present Under-Secretary of State for Defence, and the hon. Member for North Devon (Nick Harvey), now the Minister for the Armed Forces, who are not on the Treasury Bench at present, but frequently are when the House debates defence issues.

The hon. Member for North Devon also signed a motion specifically calling for an exemption and noting the differences with other Commonwealth nations. Given the Ministers’ previous support for PJM holders, I hope it is not too much to ask them, along with the other 51 Government Members who have signed early-day motions supporting PJM holders, to support the Lords amendment today. [Interruption.] The Secretary of State is chuntering from a sedentary position, but I advise him to listen to the argument being made today.

Concerns have been expressed about the precedent that the amendment could set, but we must remember that it seeks to address a very specific set of circumstances—that veterans be allowed to wear a Commonwealth medal that they have earned, been awarded and been permitted to accept.

Members may be aware, however, that the Government have faced similar situations in the past. The Russian convoy 40th anniversary medal was awarded to British veterans in 1985, after negotiations between the Foreign and Commonwealth Office and Russia. Like the PJM, although veterans were able to receive it, they were not allowed to wear it until 1994 when, after further negotiations and lobbying, veterans were given permission to proudly display their commendations. Ministers talk about precedent, but it seems that a precedent already exists that would permit the wearing of the PJM.

I do not suggest that we start using legislation routinely as a vehicle for decisions on medals, but in this instance it is clear that Members feel that the process is not working. My office receives frequent inquiries from people who are not constituents of mine but are entirely frustrated by the medals system and the lack of information about the review, in which the Minister places so much faith.

[Mr Gray]

rose—

[Mrs Anne Main (St Albans) (Con)]

rose—

[Gemma Doyle]

I am not giving way at the moment. I know that the Minister had to re-open the consultation on the medals review as the proper consultees were not initially involved.

[Mr Gray]

I am grateful to the hon. Lady for giving way. I am amazed that she shows no tint of political embarrassment about the blatant political opportunism of promising now to do something that her Government refused to do for 13 years. Will she not be satisfied with the fact that my right hon. Friend the Minister announced that there will be a review of the PJM, which is an important point? The Lords amendment is not about the PJM; it is about all Commonwealth medals. Surely she can understand that those of us who feel strongly about the PJM on behalf of constituents should be satisfied with the fact that the Government are prepared to review it—something that her party was never prepared to do.

[Gemma Doyle]

The hon. Gentleman is making a somewhat better case than the Minister made. As he supports the principle of the amendment, I hope he might reconsider and join us in the Lobby this evening.

In conclusion, I welcome the strengthening of the armed forces covenant in the Bill. It offers veterans, as well as service personnel and families, the protections that they deserve. Supporting the amendment would be an indication of the approach that the Government intend to take in moving forward in the spirit of the new legislation on the armed forces covenant.

19:29

[Stephen Gilbert (St Austell and Newquay) (LD)]

Before addressing Lords amendment 6, I wish to join colleagues in paying tribute to the men and women of our armed forces, wherever they serve, and expressing gratitude for their hard work, bravery and courage.

I agree with the Minister. The Liberal Democrats will be disagreeing with our friends in another place on this matter. We need a full and thorough review of all the issues associated with the awarding of Commonwealth medals. It is pernicious for the Opposition to pick one medal and try to make political capital out of it, rather than looking at the matter overall. However, I say to the Minister that this will be the second review that the coalition Government have had on the awarding of medals. It is important that this time we learn from the failure of the previous review to secure cross-party support and get it right for the long term. The terms of reference and the timeline for the last review were not made public and it failed to consult interested stakeholder groups, including the veterans to whom the medals are awarded. I ask him to give an assurance that those three concerns will be resolved in the new review.

[Mr Robathan]

We have since consulted specifically on each issue and await the approval, or otherwise, of the medals review, but I am afraid that it has not yet been approved.

[Stephen Gilbert]

I thank the Minister for his intervention.

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

I must remind the hon. Gentleman that his party backed this campaign when in opposition. It also campaigned very strongly for the national defence medal, including some very nasty leaflets from a Liberal Democrat candidate directed against the hon. Member for New Forest East (Dr Lewis).

[Stephen Gilbert]

The hon. Gentleman is entirely right. The Liberal Democrats support the national defence medal and a thorough review that will deliver consistency for the awarding of all medals for members of our armed forces. It is absolutely right that for people joining our armed forces it is as much a calling for them as it is a job. It is right that we give them the recognition they deserve for their bravery in standing up for our freedoms. It is absolute hypocrisy for a former Minister sitting on the Opposition Front Bench, who was chuntering under his breath and saying that the reason they changed their view—

[Mr Speaker]

Order. I say to the hon. Gentleman that no allegation of hypocrisy against an individual hon. or right hon. Member should be made. I feel sure that he is not imputing such motives, but if he is perhaps he would withdraw his remark.

[Stephen Gilbert]

If that is what the record shows, Mr. Speaker, I of course withdraw the remark.

There is a level of disingenuity, shall we say, in a party that had 13 years to act on this issue but failed to do so now seeking to make political capital from it. It is important that we get this right for all the men and women who serve in our armed forces and that we do so in a considered way. That is why we disagree with the Lords tonight.

[Mr Speaker]

Order. I do not know whether the Minister is seeking to respond to the debate. No? He is not obliged to, as the Government have set out their position.

Question put, That this House disagrees with Lords amendment 6.

19:33

Division 370

Ayes: 263

---

Conservative: 225
Liberal Democrat: 36

Noes: 216

---

Labour: 202
Democratic Unionist Party: 4
Conservative: 3
Scottish National Party: 3
Plaid Cymru: 1
Alliance: 1
Independent: 1

Lords amendment 6 disagreed to.

Ordered, That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendment 6;

That Mr Andrew Robathan, Mr Mark Francois, Gemma Doyle, Mr David Hamilton and Stephen Gilbert be Members of the Committee;

That Mr Andrew Robathan be the Chair of the Committee;

That three be the quorum of the Committee.

That the Committee do withdraw immediately.—(James Duddridge.)

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

[Mr Peter Bone (Wellingborough) (Con)]

On a point of order, Mr Deputy Speaker. The media are reporting that the House business for next week has been changed, and that the Backbench Business Committee debate on a European Union referendum Bill is now to be not on Thursday but on Monday. First there is the issue of the media being told first, rather than the House, but secondly, that is Back-Bench business time. Although the Government can allocate that time, they cannot dictate to the Backbench Business Committee what business is done on what particular day. This seems to be a breach of the orders of the House, and I wonder whether you have had any indication that a statement will be made to explain the situation.

[Mr Philip Hollobone (Kettering) (Con)]

Further to that point of order, Mr Deputy Speaker. Have you been informed by Her Majesty’s Government that, if the business for Monday is to be changed, the designation of the European Union business will change from Back-Bench business to business of Her Majesty’s Government?

You will well remember, Mr Deputy Speaker, that last week Her Majesty’s Government went to great lengths to protect the Hillsborough debate, which was scheduled as a result of an e-petition. The debate on an EU referendum is also in response to a public petition, but the Government’s response seems to be at odds with their previous behaviour.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I find that there is always speculation about Government business, but as the House knows, there is to be a business statement as usual tomorrow, at which the Government will set out the business for next week. That is solely a matter for the Government and not one for the Chair.

Business without Debate

Wednesday 19th October 2011 Commons Chamber

delegated legislation

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

Freedom of Information

That the draft Freedom of Information (Designation as Public Authorities) Order 2011, which was laid before this House on 5 September, be approved.—(James Duddridge.)

Question agreed to.

Northern Ireland Grand Committee

Ordered,

That the Order of the House of 6 September 2011 relating to the Northern Ireland Grand Committee be amended, in paragraph (1), by leaving out the words “re-balancing the economy in Northern Ireland” and inserting the words “applying the principles of the Big Society Agenda to Northern Ireland”. —(James Duddridge.)

petitions

Wednesday 19th October 2011 Commons Chamber

19:52

[Mr Mark Williams (Ceredigion) (LD)]

It gives me pleasure to present a petition on the issue of the illegal detention without charge of many in the Palestinian community, notwithstanding the Egyptian-brokered deal that has seen the welcome release of the Israeli soldier Gilad Shalit and good progress on the release of Palestinian detainees. The petition is from Elizabeth Morley and the Free Palestine group in my constituency.

The petition states:

The Petition of the people of Ceredigion,

Declares that the Petitioners are appalled by Israel’s continued illegal detention without charge of thousands of Palestinians, including hundreds of children, women and sick people, held in inhumane conditions, in violation of their basic human rights.

The Petitioners therefore request that the House of Commons urges the Government to take every possible measure to ensure that Israel complies with all its international legal obligations in this regard, particularly the Fourth Geneva convention.

And the Petitioners remain, etc.

[P000966]

19:53

[Sir John Stanley (Tonbridge and Malling) (Con)]

I am very glad to see my right hon. Friend the Member for Tunbridge Wells (Greg Clark) in his place. I know that were it not for the constraints on him as a Minister, he would be joining in the presentation of this petition with his customary enthusiasm and determination.

The petition states:

The Petition of residents of West Kent and East Sussex,

Declares that the Petitioners note the campaign by the Kent and Sussex Courier on Southeastern rail fares and that the Petitioners believe that local rail travellers have been unfairly targeted by double figure fare increases, above the average across the network.

The Petitioners therefore request that the House of Commons urges the Government to review its policy on the setting of rail fares.

And the Petitioners remain, etc.

[P000967]

For the thousands of rail travellers in west Kent and on the three lines to London through my constituency—the Borough Green and West Malling line, the Tonbridge line and the Edenbridge line—the extortionate increase in rail fares that they face is a matter of huge importance. I am glad of the opportunity to present this petition.

19:55

[Michael Fallon (Sevenoaks) (Con)]

I, too, present a petition that is also strongly supported by my right hon. Friend the Member for Tunbridge Wells (Greg Clark) on behalf of the residents of west Kent and East Sussex, who are calling one last time for Southeastern rail not to increase rail fares so far above the rate of inflation. The petition is supported by more than 2,000 people and I hope that even now Southeastern will think again.

The petition states:

The Petition of residents of West Kent and East Sussex,

Declares that the Petitioners note the campaign by the Kent and Sussex Courier on Southeastern rail fares and that the Petitioners believe that local rail travellers have been unfairly targeted by double figure fare increases, above the average across the network.

The Petitioners therefore request that the House of Commons urges the Government to review its policy on the setting of rail fares.

And the Petitioners remain, etc.

[P000968]

Car Insurance (Northern Ireland)

Wednesday 19th October 2011 Commons Chamber

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

19:55

[Ms Margaret Ritchie (South Down) (SDLP)]

I am pleased to have secured this debate on an issue that severely impacts on my constituents and others across Northern Ireland. I welcome the fact that the Financial Secretary to the Treasury is here to respond to the debate.

There are considerable problems in the motor insurance market at present, especially in Northern Ireland, where drivers are subject to excessively high insurance costs that are rising rapidly year on year. The problems are not unique to Northern Ireland, but they are particularly striking in our case. We have also found in our research that consumers in Northern Ireland have less choice of insurance providers, with three times fewer companies offering car insurance.

I also welcome the introduction of the Motor Insurance Regulation Bill, promoted by my right hon. Friend the Member for Blackburn (Mr Straw). My right hon. Friend, quite rightly, shone a light on troublesome referral practices and the Bill promises to make much-needed changes to the regulation of the insurance market in England and Wales. Although referrals operate in a different manner in Northern Ireland, the purpose of my speech this evening is to cast light and call for action on many of the issues that plague the operation of the car insurance industry in Northern Ireland. These issues are not entirely commensurate with those raised by my right hon. Friend in relation to England, but must be dealt with in the same direct and purposeful manner. I call on the Minister, where possible, to ensure that that is the case and to use his good influence to press the Northern Ireland Executive to act on the issue.

In August the Consumer Council for Northern Ireland launched a campaign to highlight the cost of car insurance, which I fully support. The Minister will no doubt be aware that the Office of Fair Trading subsequently agreed to undertake an investigation into the car insurance market with a specific focus on Northern Ireland. We must robustly establish why premiums have increased by a reported 40% in the 12 months to March 2011, and why insurance costs are significantly higher in Northern Ireland than in other regions. Indeed, we need not only to assess that, but to redress it. The findings must be robust and the resulting measures must have teeth.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on introducing this debate on an issue that is very important to us all in Northern Ireland. The concern about the insurance premiums is clear, and one reason for those insurance premiums, and the difference in price between Northern Ireland and the UK mainland, is the Compensation Act 2006. Is the hon. Lady aware that in the past year the number of claims notified to the compensation recovery unit in Northern Ireland fell by 23%, whereas in England and Wales it rose by 17%? Is she also aware that last year some 30,000 claims for compensation were made, but that in the past year only 768 were made and their value in the county court is less than £5,000—far below the equivalent figure in England and Wales? Does she feel that, for those reasons alone, insurance premiums in Northern Ireland should be reduced? It is quite obvious that the drivers and vehicle users in Northern Ireland are being disadvantaged financially.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. That intervention was a tad long, Mr Shannon.

[Ms Ritchie]

Thank you, Mr Deputy Speaker. I thank the hon. Gentleman for his rather long intervention. I none the less agree with him, and I will come to that point later in my speech.

The extent of the problem is stark. The Consumer Council report, “The Cost of Insurance in Northern Ireland”, published in March 2009, indicated that consumers in Northern Ireland were paying 84% more on average than those in the rest of the UK. Furthermore, five Northern Irish cities ranked among the top 10 most expensive areas in the UK. Relatively expensive car insurance premiums prevail throughout Northern Ireland.

[Naomi Long (Belfast East) (Alliance)]

I thank the hon. Lady for giving way, and I appreciate the fact that she has brought this matter to the Floor of the House. Does she agree that the OFT investigation is crucial, because although the Consumer Council report is useful in highlighting particular issues, it is flawed in a number of respects? For example, it compared median rather than best available prices in the UK. It also compared only products available on comparison websites, which is restrictive when we consider the wider available market.

[Ms Ritchie]

I thank the hon. Lady for her intervention. Like her, I believe that the OFT report is vital in making critical recommendations that I hope will result in the lowering of insurance premiums. I hope that the report has the teeth to deal with this difficult and vexatious issue.

According to evidence, car insurance premiums in Northern Ireland have increased by almost 73% in the past two years. The situation is even worse for younger drivers, whose premiums, according to research, have increased by 112%. Young people face severe difficulties in entering the job market, and the prohibitively high cost of motor insurance is yet another barrier to their finding work.

The average yearly car insurance premium in Northern Ireland is now £923.90, compared with the national average of £525. I am concerned that that, with the increasing cost of fuel, will force some people off the road altogether, or that it will lead to an increase in motorists driving illegally without insurance. I am sure the Minister agrees that we must ensure that that does not happen.

Those problems are compounded by the restricted range of companies offering premiums in Northern Ireland, which limits competition and drives up prices. I urge the Minister to address, and where possible to remove, any barriers to companies that wish to enter the market in Northern Ireland.

Two fundamental arguments are put forward to justify the high costs of motor insurance in Northern Ireland. The first argument is that Northern Ireland is a case apart, because its demographics and road layouts bring an increased risk of incidents on our roads, and the second is that the Northern Ireland legal system places a higher burden on insurers.

To begin with, the evidence that Northern Ireland has a very young population is greatly exaggerated. Indeed, we have a proportion of young people similar to that found in English regions such as London. Likewise, a lack of motorway coverage has been cited as a reason for increased premiums, because statistically those are the safest road type. However, maps show that Northern Ireland has a relatively consistent motorway density compared with regions in the UK and Europe. Moreover, some of the fundamental actuarial evidence regarding the number of accidents, claims and casualties on our highways weighs against any of the debatable factors regarding demographics or road layout.

Those facts must be kept at the forefront of our mind when considering the claimed justification for the increased cost of premiums. They are rising at a time when Northern Ireland is experiencing a decline in the number of road traffic accidents: 2010—the most recent year on record—saw the lowest number of road deaths since records began in 1931. Naturally, every death on our roads is a tragedy, but we must commend the work done to improve safety.

There are some basic facts that are hard to reconcile with rising insurance costs. The number of road traffic accidents reported to the police service has dropped over the past decade from nearly 40,000 per year in 2000 to about 30,000 per year in 2009. The number of compensation claims is decreasing, whereas in England and Wales the numbers are rising. More specifically, according to a National Audit Office report published at the beginning of the year, the number of claims reported to the compensation recovery unit fell by 23% in the decade up to 2009. In short, the trend is clear: although accidents and claims are decreasing, the cost of insurance is increasing. I ask the Minister to give detailed consideration to that fundamental point.

[Naomi Long]

I am grateful to the hon. Lady for giving way a second time. Does she accept that one of the factors cited was the higher compensation paid out in Northern Ireland, which was attributed largely to the fact that juries have been involved in such decisions for much longer than in England and Wales? Critically, however, compensation levels did not increase but insurance premiums did, so it cannot be argued that that was what led to increased premiums.

[Ms Ritchie]

I thank the hon. Lady for her useful intervention.

All those facts weigh heavily against any argument that the specific demographic or topographical factors in Northern Ireland justify the increasing costs of insurance, and are extremely difficult to relate to the draconian rise in the cost of insurance premiums.

It has also been suggested, by the Association of British Insurers and others, that the legal system in Northern Ireland imposes increased costs on insurers. However, when compared with what happens in England and Wales, many of the factors in Northern Ireland would be expected to act in the opposite direction. My right hon. Friend the Member for Blackburn rightly highlighted the impact of referral fees on insurance premiums in England. It must be noted that a statutory prohibition is in force against solicitors paying referral fees in Northern Ireland. Given that the payment of referral fees to claims management companies has frequently been cited as a significant contributory factor to increasing premiums in England, its absence would be expected to drive down the costs of insurance in Northern Ireland. However, that does not appear to be the case.

I am certainly not claiming that the system in operation is perfect. Indeed, although referral fees are prohibited for solicitors, other agents, such as brokers, credit hire companies and repair garages, may receive them. Although credit hire companies offer a useful service for non-blame drivers, they also raise the cost for insurers, and we must have firm regulations to remove the potential for the exploitation of accidents or those involved in collisions. The claims advice service is an important step in doing that, and should be commended. Another factor cited as a reason for increasing insurance prices in England is the practice of “no win, no fee”. Such a regime does not operate in Northern Ireland. Indeed, the fact that any claimant would have to invest their own money, or else find a solicitor willing to fund the costs, is a powerful disincentive against speculative claimants.

[Jim Shannon]

I shall be very quick with this intervention, Mr Deputy Speaker. Does the hon. Lady think that specific consideration needs to be given to social need and the fact that Northern Ireland is clearly, as we all know, a rural community? There are special circumstances in Northern Ireland. Does she think that those should be considered as well?

[Ms Ritchie]

I take on board what the hon. Member for Strangford (Jim Shannon)—my neighbouring constituency—has said. Like him, I represent a rural constituency and am well aware of issues such as a lack of jobs, inaccessibility, and the economic burden on people. All those can place increasing burdens on people at a time when insurance premiums are increasing.

All that, taken together with the absence of referral fees for solicitors, suggests that Northern Ireland offers a legal system that should act to keep costs down and be at least as effective as the system in England and Wales, if not more so. I would like the Minister to note my concern that that is certainly not reflected in the cost of insurance. I accept that the cost of claims for minor injuries in Northern Ireland can be higher than in England and Wales, partially as a result of there being no recourse to the small claims court for such cases, but opening up the small claims court to such cases is not necessarily the remedy, as that will bring its own risks and problems. However, more needs to be done to ensure that spurious and over-inflated claims do not clog up the system and raise costs for honest motorists. We must increase the burden of medical evidence that is required before establishing cases of whiplash or other, similar injuries, not to penalise the vulnerable—those with genuine, medically verifiable injuries would in no way be affected—but to ensure that the police and medical authorities work together so that claims are paid only in cases involving genuine accidents and genuine injuries.

I have dealt at length with the figures and the legal issues, but behind the wealth of statistics are the everyday problems that the high cost of insurance represents. Those living on low incomes or in rural areas can simply no longer afford to keep a car on the road. Many young motorists and their parents in my constituency have told me of their struggles to secure affordable insurance. They are understandably concerned about the discrepancy in insurance prices between Northern Ireland and other regions in Britain. Through having to pay excessive insurance fees, households in Northern Ireland are being discriminated against. That unfair practice has been in place for too long, adversely affecting those, young and old, who depend on their cars for work, particularly in areas where public transport provision is limited.

The broader context is that the economy is suffering, with record numbers of young people out of work, and that is only exacerbated by restricting people’s use of motor vehicles. We need a dynamic, mobile work force, but making the cost of car insurance so expensive puts up a barrier to our economic success, especially for the young, among whom the unemployment rate is estimated at 18%—almost one in five cannot find a job—compared with an overall unemployment rate in Northern Ireland of 7.6%. Excessive insurance premiums adversely affect young people, preventing them from offering the skill of driving to potential employers. In these extremely challenging economic times, I would ask the Minister to consider any measures that would make insurance more affordable for young people, particularly when driving relates to their employment.

Insurance costs have a real impact on people, young and old, who need to be mobile for social and economic reasons. I hope that I have made clear the scale of the problem faced by our motorists. The insurance industry must stabilise its premiums so that hard-pressed motorists get a fair deal when they purchase their vehicle insurance. I seek assurances from the Minister that he recognises the problem and will act in unison with ministerial colleagues in the Northern Ireland Executive to address the problem in the light of any recommendations from the upcoming Office of Fair Trading report.

Day in, day out, my Northern Ireland colleagues and I face constituents who come to us about the rising cost of car insurance. I heard it again today when I participated in a BBC Northern Ireland debate. There were numerous calls from young people, as well as middle-aged to elderly people, all complaining about the lack of competition and the lack of insurance companies offering different insurance rates. However, the most abiding comments that I heard were about how people wanted insurance costs driven down so that they could drive their cars and access the employment market.

I thank you for your indulgence, Mr Deputy Speaker, and look forward to the Minister’s response.

20:14

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

I congratulate the hon. Member for South Down (Ms Ritchie) on securing the debate. The increased cost of motor insurance has been one of the recurring themes in my postbag since I became a Minister, and those communications have gathered momentum in recent months. The matter affects all parts of the country. It also affects all age groups, but particularly young drivers. At a time when people feel that their cost of living is under pressure, it is important to ensure that the motor insurance market works in such a way as to help consumers and that it tries, whenever possible, to keep the cost of insurance as low as possible.

According to calculations from the Association of British Insurers, motor insurance premiums in 2010 amounted to £10.7 billion, and claims amounted to £10.3 billion. When the other costs of the motor insurance business were taken into account, however, that translated to an underwriting loss of £1.8 billion. The cost of motor insurance to the insurance companies themselves, therefore, is quite significant, and it is loss making. There are clearly some real challenges involved, and we need to think carefully about how we can bring down the costs for insurers, so that that can feed through to the costs for drivers. That is what we are trying to focus on.

The Government firmly believe that businesses and consumers get the best outcomes from financial services if markets are competitive and properly regulated. At the same time, disproportionate or overbearing regulation imposes costs on firms that are passed on to users, either through higher charges and lower returns or through a reduction in choice and competition. Our challenge is to strike the right balance.

It is clear that, on average, motorists faced significant increases in their premiums in the year ending 31 March 2011. That is adding substantially to the costs of motoring in the UK. The hon. Lady was right to say that we need to establish the full facts and the reasons behind any increase, and to ascertain whether there are any consumer or competition issues that need to be addressed in order to improve the functioning of the market.

The Office of Fair Trading therefore issued a call for evidence in September. The OFT is asking insurers and others for their views on a number of aspects of the private motor insurance market that might raise competition or consumer issues. This is an important piece of work; it will improve the OFT’s understanding of the market and put it in a better position to determine whether there are aspects of the market that are not functioning well and how best to address the issues.

The OFT has been actively engaging with participants in the insurance market, trade bodies, the Government, regulatory agencies and consumer groups by issuing information requests. The research that the Consumer Council for Northern Ireland has done will be helpful in informing that process, and it is to its credit that it has carried out that work. I would encourage people to think about any evidence that they can provide. The deadline for written responses to the OFT’s call for evidence closed last week, but it is still open to contributions, and I am sure that it would welcome ongoing input and views. It plans to publish its findings in December this year, and will consider next steps in the light of evidence that it receives.

The hon. Lady focused on the cost of motor insurance in Northern Ireland, and talked about some of the factors that affect it. A research paper on the same issue has been prepared for the Northern Ireland Assembly. It strikes a slightly different note from that of the hon. Lady. It states that

“the relatively high rate of accidents and related casualties in Northern Ireland, combined with higher compensation levels and legal fees suggests that insurers do, in fact, face considerably higher costs when transacting car insurance in Northern Ireland.”

The paper goes on to say that

“the higher car insurance premium rates paid by Northern Ireland drivers might be reflective of higher risks and costs associated with transacting car insurance business here, rather than a discriminatory pricing regime.”

It is interesting to note that, having looked at the cost of motor insurance, the research paper goes on to look at the cost of house insurance, and to compare Northern Ireland with the rest of the United Kingdom. There is clearly a debate to be had about the costs, and the evidence provided by the Consumer Council contrasts with that in the research paper produced by the Assembly. That is why I think it is important for the OFT to look at those particular areas and to understand the reasons why premiums in Northern Ireland might be higher than those in the rest of the UK.

Underpinning the pricing of insurers is the use of risk-based premiums. Insurers take a number of different factors into account when deciding the level of premiums and those factors correlate with the risk being covered. For example, some insurers group postal code areas in order to ensure that all those in a similar risk area are covered in a similar way, but the level of data used in underwriting is a commercial decision for firms, which the Government do not seek to control.

While a postcode does not itself determine whether or not a person will make a claim, it can be an accurate indicator of the likelihood. It is often used in cases where there are hotspots for crash fraud. The three worst hotspots are not in Northern Ireland, but where fraud is used to trigger claims, driving up costs for insurers, those costs are, sadly, borne by all those who drive.

There are other issues. For example, the Government were very disappointed with the recent European Court of Justice ruling that the use of gender as a risk factor by insurers should not result in individual differences in premiums and benefits for men and women. We expect this to have a negative impact on consumers and lead to price rises for motor insurance for young women drivers who are seen to be a safer risk than young male drivers.

What we need to do is to tackle some of the underlying causes of costs for insurers. The hon. Lady was eloquent in identifying some of the reductions in road traffic accidents. She is right to point out that it is incongruous to see road traffic accidents falling in number when motor insurance claims are rising. There is an issue there, and we need to get to the bottom of it.

We are committed to the implementation of the Jackson proposals, including the reform of conditional fee arrangements and a ban on referral fees, which we believe will reduce the risk of frivolous claims. Clearly, as justice is a devolved matter, different arrangements are in place as between the mainland and Northern Ireland. The hon. Lady is right that we need to work with our colleagues in the Northern Ireland Executive to look at where there are differences in the legal regime that could be dealt with to help reduce the cost of claims.

We are looking at introducing a statutory ban on referral fees for England and Wales. Since 2004, when the Law Society lifted the ban for solicitors in England and Wales paying referral fees, people have been encouraged to make claims. That has led to personal injury claims rising at a time when the number of collisions and casualties on the road is falling, yet the number and overall cost of bodily injury claims has steadily increased. The hon. Lady spoke about whiplash claims earlier. It is estimated that they cost insurers about £2 billion each year—a cost borne, of course, by those who pay their motor insurance premiums.

As I have said, we are trying to tackle the issue of the payment of fees in England and Wales, but the prohibition remains in place in Northern Ireland. The hon. Lady mentioned that other people might also pay referral fees. The Assembly and the Executive need to think carefully about how to strengthen the current ban on referral fees in legislation. The hon. Lady should take that up with her colleagues.

Other issues drive up the costs of insurance. The hon. Lady talked about the number of young people who want to drive to work or to college to study. What is happening is that they are in part being priced out of the market, but uninsured driving adds about £30 to each insurance premium. We want to ensure that young people take out the insurance cover that they need to enable them to get to college, while tackling the number of young people who are not taking out insurance cover as a means of driving down the cost of insurance.

In conclusion, the hon. Lady has raised an important point. It is a complex issue, as her speech set out. We want to work with the OFT and with the Assembly and Executive to find ways to reduce the cost of motor insurance in Northern Ireland as well as throughout the UK. The OFT report is an important part of that. We want to work with stakeholders so that we get the right outcome to drive those costs down so that people can use their cars for leisure, education and work without paying through the nose for that privilege.

Question put and agreed to.

20:24

House adjourned.

Deferred Division

Wednesday 19th October 2011 Commons Chamber

Adjournment of the house (november 2011, christmas and february 2012)

Division 369

Ayes: 306

---

Conservative: 237
Liberal Democrat: 33
Labour: 29
Plaid Cymru: 2
Independent: 2
Alliance: 1
Social Democratic & Labour Party: 1

Noes: 95

---

Labour: 72
Democratic Unionist Party: 8
Conservative: 7
Scottish National Party: 6
Social Democratic & Labour Party: 1
Green Party: 1
Liberal Democrat: 1

Westminster Hall

Wednesday 19th October 2011 Westminster Hall

Wednesday 19 October 2011

[Albert Owen in the Chair]

Arch Cru Compensation Scheme

Wednesday 19th October 2011 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Dunne.)

09:30

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship again, Mr Owen, in what is an important debate. Since it was announced last week, a number of hon. Members have spoken to me about the issue, and I am far from alone in having received e-mails, correspondence and surgery visits from people who have been affected by the collapse of the Arch Cru investment fund. I am pleased that the Minister is present to respond to the debate. I know from previous debates that he has a reputation for seeking to answer questions as fully as possible, and I hope that he will continue to do so today. In recognition of his reputation in that regard, and given the high number of Members present who wish to speak or intervene, I will keep my remarks as brief as I can to give the Minister the maximum time possible to respond. I also wish to recognise the efforts made by the hon. Member for Vale of Glamorgan (Alun Cairns) who is present for the debate. He has been trying valiantly for some time to secure a parliamentary debate on Arch Cru, but it was my fortune that my name happened to be picked. I know that he will contribute to the debate in due course.

Many hon. Members are familiar with aspects of the background that led to the collapse of Arch Cru, but some salient points bear repetition. Arch Cru was established in 2006 to provide low-risk, cautiously managed funds that were sold through independent financial advisers and, like all investment funds in the UK, were regulated by the Financial Services Authority. The authorised corporate director was Capita Financial Managers Ltd, part of the listed Capita group. The two depositories of the funds were Bank of New York Mellon and HSBC. Having spoken to a number of investors and financial advisers over recent weeks, I am in no doubt that the association of those names with the fund lent credibility and provided a degree of comfort for many investors. Approximately 20,000 people invested in Arch Cru, many of whom were small investors who invested retirement savings or lump sum pension payments into the fund, following advice from financial advisers. Those to whom I have spoken invested on the basis that since it involved their retirement pots, funds needed to be cautiously invested. That was the attraction and the reason for their investment.

The fund was suspended in March 2009 by the FSA following a warning that it was insolvent. At that time it was worth a total of £363.6 million but since then—unsurprisingly—the value has fallen and at the most recent evaluation in March 2011, the fund was valued at £148.8 million. Estimates vary but between 4,000 and 10,000 people suffered losses following the collapse of that fund. Many of those people never expected to be in such a position because they were attracted to the low-risk, cautiously managed fund in which they invested. This is not a tale of a get-rich-quick scheme gone wrong, or of a high-risk, high-return investment vehicle. It is a story of thousands of people who were advised to invest savings for their retirement precisely because the fund was categorised as cautiously managed. As we now know, the reality was somewhat different. Far from being cautiously managed, funds were invested via Guernsey cells in what some would argue was a high-risk and cavalier manner. Investments included property in Dubai, Greek shipping and ferries.

My constituents—and, I am sure, those of other Members—have questions that fall within four key areas. First is the role of Capita Financial Managers which, as I have stated, was the authorised corporate director with responsibility for providing assurance that the fund was operating correctly. It sold its services as a hosting solution. I have some of its marketing material with me that states:

“For investment managers looking to manage current assets with authorised fund structures there exists an alternative to establishing your own unit, trust manager or authorised corporate director…Capita offers a ‘hosting’ solution which enables investment managers to focus on investment activities. In this arrangement Capita Financial group becomes the authorised entity by the Financial Services Authority and thereby undertakes the management company function on your behalf, delivering comprehensive administrative and investment servicing and support to your funds.”

That is how Capita sold its services. It is an outsourcing group.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on securing this debate. The research papers we have received state that investors were

“sucked into the funds by some of the slickest marketing ever put together in financial services. Marketing so good, in fact, that it bamboozled many good independent financial advisers”.

People will lose 30% or 40% of their money. Does the hon. Gentleman agree that that is unacceptable and that it was a sham from start to finish?

[Tom Greatrex]

I agree wholeheartedly with the hon. Gentleman and I will go on to develop the point about marketing to independent financial advisers.

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

A number of my constituents have written to me voicing their concern about this issue. Does my hon. Friend think that there should be an urgent inquiry into the matter? On the basis of what he has just said, the situation is more serious than a lot of people realised.

[Tom Greatrex]

I agree with my hon. Friend and I will make some of those points later in my remarks. We are only at the beginning of uncovering what went on, and the situation is worrying for many other funds. There are also questions for regulators that I will go on to address.

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

I congratulate my hon. Friend on the way he presents the subject under discussion and on securing the debate. The fact that MPs from all four nations of the UK and five political parties are present indicates how widespread the problem is throughout the country. We clearly need an inquiry and to find out what has been going on. We do not want a repeat of the Equitable Life saga when it took 10 or 15 years before people got sight of any money. We need an inquiry, but we also need action by regulators and the Government to try and help people who, as my hon. Friend pointed out, in many cases made what they believed to be a low-risk investment for their later years. They will not be able to wait 10 or 15 years.

[Tom Greatrex]

I agree with my hon. Friend. It is important that people get their money and that they get it in the right way. I will make that point later in my contribution. Capita is an outsourcing group. The structure works so that Capita assumes a legal responsibility for the assets and subcontracts management back to the fund house. It is effectively an outsourcing operation.

While preparing for this debate I had the opportunity to speak to some individuals who used to work for Capita. What they told me shocked and appalled me. I was told that there was relatively little oversight over funds in Capita Financial Managers, and that there was a small team of people, a high staff turnover, and lots of relatively young and inexperienced staff who worked for over 300 funds at the same time. One individual who previously worked for Capita told me that Capita was

“not the best managed firm and the compliance culture left a lot to be desired. Capita is not particularly well respected in the industry and it is no surprise to me that they found themselves in trouble.”

Those remarks contrast greatly with the way that many people viewed Capita on the basis of their investments. Capita is a household name that for many people has a degree of respectability. People made their investment decisions partly because Capita’s name was attached to that investment.

[Bob Stewart (Beckenham) (Con)]

Capita is also international. How much power might we have over Capita if it spreads to New York and other places?

[Tom Greatrex]

The hon. Gentleman is right to say that Capita group is involved in a range of businesses across the world. Capita Financial Managers, however, was regulated by the FSA and was supposedly in a position to provide assurance in this case. That is where questions need to be asked.

[Sammy Wilson (East Antrim) (DUP)]

The hon. Gentleman makes the important point that whatever management inadequacies there may have been in Capita, it was regulated by the FSA. It oversaw what was supposed to be a prudently managed fund. Money was being put into totally illiquid assets and very dodgy assets, yet that was never identified. Was there not a regulatory failure in that regard?

[Tom Greatrex]

The hon. Gentleman makes an important point. I want to come on to the role of the FSA as the regulator and I particularly want the Minister to respond on the potential role of the Financial Conduct Authority in the future as the FSA is wound up.

[Mr Iain McKenzie (Inverclyde) (Lab)]

Does my hon. Friend agree that Capita needs to step up to its responsibilities? What it is offering in compensation is derogatory to the people who have lost their life savings. It needs to step up to its responsibilities and offer 100% compensation.

[Tom Greatrex]

My hon. Friend makes a very important point. I want to come on to the inadequacy of the payment deal—it is not a compensation deal—on the table at present, because there are serious questions to ask about that as well.

If what I have set out was Capita’s reputation among some in the industry, it is perhaps not surprising that Capita appears not to have known about the activity of the sub-funds investing in the very high-risk activity via the Guernsey cells; that Capita appears not to have been aware of the illiquidity in the fund by 2008; and that Capita appears not to have provided a proper sign-off for the accounts. I say “appear” because we do not know for certain the detail of the failings, because the FSA, in correspondence that it has copied to Members of Parliament, says that it is unable to provide details of its investigations.

Suffice it to say that those independent financial advisers who trusted the Capita brand worked on the basis of the CF Arch Cru marketing material, which Capita would have had responsibility for signing off and copies of which I have with me. It includes material headed “Going Well” from November 2008, by which time the FSA had, we know, started looking into Arch Cru. There is also a weekly update from 9 March 2009—four days before suspension of the fund. In approving tones, it boasts of cumulative decline year to year of 2.6% compared with double digit falls in most major traditional public asset houses. It says that all its UK funds retain a top five rank in their category. Those statements were issued to financial advisers just four days before the fund was suspended.

In addition to that type of material, the chief executive of Capita Finance Managers, Chris Addenbrooke, in Investment Adviser in September 2008, said:

“We’ve got the credibility to take on the ACD”—

authorised corporate director—

“role. Our clients see that as attractive.”

Given that material and comments such as that, there is no doubt that people thought that they were investing in something that was very different from what it turned out to be. It is apparent that at the very least there were serious shortcomings in the role of Capita as the ACD.

Secondly, there is the role of the FSA. Earlier this week, I spent some time with representatives of the FSA, discussing Arch Cru, and I am grateful for their time and their engagement in seeking to answer some of my questions, but serious questions remain for the FSA to answer. It was statutorily responsible for regulating Capita Financial Managers. Why did it not know or not appear to know what was happening with Arch Cru? I also spoke to people who had previously worked for the FSA. They said that the ARROW—advanced, risk-responsive operating framework—visit was not until late 2008 and that was not atypical given the risk matrix, which would have meant that the likely ARROW visits would have taken place only every 18 months approximately. I understand and accept that this matter can be complex.

[Anne Marie Morris (Newton Abbot) (Con)]

Is the hon. Gentleman making the point that this is not simply a matter of what the FSA did and whether it did it appropriately, inappropriately, negligently or otherwise, and that there was something fundamentally wrong with the processes of the regulatory regime that was operating at the time?

[Tom Greatrex]

I thank the hon. Lady for her intervention. There are two points: a point about what the FSA did in relation to Arch Cru, and a further point about the regulatory regime. As I said, with the FCA about to be set up, there is an important issue for the Government to deal with in that regard as well.

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate my hon. Friend on obtaining the debate and on the forensic and effective way in which he is presenting a very important case, which affects my constituents as it does others. Does it not pass all understanding how the FSA could have said on 21 June in its statement that it “considers that this package”—the £54 million package—

“is a fair and reasonable outcome, which is in the best interests of investors”

when it is not fair, not reasonable and clearly not in the best interests of investors?

[Tom Greatrex]

I agree wholeheartedly with my right hon. Friend. I hope to make a couple of remarks about that package in a few moments.

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

May I return to the point that was made a moment ago? Does it not appear that the structure set up for Arch Cru was designed to ensure that the FSA did not notice what was going on, although the setting up of the structure should have been noticed by the FSA and picked up at an earlier stage?

[Tom Greatrex]

I thank the right hon. Gentleman for his intervention. When I spent some time with representatives of the FSA, they showed me a diagram of the structure of the fund and it was amazing to see quite how labyrinthine it was and is. The right hon. Gentleman is right to say that that is the root of part of the problems. At the same time, seeking to say, “Well, that’s the responsibility of the Guernsey regulator. That’s the responsibility of someone else,” does not deal with the central issue. That is the lesson for the future that we need to be conscious of.

[Fiona O’Donnell (East Lothian) (Lab)]

My hon. Friend is being extremely generous in giving way. Although it is welcome to see cross-party support today for the investors who are innocent victims of absolutely disgraceful behaviour by Capita, will my hon. Friend seek an assurance from the Government that their red tape challenge will not get in the way of effective regulation of this sector to prevent other people from losing out in the way in which the Arch Cru investors have?

[Tom Greatrex]

I thank my hon. Friend for her intervention. I am sure that the Minister heard her entreaty. I agree with her that in seeking to ensure that the regulation is right, there is a great danger in looking to light-touch regulation. The consequence of that could well be the position that we find ourselves debating this morning. I am sure that the Minister will take that warning on board.

The third issue is the payment scheme negotiated by the FSA from Capita, HSBC and BNY Mellon. As everyone knows, they are careful to say that that deal is not an admission of liability. The FSA says and has said to investors that it is a “reasonable outcome” for them. It says that it saves time, given that a breach does not have to be proved in what the background note describes as a very complex case, involving multiple parties with different responsibilities. It says that it considered that it was appropriate to align the Financial Ombudsman Service decision making with the payment scheme rules.

[Derek Twigg (Halton) (Lab)]

I congratulate my hon. Friend on securing the debate. It is nothing less than a scandal that hard-working people are being treated in this way. They are suffering anxiety and concern when all they wanted to do was to secure their future. Two of my constituents have written to me to say this:

“Would it be possible for you to support a request for a Section 14 enquiry under the Financial Services Act? This will provide the best opportunity for all investors to receive an improved compensation package.”

I would welcome my hon. Friend’s view on that. Clearly, I would support such an inquiry if it could deliver an improved compensation package, because the concern and anxiety that people are suffering is terrible. Listening to what they have to say is heart-rending.

[Tom Greatrex]

I thank my hon. Friend for his intervention. I agree with him and will go on to ask the Minister—I am sure that he is expecting this—for a section 14 inquiry and for him to explain why one has not been instituted so far.

To me and to many of the investors, the deal brokered by the FSA—the payment scheme—sounds like an admission of defeat. They cannot work out what went wrong and why.

[Heather Wheeler (South Derbyshire) (Con)]

I thank the hon. Gentleman for the sterling work that he has done, along with my hon. Friend the Member for Vale of Glamorgan (Alun Cairns), to bring this matter to the fore. I am delighted that it is my hon. Friend the Financial Secretary to the Treasury who is here to answer questions. What the 15 people in South Derbyshire who have written to me about the matter have experienced is heartbreaking. They thought that they were doing the right thing, but they have been presented with this letter by the FSA saying, “Take it or leave it—70%. You’re lucky to be getting something quickly.” Is that really how we should play the financial game? Perhaps there should be a bigger inquiry into the way the FSA has been carrying out its duties?

[Tom Greatrex]

I thank the hon. Lady for her intervention. That all points to the case for a section 14 investigation to get to the bottom of these events and to prevent them from ever happening again.

To return to the payment scheme, it sounds like the FSA cannot work out what went wrong and why, and where the liability was.

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

My constituent Linda Marsh is particularly exercised by the fact that she is being pressured to accept the payment offer on the table because of the looming November deadline. Is it not really urgent that we remove that deadline and allow a proper inquiry to take place?

[Tom Greatrex]

I thank my hon. Friend for her intervention. She makes an important point about people being able to make the right decision when they are offered this payment deal, particularly given that it seems to bind in the Financial Ombudsman Service in a way that makes it impossible for it to take a case subsequently. My hon. Friend makes an important point.

[Naomi Long (Belfast East) (Alliance)]

On that point, one of the concerns raised by constituents who have come to me is that the compensation offer is conditional and precludes legal action against Capita being brought to court by any investor who accepts it. However, it leaves open the option of the investor pursuing the financial advisers, who were, as Members have rightly said, misled by the information provided to them. That seems a very unjust transfer of responsibility.

[Tom Greatrex]

The hon. Lady is exactly right. It is almost as though the deal that has been reached leaves the liability with people who have, as she said, been misled, with the result that they end up carrying the can, which would be very unfair. That is why the deal on the table is wholly inadequate, and I will go on to make a few points about that.

[Ann McKechin (Glasgow North) (Lab)]

Does my hon. Friend agree that it is inappropriate, given that such serious regulatory failures have been identified in this crisis, for the FSA to be so directly involved in the negotiations and the settlement being offered? The FSA lacks the appropriate independence, because it might be to its advantage for the settlement not to result in legal action and further inquiry.

[Tom Greatrex]

I thank my hon. Friend, who makes an important point, which goes to the heart of this issue—the role of the FSA as the regulator and, it seems, the broker of a deal that might help to get something off its back.

It seems the FSA cannot work out what happened. It wants a line to be drawn under this issue, but thousands of unhappy people expected the regulator to prevent this abuse from happening. The FSA has said that the deal will return to investors approximately or up to 70% of their investment, and the words “up to” are quite significant. That 70% is based on the £54 million that has been returned already, £149 million from the sale of other assets, which were valued at that level at 31 March 2011, and an additional £54 million, which Capita, HSBC and BNY Mellon agreed to without accepting liability in a deal brokered by the FSA. However, that £149 million might well not be realised, especially when we consider that the asset base included Greek shipping and what have been described to me as rust-bucket ferries, as well as middle eastern property, the value of which—if there is any left at all—could have fallen, even in the short time since March, given the current economic conditions.

The question I put to the FSA—it was entirely reasonable, but the FSA was unable to answer it—was why it did not add up the asset sales and projected asset sales and subtract them from the investors’ losses to give a figure that would make the compensation up to 100% of what people invested. In that way, people could get their money back; they would not make a profit, but simply get back what they invested, based on the assurances they were given by an organisation that was regulated by the FSA when they took out their investment.

[Jim Shannon (Strangford) (DUP)]

One thing that has come to my attention through my constituents is that the FSA has given advice to investors pushing them towards independent legal advice. Some of that legal advice has led to further complications and added to the money they had already lost. Does the hon. Gentleman feel the direction the FSA pushed investors in should be addressed, given the extra heartache and money losses they have experienced as a result of seeking legal advice that has turned out to be wrong?

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. I do not wish to get drawn into the background dispute between people who have paid into a class action legal fund and people involved in a different action group on behalf of investors. To be frank, I have spoken for far longer than I intended, and I want to give others the chance to get in. There are lots of complicated issues, and I want to focus on the compensation scheme before I draw my remarks to a conclusion. I hope the hon. Gentleman will forgive me.

The approach I have suggested would simply enable people to get their money back—to get up to 100%. This case has been described as one of the worst investment scandals of recent years. There was a similar scandal under the FSA’s predecessor, the Investment Management Regulatory Organisation, and the name Peter Young will mean something to many people here. The relationships and problems involved were broadly similar, but following the suspension of the fund in question in 1996, IMRO achieved a settlement whereby people got their money back. The deal was funded by Morgan Grenfell, which was broadly in the same position as Capita.

That settlement was agreed three months after suspension. Although IMRO took action against the chief executive of the fund manager, the offer was not paid until January 1999—two years and four months after suspension. In the case of Arch Cru, however, it is now two years and eight months since suspension, and only now are letters starting to go out to people with the payment offer—I understand that they are going out now or will be going out in the next couple of weeks. Why was the FSA unable to get close to the resolution achieved by its predecessor as regulator in a similar time frame? Why is up to 70% acceptable to the FSA, when IMRO managed to get 100%?

Fourthly, there is the issue of ensuring that these events do not happen again. Something needs to change if these things are not to happen again, and people who invest their retirement nest eggs or lump sums on the basis of being told that a fund invests cautiously are not to lose their money, not to have to battle through the press to get a hearing, not to have to get a debate in Parliament so that issues can be aired and not to experience the stress, anxiety and rank unfairness of losing their money in a high-risk gamble they were told was a cautious investment.

In this regard, the FSA is about to be replaced by the Financial Conduct Authority, and the relevant proposals are beginning their pre-legislative scrutiny. What will be put in place to enable the FCA to prevent something similar from happening again? All of us, including the Government, have an opportunity to get the proposals right, and that is why these issues are a matter for the Minister and the Government. The Minister and the Treasury correspondence unit have been clear that this affair is a matter for the regulator, not them, but when the ACD fails, the regulator admits it did not know what was happening because of the structure of an investment vehicle, and the basis of a payment offer is so woefully inadequate, these things become a matter for the Minister; it becomes the Government’s responsibility to prevent or minimise the risk of such things ever happening again.

It also becomes a matter of my constituents and those of other Members present being entitled to information, but the FSA and others are not releasing much information. That is why I am putting the questions to the Minister today. Does he believe that Capita fulfilled its role effectively? Does he accept that the FSA has been hampered in fulfilling its role as regulator by its structure? Does he understand that in not providing information, there is suspicion among the investors? Does he realise that on that basis, up to 70% is just not good enough? Does he now know that the FCA needs to be bolstered for the future? Given all the above, will he now ensure that there is a section 14 investigation into what went on with Arch Cru?

I have spoken for far longer than I had intended, so I will conclude. It is easy, when looking into the matter, as I have done over the past few weeks, to get into the details and get lost in the technicalities and minutiae of the regulatory regime, and in the reputations of blue-chip companies, the statements of their chief executives and other individuals, and even the reputations of some of those in high-profile positions in the investment fund. Ultimately, the matter is about people—people such as my constituent Mr Pringle of Cambuslang, whom I have been in correspondence with. He e-mailed me yesterday and asked me to include a final point in the debate, which I will conclude on. He said that

“my wife…and I invested all our pension money with the Cru in this ‘Low Risk’ venture. Being pension money we obviously did not want any high risk ventures that would put our money at risk…We are extremely disappointed in the FSA’s attitude towards this case, by saying that they think Capita’s offer is ‘Fair and Reasonable’. Not in any way is their offer ‘Fair and Reasonable’. Investing in Greek Shipping is not ‘Low Risk’!”

That is the crux of the issue. That is why it is a matter for the Government as well as the regulator, and that is why the Minister needs to respond to the debate this morning.

10:01

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

It is a pleasure to serve under your chairmanship, Mr Owen. I want to congratulate and pay tribute to the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) on securing the debate and on the way in which he introduced it. He set an absolutely right tone to try to uncover the scandal and seek justice for many innocent investors.

This debate is the first opportunity to air serious issues that have cost some 20,000 people significant sums in respect of a fund once valued at £400 million. The title of the debate relates to the compensation scheme, which is the obvious priority of investors. However, there is also a need to interrogate the background, which raises questions about the scale, source, timing and conditions of the scheme.

The investors’ starting point in the financial scandal was to receive and consider advice from their independent financial adviser. As the hon. Gentleman suggested, the funds were clearly advertised and marketed as cautious managed. That would have sounded reasonable and fitted the risk profile of many private investors across the country.

[Jonathan Evans (Cardiff North) (Con)]

May I be the first on this side of the Chamber to pay credit to my hon. Friend for his tenacity in assisting people in bringing this matter before the House?

The point that my hon. Friend is making specifically relates to the decision made by investors. I have constituents who have invested, including one who wrote to me only yesterday to tell me that he invested £120,000—the totality of his pensions and savings—primarily because he wanted to be in cautious-managed funds that were safe. That highlights the regulatory failure to which my hon. Friend is alluding.

[Alun Cairns]

The cautious-managed issue is a common theme throughout regarding the Arch Cru funds. Cautious managed, from my time in financial services, would be argued as an investment category that fits the majority of people across the United Kingdom. However, investigation shows that the Financial Services Authority does not regulate the risk classification of funds, which is assessed by the Investment Management Association. I find that staggering, considering that that is a fundamental element in the decision-making process of any investor. The IMA is merely an industry managers’ representative body. The FSA has told me that classification is not a regulated activity, so it does not have the powers to amend the classification of funds. However, the FSA needs to be reminded of its statutory objectives, specifically the one relating to maintaining market confidence.

The reality of the investment was that it was not cautious managed. The open-ended investment company invested in unconventional investments, as we have heard. Cell companies were formed and floated on the Guernsey stock exchange, investing in private equity and shipping loans, among other high-risk transactions. As that was a recognised exchange, it circumvented the FSA radar, although FSA rules banned such illiquid investments in open-ended funds. Therefore, it was no surprise that in March 2009, almost three years after they were launched, the funds were suspended.

However, the situation is not that simple. The FSA identified issues with the funds in October and November 2008, but the funds were permitted to continue to trade. It conducted an advanced risk responsive operating framework test at the time, which should have highlighted the issues, particularly pricing concerns. Yet, the funds were only suspended four months later.

Capita became the authorised corporate director, and had failed to act. It had responsibility for corporate governance and daily pricing, and control over the underlying assets. It initially denied having control of the underlying assets, but the auditors’ report from Ernst and Young showed that it held more than 75% of the shares. I suggest that Capita mispriced the funds before suspension due to its failure to exercise control to value the underlying assets accurately. There was a breach of the investment mandate and a pursuit of a reckless investment strategy by Capita’s designated fund manager.

Clearly, that negligence led to Capita’s £54 million compensation offer—70% of the value of the funds at the time of suspension, together with the remaining assets from the valuation on 31 March. That has been criticised as unlikely to hold up. Investors are being asked to accept an offer without knowing what they will receive, as that depends on the value secured on the sale of the remaining assets, which will take years. That is an obvious disparity and injustice.

The auditor was Moore Stephens. It surely should have identified the issues, but it has still yet to offer any form of explanation, let alone compensation. The Guernsey regulators also have some explaining to do and have to accept their part of the responsibility and liability.

[Sir Alan Beith]

Does my hon. Friend know whether the FSA consulted the Guernsey authorities or sought their assistance at any stage?

[Alun Cairns]

My right hon. Friend raises a good point. I have raised that issue with the FSA, which said that it was beyond its jurisdiction. However, to my mind, protecting UK investors is certainly its priority and should fall within its jurisdiction.

To date, there has been no explanation of the logic behind the £54 million offered, and the conditions are somewhat restrictive. Having recently met with the FSA, I know that the reasons behind the current delay concern third-party rights, which I understand. However, it has taken more than two and a half years from suspension to get to the current stage.

I have a constituent who invested several hundred thousand pounds of his retirement money into the funds, but there will be constituents of other hon. Members present who had invested far smaller sums, and which may be even more significant to them individually. A figure of 70% of the valuation at suspension is completely inappropriate, given that all that our constituents had done was to invest in a regulated, cautious-managed fund with a regulated, authorised corporate director and approved auditors. The delay conflicts with the timing of a possible legal challenge. Investors need to act soon to fall within the legal time frame set out by the courts.

In considering criticism of the FSA, it seems hardly just that, having failed in its responsibility to regulate, it has the responsibility to investigate and negotiate a compensation package for the people whom it failed in the first place.

[Mark Durkan (Foyle) (SDLP)]

The debate shows that we have a fund that was a scam and regulation that was a sham. We have a problem not just with the FSA’s dereliction of regulatory oversight, but with its deviance and connivance in the deed with Capita. This debate is an opportunity for Parliament to blow the whistle. The FSA is now blatantly offside, and surely it is up to the Minister and the Treasury to make it clear that the deed cannot stand and the deadline must not stand.

[Alun Cairns]

The hon. Gentleman has made an extremely powerful point. This is the first debate on Arch Cru, and certainly on the FSA and its change to the successor bodies. Those who have responsibility for this matter need to bear in mind the strength of feeling among investors and the number of people who have turned up to this debate. This issue will not go away until investors feel that they have received justice.

The regulator, the Financial Services Authority, arguably failed in its duty as did the investigators and negotiators. Clearly, there was a position of conflict. It angers me that at every meeting and in every communication, the FSA points its finger at the independent financial advisers. In view of the FSA’s four strategy objectives, passing the buck to the IFAs is wholly inadequate. The pricing and fund performance would have been integral to the advice provided by any independent financial adviser.

In a meeting last week, the FSA told me that the obligation of suitability lies with the IFA. It is unrealistic for IFAs to have the capacity to interrogate individually all marketed funds, products and pricing strategies, or to speak to the financial directors and auditors of every firm on which they advise, when the FSA, with all its resources, failed to protect investors from wrongdoing in this respect.

[Guy Opperman (Hexham) (Con)]

Independent financial advisers may be being criticised, but is my hon. Friend not surprised that the Serious Fraud Office has not been more involved in this patently criminal investigation?

[Alun Cairns]

I pay tribute to my hon. Friend for the role he has played in uncovering many of these issues. I will come on to the Serious Fraud Office in a moment.

[Sammy Wilson]

I accept the hon. Gentleman’s defence of the independent financial advisers. None the less, the only interface that many investors have is with an independent financial adviser. Is there not an obligation upon them at least to check out the funds on which they advise? Is there not some responsibility there?

[Alun Cairns]

I am grateful for that valid point. Clearly, IFAs cannot be excluded from all responsibility, but we need to bear in mind the context in which they are working. If they are looking at the strategy and pricing of a fund classified as cautious managed, we need to recognise the context in which that advice is being given. Therefore, the failure of the FSA to set the right context in which an IFA can make recommendations is fundamental to the issue.

There is another conflict. The FSA regulates the authorised corporate directors and Capita acts as the authorised corporate director for more than 300 firms. Taking action against Capita could create difficulties, leading to panic in the marketplace. The FSA has powers under section 166 of the Financial Service and Markets Act 2000 to instigate an independent investigation into organisations that take such responsibilities. Will the Minister tell us whether any such action has been taken by the FSA?

The Arch Cru affair is a minefield of accusation and counter-claim. My hon. Friend the Member for Hexham (Guy Opperman) referred to the Serious Fraud Office. I was alarmed to discover that two of the three main directors or partners who established the Arch Cru funds—Robin Farrel1 and Robert Addison—are still operating, albeit under a new name of Arch Global. Allegations have been made to the Serious Fraud Office about how Arch funds were invested in a property company with common directors. Student accommodation was bought on the open market at one price, only to be sold to the Arch investors shortly afterwards for an inflated sum. I have no knowledge of whether or not those points are true, but they clearly need to be investigated.

As for compensation issues, the auditors and the Guernsey Financial Services Commission certainly need to be pursued by some authority, be it the FSA, the Minister or other parties.

Finally, in view of the FSA’s actions and the associated conflicts, I am troubled that section 404 of the 2000 Act can bind the financial services ombudsman to the FSA’s judgment on the level of compensation. The FSA has made its view of the 70% figure quite obvious in its statement. Therefore, even if investors seek to make a claim involving the financial services ombudsman, or if they follow other routes, the FSA can limit the compensation to 70% at a later stage.

[Duncan Hames (Chippenham) (LD)]

Clearly, my constituents will wonder what the point of a financial services ombudsman is if they cannot seek redress through it to get a better deal than Capita is already offering.

[Alun Cairns]

I am grateful to the hon. Gentleman. He underlines the power of the FSA to limit compensation, rather than to uncover and to provide just compensation for people who have been ill-advised and ill-treated throughout this whole process.

These issues need to be reconsidered in an equitable way and without conflict.

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

Will my hon. Friend confirm that the vital thing that needs to be done straight away is to lift the deadline so that people can make decisions, knowing that they are not throwing away some future interest? Will he also join me in saying to the Minister that, whatever direct powers the Government may or may not have, they do have the opportunity to call people together to say that the present situation is unfair and not right for investors? They need to find a way to make it possible for MPs, financial advisers and everyone else to say to investors, “This is what you should do now.”

[Alun Cairns]

That pragmatic and practical intervention would certainly set us on the right road to gaining justice for investors. The issue needs to be reconsidered in an equitable way and without conflict. The Minister and the Government should have the responsibility to bring together the various parties. Under section 14 of the 2000 Act, the Minister also has the power to launch a formal investigation, so that those with conflict are removed and the situation is judged objectively and properly. That will be the first step towards achieving justice for investors.

[Mr Robin Walker (Worcester) (Con)]

I congratulate my hon. Friend on the points he is making. On the section 14 inquiry, does he not agree that one of the most important things is for investors and their financial advisers to be able to make an informed decision? An informed decision cannot be made until that inquiry has happened and the real bases of the problems and of any compensation have been set out in detail.

[Alun Cairns]

My hon. Friend makes a valid point. When such problems are combined with questions about the legal time frame, investors who have experienced wrongdoing are in the unenviable position of making decisions about receiving compensation or pursuing it through the courts, without there being a thorough investigation of who is responsible.

I thank hon. Members for their support, and the hon. Member for Rutherglen and Hamilton West for securing this debate. There will be many more such debates until justice is achieved for investors.

10:18

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

It is great privilege to serve under your chairmanship, Mr Owen, and to follow the hon. Member for Vale of Glamorgan (Alun Cairns) who, along with my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex), has pursued this matter with such dedication.

I rise to speak on behalf of my constituents who have been affected by this debacle, including Michael Sharkey, Ian Matthews and Donald Tart. They have invested not hundreds and thousands of pounds but smaller amounts, which are highly significant for their future standard of living. There is widespread concern, nay fury, among my constituents that they are seeing only up to 70% of the returns in this so-called £54 million funding package. In many circumstances, they face the loss of more than 40% of their investments. As we have heard, we are discussing people’s lives and money that people had worked hard for and put away for retirement or hoped to pass on to their children or grandchildren.

Of course, we will not know the full scale of the negligence involved and the real losses until all the remaining assets of the fund are eventually sold. However, private advice has conservatively estimated the losses in my constituency alone at around £1.5 million, which is a sizeable amount of money for my constituents, or to put it another way that is around 1.5% of the value of the contract recently awarded to Capita to run the national pension scheme. As the authorised corporate director for the Arch Cru investment fund, and therefore having the regulatory responsibility that we have heard so much about today, the Government might think about stepping back from giving Capita further powers and authorities. We have heard about the extraordinary negligence and even allegations of criminal activity involved in the running of these funds.

In June, I tabled 19 parliamentary questions to find out just how much business this Government have awarded to Capita. As of 3 August 2011, the Government had awarded 447 contracts worth at least £112 million to Capita. The hon. Member for Worthing West (Sir Peter Bottomley) has suggested that the Government have a role to play in bringing people to the table. I suggest that if someone is awarding £112 million-worth of contracts, they have a powerful role to play in bringing people to the table.

[Jonathan Evans]

Has the hon. Gentleman done the research to help hon. Members understand how many contracts Capita received before 2010, under the previous Administration? My guess is that it would be a significant multiple of the figure that he has just given.

[Tristram Hunt]

I was going to say that I thank the hon. Gentleman for his intervention, but he seemed to be making an unnecessarily partisan point when we are trying to work together for the good of our constituents. I will simply let it pass in that manner.

That figure of £112 million does not include contracts from the Department of Energy and Climate Change, contracts from the Ministry of Defence, which would only provide ranged values of contracts up to a total of £20.6 million and contracts awarded by the Department of Business, Innovation and Skills, which simply did not answer my question. I hope that the Minister will seek out the truth himself.

[Sir Peter Bottomley]

Does the hon. Gentleman agree that one important aspect is what attitude the Government take? The second important point is that Capita and its shareholders ought to make a clear assessment of the reputational risk of Capita handling something where things clearly went wrong and of its failure to spot what was going wrong.

[Tristram Hunt]

The hon. Gentleman is absolutely right that what we are seeing this morning is the decimation of the reputation of Capita. That decimation will only grow unless Capita steps up to the plate, works with the Government and accepts that it is in its own long-term interest, as well as its moral obligation, to ensure that those who invested in this fund on the basis of Capita’s reputation see their payments returned.

I will not go through all the intricacies of my investigation into the awarding of contracts to Capita. Suffice to say that the Government have a whip hand on this issue and should be thinking about using it.

The point is that with financial products and investment opportunities becoming ever more complex, it is vital that investors have confidence in the regulatory framework that upholds their investment. It has been said that

“A badly designed product or a product that is widely mis-sold can have a negative effect on consumer outcomes and actually, over the long term, a negative effect on the industry. It doesn’t just affect the particular product or firm involved. It also erodes people’s confidence in financial services.”

As the Minister will know, those are not my words but his words.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The hon. Gentleman is making a crucial point about confidence. Although it is important that people have confidence in the independent financial adviser that they go to, and that they have confidence in whatever companies are operating under the different structures, surely the supreme amount of confidence must be placed in the regulatory authority that has to oversee all those things. That is the crucial point that the Minister must respond to.

[Tristram Hunt]

The hon. Gentleman is absolutely right. What we have seen with the Financial Services Authority is a lack of confidence in its capacity to deal with this inquiry and the regulation of it. That is why I join my hon. Friend the Member for Rutherglen and Hamilton West in urging the Minister to take advantage of section 14 of the Financial Services and Markets Act 2000 to launch an inquiry, because the FSA has been silent on this matter for too long and as a result investors have little confidence in it. The FSA is part of the regulatory framework that initially failed our constituents.

I will wrap up now as I know that other hon. Members want to speak. I agree with my hon. Friend the Member for Rutherglen and Hamilton West that we are only at the beginning of this process. As I have said, we need the sort of inquiry allowed under section 14 of the 2000 Act. We also need a proper compensation deal and package, and I am struck by the 1996 Investment Management Regulatory Organisation model as a way of moving forward.

However, the Government have a role in this process. They are pouring money down the neck of Capita and for the Government to say that this issue is nothing to do with them strikes me and my constituents as remarkably detached and arrogant. Actually, the Government have a role to play in bringing people to the table, making Capita see sense and delivering justice for our constituents.

[Albert Owen (in the Chair)]

Before I call Guy Opperman, I remind Members that I will call the Front-Bench spokesmen from 10.45 am onwards. If Members wish to catch my eye and speak, will they stand up when I call Guy Opperman?

10:26

[Guy Opperman (Hexham) (Con)]

Thank you, Mr Owen, for calling me to speak.

The victims in this case are savers, widows and pensioners, who we must not forget and who we are fundamentally elected to fight for. It is definitely in the Government’s interests—is it not?—to encourage proper saving and proper investment. One can use this particular disaster—it is nothing less than that—to encourage proper investment in proper companies.

I am very pleased that, along with other colleagues, I have this opportunity to speak today on an issue that dozens of my constituents whose lives have been irreparably damaged by CF Arch Cru have contacted me about.

I must thank the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) for securing this debate. A lot of us have tried to secure such a debate. I also want to thank him because he gave his address in a measured, reasonable, all-party tone. That is welcome, because hon. Members are united—in every part of the country and in every democratic and political process—in their view of the disaster that has occurred.

I must also thank my hon. Friend the Member for Vale of Glamorgan (Alun Cairns), who has campaigned tirelessly on this issue. He has sought debate after debate after debate on this issue and was, frankly, pipped at the post by the might of Scotland in the form of the hon. Member for Rutherglen and Hamilton West, who snuck up the inside rail and secured this debate. However, I know that we are all working together, which is a wonderful thing to see.

Obviously I speak as a constituency MP, but I also speak as someone who, for approximately 15 years, was employed on a repeat basis by Her Majesty’s Government as a prosecutor of fraud trials. I worked for the Attorney-General and the Serious Fraud Office, and I bear the scars of involvement with cases such as Blue Arrow and Guinness, and particularly a scam in relation to a company called Moneywise, which was investigated by the Financial Times. In that case, I spent six long months in Guildford Crown court bringing fraudsters to justice and recovering money. It was another case where people were defrauded by supposedly safe investments and money was taken from them. We successfully brought prosecutions for conspiracy to defraud.

I do not know the inner details of the particular case that we are discussing today, because only those involved, the Financial Services Authority and others have full access to the documentation. It is easy to make glib comments, but, speaking as an informed observer, I would seek the involvement of the Serious Fraud Office. With respect, there seems to be only two choices in relation to official actions and official offences committed here. Either the Minister is appropriately referring this matter for an inquiry under section 14 of the Financial Services and Markets Act 2000 or—frankly—the Serious Fraud Office needs to get off its backside and investigate this matter properly, bringing people who are committing these particular offences to justice. Clearly, there is the potential—I can go no further than that—that criminal offences of conspiracy to defraud have taken place.

An awful lot of questions have been raised, and I do not want to repeat the points that other hon. Members have made, but we come back to the question why an investment advertised as a

“safe and cautious fund—ideal for pension transfer”

has so damaged people’s lives. We must move on to the simple question how to stop it happening again.

To deal first with the compensation package, given that the funds were suspended in March 2009, one might have imagined that it would have been put forward a little earlier. The delay by those involved and their dilatory tactics are to their discredit. However, the £54 million package is inadequate. Let us be blunt: Capita is a substantial company. There may be arguments about whether the company in question is limited within the confines of Capita’s many companies, or about the parent company not being responsible for the individual failings of individual people in other lesser companies in the group. Those may be perfectly legitimate comments, and if Capita wants to take that high financial moral tone with us, so be it. However, it needs to grasp that it has a simple choice in this Parliament. Either it provides 100% compensation or it will find that it has few friends in this House. The £54 million is frankly not sufficient. This is not like Equitable Life, because this is not a situation in which a company has run out of money. Capita has not gone bust. To quote one investor who wrote to me:

“The current package is barely a pinprick on Capita’s little finger.”

[Sir Peter Bottomley]

I hope that hon. Members will not mind my saying that this calls to mind the troubles of Arthur Andersen, where one problem in one country led to the destruction of a very good business in a number of other countries.

[Guy Opperman]

I endorse those comments. Capita will need to look over its shoulder after today’s debate.

[Tristram Hunt]

Does the hon. Gentleman not think, then, that the Government have a role to play in relation to the extraordinary award of contracts to Capita?

[Guy Opperman]

I accept that they have a role to a degree. The hon. Gentleman is being a little naive, because the provision of certain services by a perfectly reputable part of the company is satisfactory, and he is far too intelligent not to know that. However, we must deal with individual mismanagement by parts of the company, which happened in years gone by, and the hon. Gentleman knows that companies have obligations in relation to such matters. The matter can be pursued either as a civil obligation in the High Court or by way of criminal compensation arising out of a prosecution. Alternatively, it can be dealt with under section 14 of the Financial Services Act 2010. However, it is over-simplistic to say that just because the Government provide contracts to an organisation that is performing perfectly satisfactorily in some respects, they cannot be involved in seeking other compensation.

This debate is an opportunity for the Government to give a lead on what they will do, and they need to answer some questions. I want to discuss examples involving a couple of my constituents. The point has been fairly made that the losses have been suffered by people who are not wealthy. We are not standing up for toffs and fat cats, but for people who have lost £1,000, £2,000, £5,000, £10,000 or £15,000— people who have lost their life savings, and who were encouraged to put their money in.

[Nicky Morgan (Loughborough) (Con)]

My hon. Friend is making a powerful argument, building on some other powerful speeches. He is right about the people involved, and the same is true of my constituents, who are not wealthy but who were doing the right thing. Our party and all other parties have asked people to make provision for their pension and retirement. Those people were doing the responsible thing, and they had their fingers badly burned. Confidence has been mentioned, and the Government must address that.

[Guy Opperman]

I totally endorse that point, and that is where the Government definitely have a role. They can use the inadequacies of the present case to highlight their intention to come down hard on those who mismanage investments as in this instance, to give investors confidence in other investments in the future. Sadly, that should have been done previously, and such scams and difficulties have been bubbling over for the past 20 years.

My constituent, Mr Ian Robinson, transferred his entire pension pot of £90,000 into Arch Cru on the advice of an independent financial adviser. He thought it was a sensible policy. In 2009, his funds were revalued down to about £55,000; they were then frozen; and the remaining capital was eroded over the next two years. He will be lucky to get 40% back under the compensation package. Another constituent, who wants to remain nameless, worked all his life and built up a business. He sold it and thought that he and his wife had a successful pension pot of several hundred thousand pounds. They put all of it—savings and pension—into Arch Cru. After the devastating effects of what happened, he and his wife have been living off a state pension and with the current offer of recompense they will be forced to downsize to enable them to live from any capital that is released. They will have lost hundreds of thousands of pounds, which they thought was securely invested to provide a gentle but secure return, and they will be lucky to be able to leave anything to their dependants. If my constituent agrees to the package at this stage, he will have less than half the compensation needed to put him and his wife back in the position they were in prior to their investment. In the current climate, we should support such hard-working people.

Much could be said about the dilatoriness of the process, because, as other hon. Members have mentioned, nothing has really happened since suspension in March 2009. I shall briefly discuss Capita. Others have spoken eloquently and forcefully about its inadequacy in its role. One constituent told me:

“This is not just a case of an investment that has underperformed due to the Global Financial Crisis but one where there are serious misgivings in relation to the management and governance of the funds”.

That is certainly how I see the matter—it is potentially a criminal investigation. Capita was paid as trustees to oversee the management of the funds, which we all agree it simply did not do. Therefore why is Capita not fully accountable for the extent of the losses of the people whose money it was managing? Clearly it is vicariously liable and has an obligation.

Hugh Aldous has prepared a report on Capita, and I recommend that anyone who has not taken on board the full level of ineptitude should read it. It is clear from the report, in which Hugh Aldous makes multiple observations, that the net asset values of several of the cells that were invested in were overstated at least from 2007 onwards. He reported that the condition of the physical assets was far worse than

“we reasonably expected and, in some cases, frankly appalling.”

It seems inexplicable that small investors should suffer so severely with an inadequate package.

Several hon. Members have spoken about the compensation package, and the Minister must address two points. Why on earth has a closed offer been made, when it is also time-limited? That is wrong. The Minister must assist hon. Members by giving the reason for that and telling us whether the Government will do anything about it. Everything would change if the Minister were to say that it is an interim offer. If it were an interim offer, so that the victims of the scam could receive the £54 million paid down in the usual way, with the right to continue to take civil action if they wanted to pursue matters further, I would say, “So be it.” However, to tell them that it is a time-limited £54 million offer and they can take it or leave it is wrong.

The FSA has supposedly been making great efforts to ensure that companies can meet their commitments when they fall down. There are regulations to protect consumers. The FSA is a publicly funded body. It exists to protect investors, and it has not done so in this case. It should surely have launched a proper investigation. My hon. Friend the Member for Vale of Glamorgan has called for a proper investigation, and I repeat that call. The FSA seems reluctant to admit that Capita has failed in its duty as an authorised corporate director.

[Naomi Long]

The hon. Gentleman is making some strong points. Does he agree that in this crisis it is the failure of the regulatory aspect that has caused the biggest ripples in public confidence? People took the FSA’s regulation of the funds and the advice they were given at face value, which created a level of confidence that did not match the confusion about what was happening within the fund. The FSA has not only failed people but caused a crisis in public confidence.

[Guy Opperman]

I endorse the hon. Lady’s comments about the authority.

There are tremendous financial consequences here, but there is also a human one. All hon. Members—I have been here for only 18 months, but others have been here for many years—will have gone through the pain, difficulty and correspondence in relation to Equitable Life. To be fair, this situation is not the same, but it is similar in that constituents have written to me because they have given up. One told me about a retired couple in ill health who have already given up, because

“they have not the energy or the mental resolve to fight this”.

The Minister had an extremely difficult job with Equitable Life, and I applaud the fact that he did the best he could in very difficult circumstances. This matter, however, is far simpler, and I hope that he takes on board the four key points. First, will the inquiry be a section 14 inquiry? Secondly, why is the offer a closed one? Thirdly, why is the offer deadlined and time-limited? Fourthly, does the Minister agree with a large proportion of hon. Members—I say this based on the comments that have been made during the past hour and 11 minutes—that Capita has a simple choice: either it gives 100% compensation, or it is left with no friends in this House?

[Albert Owen (in the Chair)]

I shall call the Front-Bench spokespeople at 10.45 am. I now call Duncan Hames.

10:42

[Duncan Hames (Chippenham) (LD)]

I shall certainly be brief, Mr Owen, as I, too, look forward to the Minister’s speech about cleaning up the mess of financial scandals that arose long before he took office. I am not alone; it is worth reiterating that we have heard this morning from MPs from six political parties, and 5% of all MPs have turned up for a debate lasting only 90 minutes, knowing full well that barely a fifth of them would get to make speeches. My first point to Capita and all the bodies involved is that there is a lot of interest in this House and that their reputation in all parts of the United Kingdom is therefore at stake. I hope that they do not wish their companies to become the household names that others have in disputes that this House has unfortunately had to deal with.

Officials in the building across the road will have urged the Minister to bat questions away to the Financial Services Authority, and will have suggested that he speak of the FSA’s independence and of how this matter is for that authority and not for the Government. Our collective presence here this morning will have made it clear to him that the public interest is too strong to accept that. In addition to the complaints about the companies involved, many of our constituents are asking: who regulates the regulators? They do not trust the regulators’ handling of the matter. This morning, we have come here with reasonable questions that have not been answered in our correspondence with the FSA on constituents’ behalf. How did the FSA authorise the fund in the first place? Why did it not respond sooner to the informed criticism of experienced fund managers? Does the scope of the FSA’s investigation extend to questions about its own conduct, and does the review team have the independence to do that effectively? Even clearer are our constituents’ concerns about how the payment deal is being agreed, and about how the FSA is able to bind the Financial Ombudsman Service so securely to Capita’s proposals.

When such questions are being raised about the regulator, it falls to the Minister to reassure Members that he is totally on top of their concerns. I hope that he addresses the plea for a full inquiry that has been made across the House this morning, and I look forward to him throwing his weight behind the demands for a section 14 inquiry.

10:45

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

I pay tribute to my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex), and to the hon. Member for Vale of Glamorgan (Alun Cairns) and other Members, for drawing attention to this exceptionally important and complex issue. It is simply not right that people, many of whom have worked hard on modest incomes and have saved money in what they reasonably thought to be a responsible way, stand to lose significant sums. We welcome the Financial Services Authority’s efforts in securing a compensatory offer from the parties involved, which will be administered through the Capita financial managers, but although up to 70% of the sum invested could be returned to investors via the consumer redress scheme, many will be dissatisfied because the amount falls far short of their original investment.

I want to make five quick points. First, on the unfair constraints on the choices for out-of-pocket investors, there have been reports that the FSA is reluctant to set out a full statement of events surrounding the Arch Cru failure, possibly until after the closure of the redress scheme. I would be grateful if the Minister would agree that that would be an extremely unfortunate state of affairs, as my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) and the hon. Member for Hexham (Guy Opperman) have indicated. The FSA should either set out its understanding and explanation while the redress scheme is extant, or the scheme’s closing date should be extended to allow the full facts to emerge before investors are forced to decide whether to accept the final settlement. Does the Minister agree that that would be reasonable?

Secondly, can the Minister clarify the potential role of the Financial Services Compensation Scheme? The FSA has been brokering the voluntary settlement scheme, but at what point will the option of claiming anything via the FSCS be made clear to investors?

Thirdly, I want to ask about the lessons to be learnt about Capita and the role of the regulators. Irregular practices clearly took place, and an investigation into the regulator’s handling of the Arch Cru scandal is merited. Hon. Friends are pressing the Minister and the Treasury to look into the behaviour of the regulator, and I would be grateful if the Minister could address that in winding up the debate. Did the regulators check Capita’s capabilities? Compliance work is usually done by banks, but the Arch Cru fund was compliance-managed by Capita and, as we have heard, questions have been asked about the adequacy of Capita’s business resourcing and its internal checking procedures for ensuring the thoroughness of its important responsibilities.

Fourthly, we must have tighter regulation of investment fund descriptions, and there is an urgent need to ensure that consumers are protected from exaggerated marketing terms. For instance, do we need clearer rules about the use of terms such as “cautious fund”? The hon. Member for Hexham highlighted the term “ideal for pension transfer”, which goes to the nub of the marketing mispractice involved. “Guaranteed investment,” “absolute returns” and “balanced funds” are all used frequently in investment schemes, but I am not sure that we have the right regulation of the use of marketing arrangements.

Finally, although we should not underestimate the pain, anger and distress that many people justifiably feel, we must consider the messages that this kind of scandal sends out to the public at large. This situation can serve only to undermine people’s confidence in saving for their future, doing the right thing by planning ahead and putting money aside through pensions and investments. Parliamentarians and the Government must consider not only the impact of the scandal on the people directly affected but its repercussions on people’s trust in financial products more widely.

[Albert Owen (in the Chair)]

I thank Members for their inventions and for keeping to time. I ask the Minister now to respond.

10:49

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

I congratulate the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) on securing this debate and on how he introduced it. Despite a barrage of interventions, he managed to maintain his pace and tone and set out a clear narrative of what happened to Arch Cru. I also congratulate my hon. Friend the Member for Vale of Glamorgan (Alun Cairns) on his tenacious pursuit of the matter, as well as the other hon. Members who have taken part in the debate.

I express my sympathy to the many Arch Cru investors who have lost a significant proportion of their savings as a consequence of the events that we are discussing. Regardless of how large or small the investment was, and whether they have lost all their savings or a fraction, they have lost out. It is important to think carefully about the cause and what lessons need to be learned.

As my hon. Friend the Member for Chippenham (Duncan Hames) rightly predicted, I must add a note of caution about Treasury responsibilities in the matter. We do not have investigative or prosecuting powers of our own. The Financial Services Authority is the independent regulator. I have spoken to its chief executive about Arch Cru and sought further information about the FSA’s investigations and the voluntary compensation package, and I will respond as fully as I can to the points made today. Hon. Members clearly have an appetite for a lot more detail. I understand, as I have the same appetite, but enforcement action is ongoing, so there is a limit to what can be disclosed in the House.

As the hon. Gentleman and others have said, the case is complex and involves multiple layers of responsibility. Many investors will initially have engaged with Arch Cru’s UK open-ended investment companies, or OEICs, through their independent financial advisers, with Cru Investment Management conducting the marketing of the OEICs. The management of the OEICs was then the responsibility of Capita Financial Managers Ltd as authorised corporate directors and of BNY Mellon Trust & Depositary (UK) Ltd and HSBC Bank plc as depositaries. Although the legal form is that Arch Financial Products acted as the delegated investment manager, in substance, it approached Capita and proposed that fund structure.

The OEICs invested principally in more than 22 Guernsey- domiciled incorporated cell companies, which were listed on the Channel Island stock exchange and required to comply with Guernsey regulations. The cell companies had two independent directors. The administrator of the cell companies was regulated by the Guernsey Financial Services Commission and was responsible, among other tasks, for producing valuations for the cell companies, which were made available to the Channel Island stock exchange. Arch was the investment manager for the cell companies and, of course, the OEICs themselves. Both the OEICs and the Guernsey cell companies were independently audited. That complex structure should make it clear that it is not easy to apportion full responsibility to any single player in the matter.

As part of the authorisation process for UK OEICs, the FSA assesses a fund’s proposition before launch and decides whether it complies with the rules. The FSA then reviews the fund’s prospectus and, after authorisation, continues its normal supervisory activity, which includes visits to authorised corporate directors and depositaries and thematic work such as the monitoring of financial promotions. As hon. Members have identified, the FSA does not regulate descriptions of funds, such as “cautious managed”. It is worth reflecting on what “cautious managed” means. It means that a fund invests in a range of assets with a set maximum equity exposure and a minimum exposure to fixed interests and cash. A minimum percentage of assets must also be held in sterling or euro-denominated assets. That describes what such funds should be.

The FSA is not an auditor and does not check underlying investments or the veracity of share prices. That is the responsibility of others. The regulatory regime is not a zero-failure regime, and the FSA conducts risk-based supervision. It does not visit every firm every year; the frequency of visits depends on firms’ risk and impact. If hon. Members reflect on that for a moment, they will expect more resources to be devoted to a big insurer than to an insurance broker on the high street. However, it is ultimately the responsibility of the firms involved to ensure that they comply with all the relevant rules.

What did the FSA do in this situation? It has been suggested that the FSA let down investors, but its financial promotions monitoring activity picked up some of the issues with Arch Cru OEICs, which were raised with the parties involved. Crucially, in October 2008, during the course of an ARROW inspection visit, the FSA identified issues with the funds, including the fulfilment of the OEICs’ investment objectives. Those issues were raised with Capita Financial Managers, the authorised corporate director, leading to the suspension of the OEICs in March 2009.

On the payment scheme, it should be clear from my opening remarks that the structure underpinning investment in an Arch Cru fund was complex and multi-layered. The FSA could have pursued a comprehensive package of redress, which would have needed agreement from all the parties involved, some of which were responsible for the management of the funds and some for their sale or promotion. Not all those parties are regulated by the FSA or based in the UK. To have put together such a package would have been time-consuming and complex. The FSA has reached agreement with the three parties responsible for the management of the UK OEICs: Capita, BNY Mellon and HSBC. The package was announced in June 2011, and will pay up to £54 million to investors. The amount of compensation takes into account distributions already made to investors and the remaining value of the funds.

The compensation amount also has an element of proportionality, taking into account the fact that while those three parties share some of the responsibility for the losses, they are not solely responsible. Other parties contributed to the failure, and the FSA is currently considering the positions of those other parties. The pursuit of a voluntary settlement with the three parties allows investors to opt to receive payments by the end of this year rather than having to wait several years for the uncertain outcome of a more complex process, which would include enforcement action against the relevant parties. It is a trade-off. Do we want investors, some of whom invested all their funds in Arch Cru, to receive money sooner or later? A question was asked about time scales. People have until the end of next year to decide whether to opt for the package.

The FSA has required the Financial Ombudsman Service to apply the payment scheme to complaints that it receives, under the provisions of the Financial Services Act 2010, which was introduced by the previous Government and supported by us. The provisions ensure certainty to investors and a consistent regulatory approach between the FOS and the FSA. Without them, the FOS would have to consider individual cases on their own merit rather than applying the same principle to every investor. I will explain what the FOS is bound to.

[Alun Cairns]

Will the Minister give way?

[Mr Hoban]

No, I will continue. I have three minutes left and more points to make.

The FOS is bound only in respect of complaints made against Capita, HSBC and BNY Mellon. Complaints made to the FOS about other parties to the investment chain, including independent financial advisers, can still be heard by the FOS. The limitation on the FOS applies only to complaints made about the three parties. That is a clear signal to investors that they can make further complaints about other parties. Investors are free to pursue action through the courts and to challenge the IFA who advised them to invest in Arch Cru funds over whether that advice was appropriate. Numerous people have already done so. If they are not satisfied with the IFA’s response, they can go to the FOS. If a complaint has been upheld but the adviser is no longer in business, investors can also complain to the Financial Services Compensation Scheme and apply for compensation.

[Guy Opperman]

Will the Minister give way on that issue?

[Mr Hoban]

No, I cannot. I have two minutes left. My hon. Friend and others asked about section 14, which I would like to address; I am sure that he will be grateful if I do.

I have yet to be persuaded that a section 14 inquiry is appropriate. It certainly would not be appropriate to announce one while enforcement action is being taken against any party to the matter. The powers are available where it appears that significant damage has been done to the interests of consumers that might not have occurred but for a serious failure of regulation. It is worth pointing out that the power has never been used. Throughout the life of the Financial Services and Markets Act 2000, many issues have not been examined.

As I have said, it is not the FSA’s role to ensure that no firm ever fails, to approve the investment strategy of every OEIC operating in the UK or to ensure that all investments are sound. The FSA does not audit or sign off an OEIC’s accounts. That responsibility rests elsewhere. It was the FSA, through its ARROW inspection, that identified the issues in Arch Cru.

It is vital that everyone engaged in the matter—the regulator, industry players, IFAs and others—reflects on the lessons learned. Many issues emerge, including the scheme’s complexity and consumers’ need for better financial education and better-quality advice. We look carefully at every lesson learned from such cases, and that is reflected in our thinking on the operation of the FSA.

Dangerous Dogs

Wednesday 19th October 2011 Westminster Hall

11:00

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

It is a pleasure to serve under your chairmanship, Mr Owen. I thank Mr Speaker for granting this debate, which I think has been welcomed by all parties in the House and by areas throughout the country. For that reason, I hope we can keep the debate on the strictly all-party basis it deserves. That will certainly be the tenor of my remarks throughout.

More than 6,000 postmen a year are bitten or attacked in one form or another by dogs. There are approximately 10 attacks per constituency per year, so it is a matter in which we all have a direct and important interest. Indeed, the devolved Parliament in Scotland has legislated on the issue, and Northern Ireland is in the process of doing so.

The reason why I have called for this debate relates to a nasty incident in Coventry involving a young girl, Alicia Foskett, whose mother, Sarah, has, without a great deal of encouragement, led a campaign. Under existing law, the Dangerous Dogs Act 1991 excludes private property from any criminal provision, so Sarah Foskett felt that, at best, she got passive help from the police and local council. That might be understandable in the context of the present law, which I wish to address. I hope to leave as much time as I can for the Minister and other MPs to respond, but I cannot leave too much time because it is only a half hour debate. The support for Sarah Foskett seemed inadequate, so she led a strong and courageous single-woman campaign to raise the profile of the issue in Coventry and has done extremely well. I am pleased to say that the police are now giving her a lot of support in the civil action she intends to take.

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

It is only after the event that the police are actually doing something. Does my hon. Friend agree that it is a pity they did not do something beforehand?

[Mr Robinson]

I agree. They should have given much more positive support beforehand, but they could not take any action under the existing legislation. I will come back to that in a moment, but it is one of the principal things that needs to be addressed. As things stand, the case is for a civil action rather than criminal proceedings.

As I have said, this is not a party political issue. Indeed, the Prime Minister in a letter to the Communication Workers Union just before the election, when he was Leader of the Opposition, made it clear that he and the Conservative party were very much in favour of the action that I wish to recommend. He wrote:

“We support extending dangerous dogs law to cover all places including private property”.

That is a clear statement from the then Leader of the Opposition and now Prime Minister. I hope that the Government can find some impetus in the light of that support.

The more general statistics are interesting, but I will not detain hon. Members with them for too long. I have already mentioned that 6,000 postal workers are injured every year. Some 2,500 adults and 2,700 children are treated for injuries every year. In the past four years, six children and two adults have been killed. The attacks seem to come in spates. The past few years have seen a further spate of attacks in London that have been so bad that the Met has set up its own special dog unit in response.

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

A constituent of mine, Mr Naylor, has asked me to raise this very point with my hon. Friend. The burden on the authorities and the taxpayers is growing daily because of the lack of control and responsibility exercised by owners. We need more control over the behaviour of owners, whether that be via an insurance policy—that idea has been floated in the past—or some other mechanism. We cannot have the general public picking up the bill for irresponsible dog owners.

[Mr Robinson]

Getting all dog owners to pay into an insurance fund relating to a small minority of dogs would tar everybody with the same brush. Over the centuries, dogs have been man’s greatest friend. They are appreciated in families such as mine and by children. That idea would also be grossly unfair at a time of extreme stringency for all families. It is a question of getting the owners to change their behaviour and become responsible. I regret to say that that is a more general problem throughout society at present.

In the case of Mrs Foskett, the owner refused to even have the dog looked at. He shunted it off to a friend. We do not know where it is yet, but it continues to be on private premises and to pose a danger, which is not good enough. He even refused to have the dog put under the temporary care of the Royal Society for the Prevention of Cruelty to Animals while it undertook training. That is, by any standards, irresponsible behaviour. I agree with my hon. Friend that part of the solution is to change that, but the application of criminal law—the greatest sanction the country can impose on any individual—would be a good step forward. Making the law apply to individual premises would begin the change of mindset that my hon. Friends the Members for Coventry South (Mr Cunningham) and for Birmingham, Selly Oak (Steve McCabe) are seeking.

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

I congratulate my hon. Friend on securing this debate, and I congratulate his constituent on her work. Does he agree that it is not the breed of dog that seems to be the problem? It seems to be a problem with all dogs. A common theme seems to be that cases are not treated as seriously as they could be by the police, and that far greater resources need to be given to making prosecutions.

[Mr Robinson]

I am grateful to my hon. Friend for that intervention and agree with her to some extent. In Scotland, they have brought the “deed, not the breed” distinction into play. I do not know how useful that would be; I would go for “and the breed”. It was a Staffordshire bull terrier that was involved in the incident in my constituency, and there was dreadful scarring to the young girl’s face. The breeds are fairly identifiable. Indeed, the Met’s conclusion is that they are being bred in London by young men and others almost as trophy items to display. That is a problem, and I do not think that we lose anything by having a category. It should also be made clear that no other breed of dog is excluded, and that the criminal law will apply to them if there is any doubt, which I do not think there is.

[Paul Flynn (Newport West) (Lab)]

An additional issue that has been brought to my attention by some of my constituents is attacks by out-of-control dogs on wildlife, particularly swans. There has been a distressing increase in the number of swans killed or injured by dogs. At present, rescue groups such as the Gwent Swan Rescue, which is now called Swan Rescue South Wales, cannot claim back the veterinary fees from irresponsible owners. Surely that must be put right.

[Mr Robinson]

I agree. This is pointing towards a consolidation of all previous laws—many of them go back many years; one of the most useful was enacted in 1871—into new, modern statutes to deal with some of the points that are not clear in previous legislation. In addition to dogs attacking defenceless, beautiful animals such as swans, I have even heard of dogs attacking guide dogs. It largely comes back to the owner. We must put in place the sanctions that make it clear we are not going to tolerate this situation any more.

Without rehearsing the whole history of the issue, I shall give hon. Members a flavour of it. Related Acts were introduced in 1839, 1847, 1861 and 1871. This is, therefore, a recurrent theme in society and our pet community. It is no good denying the problem; we must simply do the best we can to minimise it, even if we cannot totally eliminate it. That means introducing sensible, modern legislation. I hope that some Conservative Members have time—as they can probably tell, I am trying to get through my speech as quickly as I can to leave time for others to speak—to join us in supporting such an approach. The consultation has been carried out, and finished in June 2010.

[Andrew Rosindell (Romford) (Con)]

Does the hon. Gentleman agree that two clear things need to be done? First, the Dangerous Dogs Act 1991 needs to be got rid of and replaced by sensible, effective legislation; and secondly, we need a workable law that introduces compulsory micro-chipping for all dogs.

[Mr Robinson]

I am coming to that in a moment. I agree with the hon. Gentleman but the point is: why are we not getting on with it? We must face the fact that we need legislation to deal with the problem and, if we all agree on that, we could go one step further and say that it needs to be consolidated. Let us have fresh legislation that takes all recent experience into account. This is not a criticism of the Prime Minister, the Government or the Conservative party, but the consultation was completed a year and a half ago and I cannot think what is holding things up. There is widespread support in the House for dealing with this problem, which exists throughout the country, so let us get on with sorting it out.

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

Does the hon. Gentleman agree that we have consensus among a range of organisations—such as the Kennel Club, the dog wardens’ body and, indeed, the postal services union—on the need to introduce consolidated legislation that works in the 21st century?

[Mr Robinson]

Absolutely. I could not agree more. We have little influence with the Government these days, but the question is whether Conservative Members can influence the Government to get on and produce the legislation. This is a time of party political tensions. There have been bitter disputes in the House about the economy, social welfare and a range of issues, and it is difficult for parties to agree in this time of extreme danger in the economic sphere; but this is an issue on which we could get ahead, do something useful and be united. The country would feel much better for it. There is every reason for taking action.

I will finish my speech by 11.15 am. It is only a half hour debate, and I hope that the Minister will not take too much time and that others can contribute if they still wish to do so. I am not going to legislate now, but essentially, the basis of the new legislation should definitely be to extend the criminal law so that section 3 of the 1991 Act includes private premises. We also need to consider the issue of micro-chipping. As the hon. Member for Romsey and Southampton North (Caroline Nokes) said, there is widespread agreement among, for example, the Dogs Trust and the Kennel Club. Everyone recognises the need to deal with these issues—even those on which we are not known for agreeing. We could push ahead, but we should do so sensibly and clearly.

We should also consider the issue of dog control notices. The no-fault personal injury compensation scheme should not be paid for by all dog owners. That is unfair and unnecessary. There must be some other approach—one that does not impact, I hasten to add, on the public purse.

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

Much has been made of the fact that breed-specific legislation does not seem to work. Does my hon. Friend know of any analysis of whether such accidents or attacks are breed-specific? We seem to be talking simply about statements made by one side or the other.

[Mr Robinson]

I made a statement, for which I do not have any statistics, based on my personal impression—which may well be wrong—and the examples I have seen in and around my constituency and in London. In Scotland, for example, they have rejected that view and are taking a deed-based approach. However, by definition, such an approach accepts that damage has to be done before action can be taken. I do not know what the phrase “deed and breed” might add to the legislation, or whether it might confuse matters; but I am not against that approach.

[Katy Clark]

If the list is breed-specific, people simply swap breeds and find new ones. That is one of the reasons why looking at the deed is considered more helpful.

[Mr Robinson]

I am grateful for that intervention. Of course, that is why I said that we cannot focus just on the breed; we also need to consider the deed. We do need, however, to focus a little on the breed, just to make people conscious that other breeds are available. To ditch that approach after a certain amount of effort has been put into it would be unnecessary.

I have covered the personal injury compensation scheme and micro-chipping. Tougher penalties for and punishment of irresponsible owners should be applied through the criminal law. That would be the single most important legislative action we could take to influence owners’ behaviour, which is clearly what we must do.

I will now open the debate to others who wish to take part. All I am saying is this: it has come to the point when we owe it to ourselves, our constituents and the young children and adults who have been scarred for life by these dogs, to deal with such legislation properly. We need to produce something that is comprehensive, clear and up to date. That is the minimum we can do to prevent such scars from blighting people’s lives in future.

[Margot James (Stourbridge) (Con)]

rose—

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

rose—

[Albert Owen (in the Chair)]

Order. Two Members are indicating that they want to speak. I will call the Minister at 11.20 am, so they can share the four minutes between them. They can do the maths.

11:16

[Margot James (Stourbridge) (Con)]

I congratulate the hon. Member for Coventry North West (Mr Robinson) on securing this important debate. I agree with much of what he has said, particularly about the criminal law needing to be much tighter on the irresponsible ownership of dogs. In most cases, it is the humans who are at fault, not the dogs. Possession of a violent dog has caused catastrophe in the hon. Gentleman’s constituency in Coventry. If it can be proven that an owner has trained that animal to be aggressive, it should be an aggravating factor and fall under the criminal law.

I shall offer a slightly different view on the issue of “deeds not breeds,” which I am erring in favour of. The breed issue is not clear. The pit bull terrier is not a single breed of dog; it is a generic name and a grouping that contains several breeds of dog, including the popular Staffordshire bull terrier. If handled in the correct manner, the Staffordshire bull terrier is an affectionate and loving family pet. A dog bearing just one or two of the physical characteristics associated with a pit bull terrier can be classified in law as a pit bull terrier. The implication of that for anyone who complains to the police about a neighbour with an animal bearing just one of the characteristics of that dog type is that the police are mandatorily enforced to take that dog away from that owner. My visit out with the Royal Society for the Prevention of Cruelty to Animals the week before last to mark world animal day confirmed that such an approach can be very unfair indeed, because unfortunately many of the calls the RSPCA get from members of the public are malicious. I ask the Minister to take that into account.

11:18

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

Just briefly, I support and congratulate my hon. Friend the Member for Coventry North West (Mr Robinson) on his call for the consolidation of existing laws into a new statute. I will not repeat everything that he has said and instead make two further points.

First, I found out today from a written parliamentary question that 892 people were admitted to hospital last year in Yorkshire and the Humber alone as a result of dog attacks. If we can establish the average cost for those admissions as opposed to accident and emergency attendances, I am sure we will find that, overall, there is a significant multi-million pound cost in England to the Exchequer. That underlines the argument that I have always made, which is that the improvement of existing legislation and an addition to available resources, particularly to local authorities to enable them to enforce legislation and engage in education and prevention activities with dog owners, will be an investment that will actually result in a reduction in public spending. At the moment, we spend a great deal of money on treating people who have suffered in the way mentioned by my hon. Friend the Member for Coventry North West.

The consultation finished in June 2010. It is now October 2011. The Minister of State, Department for Environment, Food and Rural Affairs, the right hon. Member for South East Cambridgeshire (Mr Paice) pointed out in July in this Chamber that action must be taken, yet we still have no response from the Department. We must have an answer to the consultation soon. I hope that the Minister will today give us a date for a response to the consultation.

11:20

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

I congratulate the hon. Member for Coventry North West (Mr Robinson) on raising this important subject. When the Minister of State, Department for Environment, Food and Rural Affairs, my right hon. Friend the Member for South East Cambridgeshire (Mr Paice) replied to the debate on dangerous dogs in July, which was introduced by my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes), he made it clear that the Government were sympathetic to hon. Members in all parts of the House who feel that the existing law is in need of an overhaul.

The Government recognise the difficulties faced by those who find themselves in the front line dealing with irresponsible dog ownership in communities. No one can fail to be shocked by the savagery described by the hon. Member for Coventry North West, the savagery of dog attacks that we have all seen in the media and by the several deaths in the past few years that have been mentioned by hon. Members. We understand the very real concerns about safety and the impact on communities. We also recognise the immense pressure on dog rescue centres as they see an ever-increasing rise in the number of Staffordshire bull crosses—so-called status dogs. I wish that we could somehow get away from using that phrase, as it indicates some sort of status for the people who use dogs in a malign way. Calling them “stupid people’s dogs”, or something like that, might be more relevant. Very often, these dogs are cruelly abandoned by their owners, and we often forget that in this debate.

There are no easy answers to this problem. We do not want to rush into changes to the existing law without giving thought as to whether they will work. We want to be sure that any changes will have a real impact on reducing instances of irresponsible dog ownership, particularly dog attacks.

I would like to update the Chamber on the progress made since July, and I hope that that will answer the point raised by the hon. Member for Penistone and Stocksbridge (Angela Smith). Ministers and officials have continued to work across Government and with key stakeholders such as the police, local authorities, the Royal Society for the Prevention of Cruelty to Animals, the Dogs Trust, Battersea Dogs and Cats Home and the Kennel Club. Contrary to what has been said, those organisations do not all share precisely the same view on how the law should be changed. Indeed, differences have been suggested in the Chamber today. However, they have all been very helpful in letting us know their views and helping us to refine our thinking about what should be done.

As the consultation that the Department for Environment, Food and Rural Affairs held last year showed, the issue of dangerous dogs covers a range of concerns, from thoughtless and irresponsible ownership, up to deliberately using a dog as a weapon to intimidate and harass others. As a result, a number of agencies and interested parties are involved. Earlier this year, the Home Office concluded a consultation on a more effective approach to antisocial behaviour. That new approach is intended to reform the toolkit available for tackling antisocial behaviour, including that relating to dogs.

When launching the consultation, the Home Secretary made it clear that the Government expect everyone to have a right to feel safe in their home and in their neighbourhood. She said that antisocial behaviour should be a priority for local agencies, including police, councils and social landlords. She underlined the fact that we need a new approach to problems that are fundamentally local. The proposals include streamlining the toolkit used to tackle antisocial behaviour, so that police and partners have faster, more flexible and more effective tools; sweeping away a swathe of statutory powers, so that the police have simple, intelligible powers that they can use when necessary; and giving victims and communities the right to force the authorities to take action, where the authorities have failed to do so.

I realise that there are concerns that a simpler approach by the Home Office will somehow overlook the problem of dogs being used to intimidate others, but that is simply not the case. Ministers and officials are continuing to work closely with the Home Office to ensure that dogs are not overlooked in the new framework and that the police, local authorities and local communities continue to be able, where appropriate, to develop their own solutions to dog problems that do not necessarily involve the courts and criminal sanctions. That may answer the point made by the hon. Member for Penistone and Stocksbridge. In the next month, we expect the precise details from the Home Office about how it feels this should be taken forward. We will then be able to involve that in what we are saying.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Will the Minister cover the issue of private property and the loophole in the law that allows 4,000 postal workers to be attacked without any prosecution being brought?

[Richard Benyon]

I am coming on to that precise point. Ministers have made it a priority to see how this issue is being dealt with on the ground in the communities that are affected. We are keen to learn the lessons of what works—and what does not—from local projects in areas where there is a high incidence of dog-related problems. Our view is that local action is key to tackling the problem of irresponsible dog ownership. We are keen to support local people, charities, the police and local authorities, so that they can jointly tackle local issues. We are also looking at what more Government can do to support the police, local government and the courts in dealing more effectively with dog problems. We have already facilitated the production of guidance for the police, the courts and the public. We have also provided financial support for the training given by the Association of Chief Police Officers to police dog legislation officers. Ministers are keen that we build on this support in future.

[Andrew Rosindell]

Will the Minister give way?

[Richard Benyon]

If my hon. Friend will allow me, I am coming to the point that he raised earlier.

A number of people support the idea that if breed-specific legislation is not repealed, then owners should be allowed to apply to the courts to have the dogs added to the index of exempted dogs. I want the police to have the final say on whether a dog is seized, and there may also be scope for not kennelling other types of dogs that are not a danger. In all cases, the police would need to be satisfied that the dogs are in the care of a responsible owner. That idea would undoubtedly save money for the police who, under the existing law, must first seize the dog pending the outcome of court proceedings. However, we also need to consider whether such a proposal would allow for the public safety factor of each application to be properly considered.

On the point raised by the hon. Member for Washington and Sunderland West (Mrs Hodgson), another proposal under consideration is to extend the criminal law on dangerous dogs to all private property. That would allow the police to investigate dog attacks on private property, and we have sympathy with that desire. That may, on the face of it, be an easy thing to do, but we should consider the effects of, say, a trespasser with criminal intent who is attacked by the home owner’s dog. Do we really want a trespasser successfully prosecuting a home owner because the home owner’s dog has acted in a way that many people would consider only natural? I point that out as just one example of where it is not a simple binary decision. There are some major implications in extending the law into the home. Before going down this route, we would need to be sure that all the potential risks are understood and can be addressed, but I assure the hon. Lady that we get the problem and are very keen to move position, which I think all hon. Members would—

[Mr Robinson]

The Minister said a moment ago that not all organisations agree about every detail—that is true, and they never will. However, what everybody agrees on is the extension of criminal law, and everybody agrees with a natural exemption if there is a trespasser or a burglar. That happens in all criminal law. It is not a real problem, unless the Minister wants to make it one. We have no timetable for any sort of legislation to deal with the issue.

[Richard Benyon]

We are mindful of that point. We believe that we can get through it, but it indicates how the issue is not straightforward.

Turning to the point made by my hon. Friends the Members for Romford (Andrew Rosindell) and for Romsey and Southampton North about microchipping, I worked closely with my hon. Friend the Member for Romford on this issue before the election. There are obvious side benefits to the compulsory micro-chipping of dogs, one of them being the ability to identify the owner of a dog that has become dangerously out of control even if the owner is not present at the time of the incident. Better traceability of owners could discourage them from letting their dogs run loose, and hence reduce the likelihood of attacks. However, I consider that the principal benefit is that it would enable the police, local authorities and rescue centres to reunite lost and stolen dogs with their owners. It may also help where dogs have been stolen, which is a big issue in my constituency. That is an important step forward, and one that I believe that we can support, but would it reach the problem owners we are talking about? That is a fundamental point that we have to consider.

[Michael Connarty]

Will the Minister give way?

[Richard Benyon]

With respect to the hon. Gentleman, I have just a few seconds left, and I want to say that the Government take this issue very seriously. It is a complex issue that spans many areas of undesirable behaviour from thoughtless and irresponsible dog owners.

11:30

Sitting suspended.

Ministry of Defence (Procurement)

Wednesday 19th October 2011 Westminster Hall

[Mr Jim Hood in the Chair]

14:30

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

It is good to have you in the Chair for the debate this afternoon, Mr Hood, and I apologise for its wide-ranging nature. A number of Ministers have responsibility for Ministry of Defence procurement, which I know has presented something of a dilemma as to who should respond to the debate. The Under-Secretary of State for Defence, my hon. Friend the Member for Mid Worcestershire (Peter Luff), appears to have drawn the ministerial short straw, and I appreciate that he might not be able to answer fully some of the issues raised. However, if necessary, I am more than happy to receive a delayed response from his appropriate ministerial colleague.

The issues are varied but a common theme runs through them: the apparent flaw in how contracts are negotiated by the Ministry of Defence. The first such contract to mention is a memorandum of understanding signed between the British MOD and the Canadian Department of National Defence, an agreement about the British Army training unit, Suffield—BATUS for short—which is sited at the Canadian forces base at Suffield in Alberta, Canada. In case my words are taken as a criticism of the coalition Government, God forbid, or its immediate predecessor, I should point out that although the current agreement was signed in July 2006, the original one was signed way back in 1972. I have a copy of that agreement and, in all my experience in the contracts industry, I have never seen a more one-sided document. Not only does the agreement give to the Canadian Government the final say in how BATUS is operated, down to who is employed on the base and from whom and from where equipment is purchased—I will come to that aspect in a moment—but it is also my understanding that the financial split between the two Governments is such that the British pay 80% of all the costs and the Canadians 20%. Bizarrely, however, nowhere in the documents are those figures spelt out explicitly.

The effects of the agreement are plain to see by anyone who visits BATUS, as I did recently with colleagues from the armed forces parliamentary scheme. Let me give a couple of examples. Administration on the base is shared between Canada and Britain, but three or four Canadian civilians work there, compared with one Brit. That is hardly surprising if we consider that the Canadians decide who is employed but the British taxpayer picks up 80% of the bill for employing such people. On the equipment side, earlier this year the Army decided to withdraw its helicopters from Belize and wanted to transfer them for use at BATUS in support of battleground exercises. The Canadians refused and insisted that British forces at BATUS lease Canadian helicopters piloted by a Canadian civilian from a Canadian company. That is not a good use of British taxpayers’ money.

On the subject of helicopters, to save money BATUS has now stopped using helicopters as part of its battlefield training exercises, apart from in a support role. That is a false economy because the lack of proper training could put at risk members of our armed forces during any future active service in which helicopters might be needed to transport soldiers to the front line. The cost of using helicopters during annual training exercises is estimated at £100,000—a small price to pay for a soldier’s life. If the MOD wants to find that money, let me say where it can be found.

At BATUS, there is a range control building, which is used to monitor vehicles accessing and leaving the training area. It is sited at the beginning of Rattlesnake road—yes, there are rattlesnakes on the prairie, to which my colleagues and I will bear witness—but eight years ago the Canadians insisted that the building was in poor condition and needed replacing. The MOD agreed and, earlier this year, contracts were awarded for a new range control building on a site a few hundred yards from the existing building, which, surprise, surprise, will be built by a Canadian construction company, using local labour. The cost to the United Kingdom, confirmed in a letter from the MOD, will be £4 million. Setting aside that we could build a decent-sized primary school for that amount, I question the need for a new building at all. As I said, I was at BATUS with colleagues a little more than a month ago, and the old one looked fine to me. The House need not accept the judgment of a humble Back-Bench MP, however, because I can assure the House that that view is shared by the permanent British military personnel in Canada, who categorically state that they do not need the new building. I urge Ministers to look again at that unnecessary project and to pull the plug immediately. Just think how many helicopter training hours we could fund with the £4 million saved.

[Craig Whittaker (Calder Valley) (Con)]

I thank my hon. Friend for securing the debate. I was on the same trip to BATUS and the training facilities there are second to none—they are an incredible facility for the British Army to use, and no one for one minute is doubting that. During our recent visit to BATUS as part of the armed forces parliamentary scheme, however, we saw another example of the ludicrous bias in the memorandum of understanding. The British Army has two personnel looking after several bunkers of live ammunition, whereas the Canadians have six personnel looking after the equivalent of a tableful of ammunition, 80% of whose cost is paid for by the British taxpayer. Does my hon. Friend agree that the BATUS memorandum of understanding needs to be looked at again now, for renegotiation, rather than being ignored? My understanding from the Minister is that there are no plans at all to renegotiate the MOU.

[Gordon Henderson]

I thank my hon. Friend for his intervention and for reminding me of that additional scandal—which is what it is, ultimately—about an agreement that allows the Canadians to employ whomever they want with the British taxpayer paying up to 80%. I, too, urge Ministers to enter into immediate negotiations with the Canadian Government to reduce the percentage of the total operating costs of BATUS paid for by the British taxpayer. I hope they do so, and it can be done, because the memorandum of understanding is a rolling contract—there is no bar on opening negotiations at any time.

The MOD pays the Canadians £20 million a year to use the BATUS training area which is, as my hon. Friend said, a fantastic training facility, and I would certainly not want it to close. Entering into new negotiations with the Canadian Government might pose a threat because the Canadians could turn round and ask the British to leave, but I do not believe they would. It is Canada’s interest as much as ours to have that joint training facility, and I remind Ministers that it is a joint training facility for which we Brits pay 80% of the cost. In addition to the £20 million that Britain pays for use of the training area, the UK pays a proportion of the operating costs, which is around £80 million a year, so the total cost of the facility is £100 million a year. In the current economic climate, with members of the armed forces being asked to accept cuts in pension entitlement and allowances, it is surely right that the MOD makes an effort to reduce the cost of operating BATUS.

[Graham Evans (Weaver Vale) (Con)]

I congratulate my hon. Friend on securing this debate. I, too, was on the parliamentary scheme visit to Canada, and I could not decide whether the Canadian Government wanted the British Army at BATUS. Given what my hon. Friend has just said, would it be worth considering leaving Canada and using other areas such as Scotland and Germany? The Army of the Rhine has to return to the United Kingdom, and perhaps we could look at more cost-effective areas instead of staying in BATUS.

[Gordon Henderson]

My hon. Friend is right to point that out. While we were visiting BATUS, it became clear that with the number of oil wells in the 2,700 sq km of training area, which is essentially protected by the Canadian Government, there must be tremendous pressure on them from the oil companies to encourage the British Army to leave BATUS. That is a risk, as I pointed out, but my hon. Friend is right in suggesting that other options are open to the British Government, not only in Scotland and Germany, but perhaps with expansion of the training area in Kenya, which colleagues may visit in the new year.

My personal view is that nothing that we can provide in this country is suitable for armoured warfare and tank manoeuvres. That is a problem with Scotland, although it could provide good training facilities. Germany is an option, but Kenya would pose a risk because of what might happen if there were a change of regime to an unfriendly Government and we had to leave. At least Canada is a long-standing ally and, I hope, a long-standing future ally.

I do not want BATUS to leave Canada, but in the present economic climate the Canadian Government will recognise that the British Government must do something to reduce costs, and I ask the MOD to start those negotiations. If we could negotiate a more equitable 60:40 split, which would be a reasonable split for a shared facility, that would save British taxpayers at least £20 million a year, and probably more. A more equitable cost share would encourage the Canadians to be more cost conscious when considering whom they employ, how many people they employ, and how they operate. That should be considered.

Good negotiation is the key, and there is the rub. I simply have no faith that some other procurements negotiated by the MOD provide the best possible deal for British taxpayers or, perhaps more importantly, the armed forces personnel who must live with the consequences of those contracts.

[Mr Mark Spencer (Sherwood) (Con)]

I congratulate my hon. Friend on securing this debate. Does he agree that the MOD’s focus should be on value for money, rather than price? A contractor in my constituency, F.J. Bamkin, made high-quality socks for the MOD, but lost the contract to a company providing a much cheaper but inferior product. If the focus was on value for money, rather than just price, we might be more successful.

[Gordon Henderson]

I thank my hon. Friend for his intervention. He is right, and I will come to that when referring to a contractor in my constituency whose situation reflects, in a slightly different way, the difficulties facing suppliers. I hope that he will bear with me.

I have no faith in the MOD securing a good deal for taxpayers, and I will highlight as an example a couple of contracts, the negotiation of which can best be described as nonsensical. I recently visited the 2nd Royal Tank Regiment at its Tidworth camp in Hampshire. I toured the armoured vehicle repair shop and noticed that one of the lifting ramps was cordoned off. When I asked why, I was told that the ramp had been out of order for a couple of weeks, and that although the on-site mechanics could repair it, as would be expected from REME personnel, they were not allowed to because the contract for the equipment required outside contractors to be called in, and the regiment was having trouble getting those contractors in. The bureaucracy involved in applying for the contractors to do the work was not only taking up a lot of time, but was a lot of work. That is idiotic.

While at Tidworth, I saw another example of idiocy. The problem, which is only a small one, is in the sergeants’ mess, but I have no reason to think that this is not replicated in all messes throughout the armed forces. The range of beers on offer is limited to brands determined by the private company that runs those messes, and if that is not bad enough for beer drinkers, the corporals are even worse off, because the contract does not recognise that corporals have a mess. It recognises only officers’ messes and sergeants’ messes. The corporals must pay almost double the price for beer as sergeants. In the grand scheme of things this is a small issue, but such small niggling issues chip away at the morale of our service personnel, yet they are so easy to resolve with the right contracts and the right negotiation.

I turn now to a specific procurement problem that affected a company in my constituency. The company wanted to bid for MOD work, but the tender document was drafted in such a way that compliance was impossible for any company except the existing supplier. The products that my constituents wanted met all the relevant quality and safety standards, and all the tender conditions except one. The tender document required proof of field trials carried out in Desert Storm warfare conditions. That condition could, of course, be met only by the company that supplied the equipment during that conflict. My constituent was not best pleased and, understandably, believes that the tender document was written not by the MOD, but by the supplier of the original equipment. I am slightly more charitable, and inclined to believe that the MOD staff who drafted the tender document simply did not consider the ramifications of what they were writing, and what the consequences would be.

I want to finish with a confession. I know something about MOD negotiators, because I worked for 15 years as a senior contracts officer for GEC Marconi Avionics. I spent my time running rings round MOD staff while negotiating various defence contracts. That is the problem and the solution all in one. The MOD needs people with a sound commercial background, the desire to get as good a deal for the taxpayer as they would if they were still working for a private company, and a financial incentive if they succeed.

[Stephen Gilbert (St Austell and Newquay) (LD)]

I congratulate my hon. Friend on securing this debate. He has put his finger on the crux of the matter with his ability to run rings around procurement staff at the MOD. Is part of the problem the fact that procurement staff in the Ministry rotate, and would a more professional, stable procurement service go some way to solving the problems that he has outlined so eloquently?

[Gordon Henderson]

I welcome that intervention. My hon. Friend is right because that is half the problem. However, my experience of running rings around staff during negotiations does not apply only to MOD staff; I have also negotiated with staff from the Department of Defence in America and with Canadian defence staff and they are all the same. They are civil servants who have no interest or background in commercial matters. They are negotiating with taxpayers’ money, which does not come out of their pockets or affect their profits. They have no incentive.

[Karen Lumley (Redditch) (Con)]

I thank my hon. Friend for securing this debate and for sharing his vast experience. I know that the taxpayer needs value for money, but does my hon. Friend also accept that we need to use Great British companies, such as Mettis Aerospace in my constituency which employs over 500 people?

[Gordon Henderson]

I accept everything that my hon. Friend says. It is vital to bring more professionalism into procurement. I do not want this debate to be only about kicking the MOD. I suspect that procurement systems across Government are absolute rubbish, and today’s debate highlights a deeply flawed system that we must try to do something about.

14:52

[Jeremy Corbyn (Islington North) (Lab)]

I am sorry that I was not present at the start of the debate and I will be brief because other colleagues wish to speak. I want to introduce a wider issue of defence procurement and I hope that the Minister will respond to my contribution. The issue concerns the large amounts of money that are being spent in advance of a parliamentary decision on the replacement of Britain’s nuclear weapon system. The Minister is smiling but I am not sure why—perhaps it is out of desperation at the amount of money flowing out of his Department and into the hands of contractors as we speak.

I would like the Minister to answer a number of questions about the costs of replacing our nuclear weapon system. The main gate decision on the Trident replacement is not due before the House until 2016. Out-turn prices were estimated in the initial gate report to be £25 billion for the replacement of the submarine, and costs for the successor system, including the warhead and infrastructure development, were between £30 billion and £32 billion. So far, £900 million has been spent on planning and replacement, and £3 billion is due to be spent on detailed design before 2016. The rest will be spent after the main gate decision in 2016.

A number of serious questions must be raised. This is not a discussion on foreign policy and we are not debating nuclear negotiations. Nevertheless, when we are faced with a massive deficit, and people in every community in the country are being told to make savings, why is the Ministry of Defence calmly ploughing ahead to get rid of £100 billion of public money on a nuclear missile system that many of us believe to be illegal, unnecessary and dangerous? All the money being spent is going into the pockets of various contractors around the world and not being put to any socially useful purpose.

Whatever choice is reached in 2016, major elements of the vessels will already have been ordered before Parliament has had a chance to debate the issue. That includes £380 million spent on the first submarine, £145 million on the second and £6 million on the third —those are the submarine costs alone. I hope that the MOD will be more open about what that expenditure is for and why it is necessary to make it ahead of any parliamentary decision. I was told by a Minister in another debate that such actions are the normal way of doing things in the Ministry of Defence, and that it does things on a sort of custom and practice basis. If it is custom and practice for the MOD to spend such sums of money without parliamentary approval, I suggest that that custom and practice needs to stop. There should be specific parliamentary approval for each element of expenditure, but that has not happened in this case.

Further spending is taking place at Atomic Weapons Establishment Aldermaston and Burghfield, and the full cost of project Pegasus—the proposed new facility for manufacturing enriched uranium components for nuclear warheads and reactor fuel for nuclear-powered submarines—was priced at £747 million when it received initial approval in 2007. I would be grateful if the Minister confirmed whether that figure is correct. If it is not, will he give the Chamber an accurate figure and state how much more money is expected to be spent on project Pegasus at AWE Aldermaston and Burghfield?

The relationship between the MOD and defence contractors is interesting. Poachers who join the side of the gamekeeper are obviously extraordinarily welcome, and the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) brought a particular expertise to the debate. He seemed, however, to underline an issue that needs questioning concerning the close relationship between the MOD, defence contractors and the defence industry, and the large amounts of money being spent. Parliament exists to control what the Government do. MPs exist to represent their constituents and hold the Executive to account, and there are serious questions about the decision-making process surrounding the replacement of Trident, the purpose of Trident, and the vast expenses that are being undertaken without any parliamentary approval.

[Nick Smith (Blaenau Gwent) (Lab)]

I congratulate the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) on securing this debate and I want to pick up the point about contracts and transparency in Government expenditure. The strategic defence and security review will lead to the renegotiation of many contracts, and that may lead to some savings or perhaps to an increase in costs. So far, the MOD has failed to provide the Public Accounts Committee, the parliamentary body that looks at value for money in defence spending—

[Mr Jim Hood (in the Chair)]

Order. Interventions should not be speeches. I ask the hon. Gentleman to be brief.

[Nick Smith]

Thank you, Mr Hood. Does my hon. Friend agree that transparency is vital in cases such as that under discussion, so that Parliament can scrutinise expensive defence procurement issues?

[Jeremy Corbyn]

Absolutely. Parliament must scrutinise such expenditure. One of the greatest weaknesses of the British parliamentary system relates to its ability to scrutinise expenditure. We do not traditionally do line-by-line budget voting in this country, and although the Public Accounts Committee does a good job, it can look into only one theme or area of expenditure at a time. Perhaps we need tougher scrutiny, particularly where the Ministry of Defence is concerned and given the levels of expenditure being discussed.

I have two final points. Some colleagues present today represent constituencies that have embarked—or are likely to embark—on the manufacture and development of submarines and nuclear warheads, and some represent constituencies that have a big defence interest. I do not have a big defence interest in my constituency but I understand what the position of my colleagues may be. However, there are enormous skills in the defence industry in this country. We make planes, ships and all kinds of things very well, and we have a highly skilled work force. How much better would it be to have a longer-term trajectory for using those skills to make other things such as socially useful products that will develop, sustain and support people, rather than weapons of war or, in the case of nuclear weapons and submarines, weapons of mass destruction that can only kill large numbers of civilians?

Concerns have been raised that the cost of the Trident replacement programme puts significant stresses on the rest of the Ministry of Defence budget. I hear complaints from many people throughout the armed services that they are experiencing various shortages at present. All hon. Members in the Chamber will be able to relate to that. None of those shortages will be met while we continue with the massive expenditure on nuclear weapons and the preparation for replacing the submarines and missiles.

A document entitled “Looking into the Black Hole” by the Royal United Services Institute states:

“The largest, and politically most difficult, procurement programme over the next two decades will be the construction of a successor to the Trident nuclear deterrent submarines. The MoD is due to spend £7 billion over the decade to 2020 on the initial concept, design and development phases of this project, equivalent to around 11 per cent of the new equipment budget over the decade from 2011/12 to 2020/21. But the bulk of spending on the successor submarines, total costs of which are projected at £25 billion, is due to occur during the decade after 2020/21. The Main Gate decision, which gives permission for the Demonstration and Manufacture phase to begin, is due to be made in 2016. If this schedule remains, spending on the successor programme will rise sharply, probably reaching a peak of around 30 per cent of the new equipment budget by 2021/22 or 2022/23, when the first-of-class begins production. It is likely to remain close to this level until after the planned delivery of the first submarine”.

We are on a trajectory to spend a great deal of money before Parliament has even made the decision. I could write now the speech for the Secretary of State, whoever it will be, in 2016—“We’ve spent so much, done so much and made such preparations. Let’s spend another £60 billion on this project.” Why can we not have that debate, discussion and decision now, rather than leaving it for another five years, until 2016, when all this money will have been spent?

15:01

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

I do not know whether you care to cast your mind back to May 1997, Mr Hood, but you drew the short straw of being the hon. Member who had to respond to my maiden speech. That speech was about nuclear weapons—Trident—and I fear that this one will be on the same subject. Indeed, I suspect that it will not be the last one that you or other hon. Members hear from me on the subject. I sometimes think that I should go into a sort of partnership with the hon. Member for Islington North (Jeremy Corbyn). We have debated this subject many times over the years. He never changes his tune, and I never change mine, but the debate remains live. It relates to procurement, in addition to strategy and the ethics or otherwise of nuclear deterrence, because of course the procurement process for Trident has been much disrupted.

The hon. Gentleman made great play of the fact that Parliament has not yet had the debate. Well, excuse me, I think that Parliament did have a debate. If I remember correctly, it was in the spring of 2007, and both the Labour party and the Conservative party were wholly in favour of the next generation of Trident being constructed. I recall the then Leader of the Opposition—now the Prime Minister—to whose speech I had contributed, passing me an Order Paper on which he had inscribed the words “Julian gets his way”. Sadly, of course, there’s many a slip between cup and lip or, indeed, between a vote in Parliament and the deployment of a successor generation. The slip concerned came in the failure of the Conservative party to win an overall majority at the last general election. That ought not to have been a problem for the procurement process for Trident, given that the Labour party had gone into the election pledged to renew the nuclear deterrent and so had the Conservative party. Only the Liberal Democrats were opposed to that.

[Jeremy Corbyn]

I know that the hon. Gentleman loves the fact that the Conservatives are in a coalition Government with the Liberal Democrats—it is what gets him out of bed every morning and into work—but in his discussions with his Liberal Democrat colleagues, has he reached any conclusion about whether they do or do not want a nuclear missile or whether they want a different type of nuclear missile in the review that apparently is being undertaken?

[Dr Lewis]

I have to say to the hon. Gentleman—I am tempted to say “my hon. Friend”—that the Liberal Democrats really differ from both of us, because he knows where he stands on nuclear weapons and I know where I stand, but the Liberal Democrats stand firmly with a foot in both camps. They know that they do not want Trident, but they do not want to put themselves in his camp by telling the truth, which is that the majority of their activists are one-sided nuclear disarmers and do not want a strategic nuclear deterrent at all. Therefore, they come up with this fiction that it is possible to have a viable strategic nuclear deterrent with an alternative system to Trident.

That ought to have made no headway at all when the coalition was formed. The reason for that was that I and all the other Conservative Members of Parliament, who were being addressed by the Prime Minister-to-be at a meeting in Committee Room 14, were told what the terms of the coalition agreement would be, or some of the basic outlines of the terms. We were told that we would have to accept certain things that the Liberal Democrats wanted that we did not want, such as a referendum on the alternative vote, but that the Liberals would have to accept things that we wanted that they did not want, such as the renewal of Trident—that was the very example chosen. I remember my friend and colleague the future Chancellor of the Exchequer looking up at that moment, catching my eye—because at the time I was still the party spokesman on the Royal Navy and the nuclear deterrent—and nodding vigorously in confirmation of what the leader of the party had said. You can imagine, Mr Hood, my surprise and dismay—

[Mr Gregory Campbell (East Londonderry) (DUP)]

On the issue of discussions and debate, does the lesson of someone nodding vigorously in agreement with a position, only for that subsequently to be replaced by a cold, hard dose of reality, ring a bell in relation to other issues?

[Dr Lewis]

There is always the possibility that people will change their mind when they see different circumstances, but I genuinely feel that that has not applied in this case as a result of what I was about to explain and what hon. Members will remember. Out of the blue, even though the procurement of a replacement and successor system for Trident had specifically been excluded from the terms of the security and defence review, on the day when the statement was made, publishing the review and presenting it to Parliament, we were told that the main gate decision, the contracts for Trident would be put off until after the next election. With the greatest respect to the hon. Member for East Londonderry (Mr Campbell), there was no doubt at all that that had nothing to do with hard facts or realities creeping in, and everything to do with politics, as the letter subsequently sent out from the president of the Liberal Democrats, crowing in triumph at the delay of the Trident decision, made clear.

I must not wander too far from the procurement emphasis of this debate. Therefore, I would like to put a specific question to my hon. Friend the Defence Minister with responsibility for procurement issues. It relates to the study that is being done about alternative systems to Trident as a possible nuclear deterrent. That is being done as a gift, a present, a political offering to the Liberal Democrats in the coalition, and I believe that the study is being carried out by the Cabinet Office rather than the Ministry of Defence, although the Ministry of Defence is supplying the material to the Cabinet Office.

I have to say to the Minister that any halfway competent assessment team, facing the problem of examining the existing and the potential systems for carrying a nuclear deterrent in the future, could do a comprehensive study over a period of probably not more than two or three months and arguably over a few weeks, on the basis of the accumulated knowledge of half a century that we have in the business of strategic nuclear deterrence. I would therefore like to know what progress such a study is making or whether it will in fact be spun out until the next general election. The reality is that there is no alternative to Trident for the next generation of the strategic nuclear deterrent, and I suspect that my political opponents in the CND ranks would agree.

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

Just as an aside, does the hon. Gentleman have any concerns that the study was one of the documents put in the waste paper bin in the park?

[Dr Lewis]

I do not mind so much when unclassified documents are thrown away, but I do mind when this country’s basic protection is thrown away. I really do not want to see another hung Parliament, with both major parties having gone into an election proclaiming their commitment to the next generation of the nuclear deterrent, only for a small third party that is adamantly opposed to that deterrent, but which does not have the guts to wear its unilateralism openly, to blackmail the leaders of those two parties in turn, saying, “You get rid of this weapons system and we will make you Prime Minister.”

[Stephen Gilbert]

I feel loth to interrupt my hon. Friend as he expands on how a small but effective team can punch above its weight in the coalition, because he is doing a splendid job. Does he not see, however, that the threat facing the United Kingdom has changed hugely over the 20 or 30 years since the end of the cold war? Does he not agree, therefore, that it is right and proper to examine whether we need to change our plans in response to that changing environment?

[Mr Jim Hood (in the Chair)]

Order. We are now moving from a procurement debate into a pro-nuclear or anti-nuclear debate.

[Dr Lewis]

I shall briefly deal with the point, as it is out there, and then I shall move back to procurement in the narrow sense, if I may.

[Mr Jim Hood (in the Chair)]

Order. I would much prefer you to carry on with your very interesting speech.

[Dr Lewis]

Thank you very much. I would simply say that punching above one’s weight and getting a result that reverses the mandate of the two large parties are very different things.

The question is what happens in the procurement process for a weapons system that Parliament has already voted in principle to bring into existence. The hon. Member for Islington North says Parliament should debate and vote on the issues again and again at every stage of the procurement process. As the Minister will confirm, however, procurement does not work that way; there are certain set stages in the procurement of a weapons system at which Parliament may have its say and at which contracts must be signed. The fact is that the contract in this case has been put off until after the election, and the result is that the entire procurement project has been put in jeopardy.

The systems we are worried about—whether nuclear systems or aircraft carriers—will be built over a fairly long period, but they will be in service over a very long period. The lifespan of the new super-carriers will be 50 years, and that of the next generation of the nuclear deterrent will be about 30 or 35 years. Therefore—I would not dream of returning to our earlier debate—the circumstances that have changed in the world over the past 15, 20 or 25 years might well change again over the next 15, 20, 30, 40 or 50 years. That is why we have armies, navies and air forces in times of peace, when there is no apparent threat on the horizon, and why we need systems such as the nuclear deterrent—to prevent us from being taken by surprise.

I must draw my remarks to a conclusion, as others will not have time to speak otherwise. However, I would not like today to pass without paying tribute to my right hon. Friend the Member for North Somerset (Dr Fox), the former Secretary of State for Defence, and wishing him all the best. I served under him and three previous shadow Secretaries of State, and I know that defence specialists across the parties are bound by a common world view and a common realisation that decisions taken in the defence portfolio, above all others, will determine whether the people of this country remain safe and whether our forces, when they go into action, sustain great casualties or emerge triumphant, bearing few, if any, casualties. The responsibility for those issues is fearsome. My right hon. Friend had a passionate belief in the importance of the Anglo-American alliance and of procuring a future generation of the nuclear deterrent, and I trust that his successor will be equally committed.

Finally, I welcome the hon. Member for Plymouth, Moor View (Alison Seabeck) to her responsibilities. Like many members of Labour defence teams in the past, she takes defence seriously and works on a non-partisan basis when she can.

[Several hon. Members]

rose—

[Mr Jim Hood (in the Chair)]

Order. Before I call the next speaker, I should say that we may well be comfortable for time. I intend to call the Front-Bench spokesmen at 3.40 at the latest, and I have two hon. Members on my list of speakers.

15:16

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

It is a pleasure to speak under your chairmanship, Mr Hood. It is also a pleasure to follow the hon. Member for New Forest East (Dr Lewis). My remarks will follow on neatly from his, as his did from those of my hon. Friend the Member for Islington North (Jeremy Corbyn)—those who speak in debates on the deterrent are a kind of a parliamentary tag team. This is not the first time we have seen that, and I am sure that it will not be the last.

[Jeremy Corbyn]

It is an asymmetric triangle.

[John Woodcock]

Yes, that is quite possibly true, and I may say something about the fundamental importance of this debate for Opposition Members later.

I want to talk about the successor deterrent in the context of procurement and the critical issue of sovereign capability. Defence procurement is different from so much Government procurement in other Departments, because of the importance of Britain retaining capability in certain key strategic areas. Submarine capability must remain one of those, and British submarines defending British shores must continue to be built in Britain. It is a happy fact that the only place in Britain that can build them is in my constituency, and what an incredible engineering feat is achieved there.

It is important that procurement is undertaken in the most effective way. Gaps in construction could spell disaster for our capability to build submarines. Hon. Members will think back to the early 1990s, when the previous Conservative Government left a gap between finishing the Vanguard class submarines and starting the Astute class submarines. Ministers say—I welcome this, and we need to hold them to it—that they have learned from those mistakes and from the experience of how difficult it was to restart our capability in Barrow. In fact, the problems and cost overruns experienced with the new Astute class submarines came in large part from the fact that the people building them were learning their craft anew.

Given the constraints of sovereign capability and the fact that only one place in Britain will retain the skills to build submarines, it is critical that the Government do whatever it takes to ensure that the taxpayer gets value for money and that the country’s security is upheld. Conservative Members were hot on that in opposition, when they repeatedly pointed out the cost to taxpayers of delaying important procurement projects and of shifting timetables to the right. It therefore greatly concerned me that when they took office, they delayed the proposed in-service date for the successor deterrent submarines from 2024 to 2028, which necessitated a re-baselining of the Astute class submarines at an increased per boat cost to taxpayers and created the need for a costly refit of the Vanguard class submarines. In an answer to me on 8 November 2010, at column 5, the former Defence Secretary, the right hon. Member for North Somerset (Dr Fox), put the cost between £1.2 billion and £1.4 billion, which is the cost of refuelling alone aside from any other cost incurred in keeping the submarines going.

Apart from the increased cost, the changed in-service date has potentially stretched the safe life of the current Vanguard class submarine to its limit. Experts in the Navy, Barrow shipyard and the Government say that with the increased cost of the refit they think they can keep the Vanguard class submarines in service for the projected time, but their life will be stretched to the limit, and any further delay could compromise safety and radically increase the cost. I hope that the Minister will comment on that. It is important that we keep the project to time, but it has slipped in the past, and if it slips further, given that he has increased the risk to the project, what will happen?

I hope that the Minister will make it clear whether the new Defence Secretary intends to look at the issue afresh, and, if so, what that is likely to entail. Will he ring-fence the budget for Trident from the defence main budget, which has already been mentioned in the debate? Will he make clear the overall extra cost to the taxpayer from the political deal between the coalition factions, which the hon. Member for New Forest East has expanded on at length? That deal subjugated what was in the best interest of British taxpayers on procurement and the defence of the realm to political expediency in this Parliament.

[Nick Smith]

I take my hon. Friend’s point about timing, which is perfectly made, but the alteration to requirements is also important. In the strategic defence and security review the Government, as we have seen, changed their mind about what planes would travel on the new aircraft carrier, which has pumped up the cost by billions.

[John Woodcock]

My hon. Friend has extended my point. Because of the limitations that have necessarily been put on defence procurement for very good reasons, Ministers have an increased responsibility to make the right decisions. The hon. Member for Sittingbourne and Sheppey (Gordon Henderson), whom I congratulate on obtaining the debate, expanded at length on other areas of difficulty, and I hope that the Minister will deal with those points, particularly the most important issue of all for our defence—the ultimate deterrent that the UK maintains.

15:24

[Caroline Dinenage (Gosport) (Con)]

I congratulate my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) on securing the debate, which he promised would be wide-ranging, as it has certainly proved. I want to make passing reference to some of his points about the waste of public money in various previous defence procurement contracts, which is particularly galling given how hard we are now sweating our military assets, working people and equipment to deliver incredible value for money. It is galling, too, because, representing a military constituency, I receive letters from wives in military families saying, for example, that their husband is about to be deployed for a second eight-month term with only a 10-week break, and will be away for a second consecutive Christmas. That puts incredible pressure on families, so it seems very wrong to throw money away thoughtlessly on ill-devised and badly thought-out procurement contracts.

I want, however, to talk about another matter, and that is the vagaries of a defence procurement process which puts obstacles in the way of good, efficiently run British companies—particularly small or medium-sized enterprises—winning contracts, creating jobs and earning the money to help the country grow out of its economic hardship. I know that the Government have always recognised the strategic and economic importance of the defence sector. I have six significant defence companies based in my constituency, so I have become increasingly aware in the past 18 months of the challenges that the industry faces. In the light of the forthcoming White Paper on defence and security equipment, support and technology, I urge the Ministry of Defence to deal with three areas of concern to the companies in my constituency: support for SMEs, greater long-term planning and a strategy for successful outsourcing to industry.

I have spoken before in the Chamber about the great importance of SMEs in all sectors. They are truly the lifeblood of the defence industry. In my constituency, SMEs such as Vector Aerospace represent vital links in the supply chain that allow our headline companies to succeed, and to be world beaters. Britain boasts more SMEs in its defence industry than France, Germany, Spain and Italy combined, and we must recognise and nurture those unique assets.

I welcomed the acknowledgement in the December 2010 Green Paper that SMEs are a vital source of innovation and flexibility. I now urge the Government to address the enduring challenges that SMEs face, as unreliable or slow acquisition processes continue to place unmanageable burdens on their cash flows. Requirements such as the framework agreement for technical support listing have also been highlighted by small contractors in my constituency as prohibitive to SMEs supplying the Ministry of Defence.

The forthcoming White Paper must deliver comprehensive support, through the procurement processes and supply chain management, for our SMEs, so that they can continue to be the pride of the British defence industry. Across all tiers, our defence companies provide jobs for more than 300,000 people and add £12 billion to the UK economy, but, despite the importance of that, the Government are right to prioritise the needs of our armed forces and the taxpayer above industry. We must always be clear that we are not in the business of artificial job creation through public sector procurement. However, the companies whose representatives I have spoken to in my constituency and beyond are not demanding protectionism. They want, for the taxpayer and for industry, an environment that delivers the best value for Government and appropriate support for British companies.

[Jeremy Corbyn]

In the hon. Lady’s dealings with local companies, which undoubtedly have very high skill levels, has there been any discussion or consideration of contracts outside defence, and in other areas, using those transferable skills?

[Caroline Dinenage]

Many do that, and many work in the defence of other countries outside the UK, but Vector Aerospace does repairs and servicing for many of the helicopters—Chinook, Sea King and Lynx—and the mainstay of its work is for the British military.

The White Paper must tackle two procurement challenges that have frequently hampered both industry and cost-cutting efforts. First, we must ensure that through-life capability management is fully considered in the procurement process. In many respects, the MOD is right to prioritise buying off-the-shelf products at the best value, but with acquisition representing only 15% to 20% of the lifetime cost of a programme, there can be significant cost implications to excessively short-term thinking. That has been all too apparent in the case of the Carson rotor blades purchased under an urgent operational requirement for helicopters in Afghanistan, which lacked a repair contract and so had to be ordered as new each time one broke. That is absurd and highly expensive, and we must seek to avoid that in future through greater scope in the procurement process for long-term thinking.

Secondly, the White Paper must ensure that the limited resources of the MOD are put to the best use through successful partnerships with industry. Representatives from Vector Aerospace, which I have already mentioned, have noted that the outsourcing of functions carried out by service personnel or civil servants can deliver significant savings to the taxpayer while continuing to support British industry. They have had incredible results by sending their own personnel to Afghanistan to service and repair Chinook helicopters. Their performance has always been described as exceptional.

We need to ensure that long-term thinking is built into our procurement process. I look with great anticipation to the publication of the forthcoming White Paper, and urge the Government to ensure that it sustains the strategic and economic importance of our defence industry through delivering a supportive and considered procurement environment.

15:31

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

It is always a pleasure to serve with you in the Chair, Mr Hood. This is my first opportunity to speak as shadow Minister since the Minister’s warm welcome last week at Defence Question Time. Looking back through Hansard, it is a little surprising that this is the first Westminster Hall debate on procurement since the last election, with the exception of two half-hour debates. I therefore warmly congratulate the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) on securing this debate. He certainly ranged widely, as promised, and highlighted the broad scope and reach of the Ministry of Defence in procurement. There are major challenges in balancing defence equipment needs while ensuring value for money and retaining the essential skills base to support sovereign capability.

I know that I am not the only MP in the Chamber who has a sizeable defence community in their constituency. Before the last election, my constituency was called Plymouth Devonport, which included Her Majesty’s naval base at Devonport. Thanks to the Boundary Commission, it looks like it might be coming back at the next general election, but we shall see. For me and many hon. Members, providing the right equipment to our troops when they need it, so that they can carry out the work for which they have been trained to the best of their ability, is of upmost importance. A number of hon. Members in the Chamber and I have constituencies filled with military personnel and their families, and I often pick up concerns on the doorstep. I should say at this point that I am delighted to have 29 Commando back in Plymouth, safe and sound. It is right and proper to debate the issues here today.

I listened with interest to the speech made by the hon. Member for Sittingbourne and Sheppey and particularly to his reference to the British Army training unit, Suffield, based in Alberta on the Canadian prairies. It is worth noting that the reason why the British Army started to use that training site was due to the loss of El Adem and Tobruk in Libya when a certain Colonel Gaddafi came to power. The hon. Gentleman’s point about the need for bases in secure venues is absolutely right. Suffield was used briefly during world war two, and since 1972 it has been used as a British Army training base, initially on a 10-year lease. The agreement has been repeatedly renewed, which the hon. Gentleman touched on. I believe that a rolling programme of indefinite use is being offered. I note his comments and questions regarding that area. Other hon. Members also quite rightly challenged whether money was being best spent by the MOD on upgrading the premises there. I will listen with interest to the Minister’s answers to those questions.

The hon. Member for Sittingbourne and Sheppey also touched on morale and beer prices, and he raised a genuine concern about how new companies break into the MOD marketplace, to which I will come later in my speech.

My hon. Friend the Member for Barrow and Furness (John Woodcock) flagged up some potential problems, such as the need to secure the skills agenda and the loss of historic capability in Barrow, which is a lesson that we cannot forget. He also spoke about the implications of delays for contracts and cost overruns that follow.

The hon. Member for St Austell and Newquay (Stephen Gilbert), in supporting concerns about the rotation of staff in procurement, raised a challenging issue. That did not used to be the case, because officers used to be retained within certain specialties, and a number of senior and ex-members of the armed forces have spoken to me on exactly that issue in the past. I hope that the Minister will respond to that, because that area deserves consideration.

My hon. Friend the Member for Islington North (Jeremy Corbyn) asked a series of serious questions about Trident replacement and whether it is needed. He has always campaigned on that issue with a great deal of commitment. Again, I want to hear what the Minister has to say about the time scale and transparency regarding Trident.

My hon. Friend the Member for Blaenau Gwent (Nick Smith) raised the issues of contracts and transparency and of the cost of the over-specification of projects.

The hon. Member for New Forest East (Dr Lewis) is on the flip side of the coin from my hon. Friend the Member for Islington North. He described, with benefit of his long-standing interest and knowledge in defence matters, some of the problems regarding procurement and politicians’ role in muddying the waters, if I am to be gentle about what is going on in the coalition regarding Trident.

[Dr Julian Lewis]

Because there has been such candour on Government Benches about muddied waters, for the sake of clarity, will the hon. Lady take the opportunity to reaffirm her party’s firm commitment that Trident should be renewed and replaced by the successor system?

[Alison Seabeck]

The hon. Gentleman and I both stood on manifesto pledges that said exactly that. I also thank him for his kind comments in welcoming me to my new role.

I would like to look more generally to the future of defence procurement. It would be remiss of me not to thank my predecessor in this role, my hon. Friend the Member for Barnsley East (Michael Dugher), for his work alongside that of my right hon. Friend the Member for East Renfrewshire (Mr Murphy) in taking forward Labour’s review on defence procurement—not least in commissioning the report from Admiral Lord West, Bill Thomas from Hewlett Packard and Tony Roulstone from Rolls-Royce Nuclear. I thank them for their incredibly detailed and thought-provoking report, which builds on the work carried out under the previous Government by Bernard Gray, who has been brought in by this Government as the new Chief of Defence Matériel.

In response to questions last week, the Minister told me that he had read the report, although from our exchange last Monday, I think that there might be some differences in interpretation. However, I believe that we need, on the back of the report and Lord Levene’s excellent work, to look at structural reforms and at how, despite repeated attempts by successive Governments, we have failed to tackle overpriced and overrun projects. The Public Accounts Committee and the National Audit Office have clear views and some pretty sharp criticism on that. The Gray report did not mince its words either when talking about overheating in the equipment programme and the inability of the system to flesh out the real cost of equipment at an early stage.

We need to have a defence procurement policy that works with an active industrial policy—one that promotes defence exports, an area in which we in Britain excel and should continue to do so. The hon. Member for Sherwood (Mr Spencer), who is no longer in his seat, pointed that out. While value for money is clearly important, so is the quality of the product supplied to our armed forces, and British products are among the best. More than 21% of the global market in the past five years was met by British production, and we are the largest exporter to the European Union. Also, there is evidence that competition in the export market leads to an enhanced drive for innovation and improvement in those companies, from which the MOD could benefit. The make or buy proposals in the report submitted to the shadow defence team—it is good reading—deserve some further consideration. We all agree that we need a sustainable defence industrial base that can continue to deliver in the long term. Will the Minister let us have his thoughts on the proposal in the Gray report for a 10-year rolling budget, which does not seem to have found full favour with the current Government?

The hon. Member for Gosport (Caroline Dinenage) was absolutely right to say that small and medium-sized enterprises need a degree of long-term certainty when it comes to supporting programmes, particularly bigger programmes. My hon. Friend the Member for Islington North rightly mentioned the need for diversification of industry. It is all to the good if companies can diversify and find other markets, but there are a number of firms, of which I have several in my constituency, that are incredibly specialised in what they do. They provide bespoke products for defence purposes and it is difficult for them to expand, change or move on from what they do.

I welcome the Minister’s thoughts on all those issues. Will he tell us what sort of relationship he has with his colleagues in the Department for Business, Innovation and Skills and what the feelings are about the need to join up procurement policy, which is such an important element in all this?

Finally, is the Minister happy that, for future procurement policy, there is a clear enough delineation between the absolute sovereign capability and the deployment sovereign capability? Is that something that will be made clear in the expected White Paper? Given the ever-changing nature of conflict, the need for greater co-operation between nations, the drive to secure British business opportunities in this field and the economic challenges that we face, we need to ensure that Governments now and in the future have in place the best systems through which to deliver equipment that is designed to enable the front-line soldier to survive, operate and fight. We also need the best technology and back-up for our armed forces, so that they can deliver force wherever and whenever it is required. I look forward to the new White Paper, because there is a real opportunity to make a difference in this particular sphere of MOD procurement.

15:42

[The Parliamentary Under-Secretary of State for Defence (Peter Luff)]

I join the hon. Member for Plymouth, Moor View (Alison Seabeck) in welcoming you to the Chair, Mr Hood. I am grateful for the opportunity to serve under your excellent chairmanship. We have been on various defence expeditions together and have enjoyed them greatly, and it is good to be here today.

I agree with what the hon. Lady said about the paucity of defence debates, and of defence procurement debates in particular. I commented on that fact about two or three weeks ago in the Department, and since then there have been two Adjournment debates, so we sometimes get what we wish for. Let us hope that there are more such debates, because it is very good for hon. Members to discuss these issues.

I congratulate my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) on securing this important debate, which, according to my script, relates to a number of interesting and pertinent issues. I will go further in saying that there is a bewildering range of interesting and pertinent issues that cover everything from the price of beer in messes to the nuclear deterrent. The underlying philosophy behind defence procurement is underneath all that. I may not be able to do justice to all the remarks that have been made during this debate, but I will do my best.

Reflecting on what my hon. Friend the Member for Gosport (Caroline Dinenage) said in her contribution, I pay tribute to all those who serve in our armed forces. Their courage and bravery enable the Government to fulfil their first and primary duty of providing security for our country. That duty remains ever more challenging given the complex nature of the threats that we face in the 21st century. Although, procurement—or acquisition as it is called these days—is an important part of that, it is simply a means to the end of helping those brave men and women serve their country, as they are doing right now as we speak, in two theatres.

The hon. Member for Blaenau Gwent (Nick Smith) mentioned the strategic defence and security review, which sets out a coherent path to delivering adaptable and flexible armed forces. It is crucial that we put in place the right technologies, skills and industrial capability to deliver that outcome. I do not recognise his description of the lack of scrutiny of MOD contracts. If anything, we suffer from an excess of scrutiny. The Public Accounts Committee and the National Audit Office do an excellent job. We will soon have the next NAO report on major projects to consider, too.

[Nick Smith]

I made that remark because an NAO report mentioned the weakness of the Government’s feedback on that particular topic.

[Peter Luff]

It does not feel like that from this side of the fence. I look forward to the conclusions of the PAC on the forthcoming NAO report.

I accept that we need to be clear about how we plan to acquire and support our equipment for the armed forces, which is a point that my hon. Friend the Member for Gosport mentioned. The support costs are typically about two thirds of the total acquisition cost, with one third being the initial acquisition. We also need to be clear about how we invest in technology to sustain the skills of the defence industry, which is something that the hon. Member for Islington North (Jeremy Corbyn) raised. That was about the only thing that I agreed with in his speech.

The scale of what we spend is huge; the total spend for the whole range of procurements in the financial year 2009-10 was £20.6 billion. It is right that hon. Members should be concerned about how we spend that money. It is also right that we should say that much of that is spent very well, very wisely and very effectively by skilled and talented people. It is inevitable that we concentrate on the problems, because that is the nature of Parliament and holding the Government to account is what we do. None the less, I pay tribute to all those who do their jobs remarkably well, whether they are in the armed services, the civil service, the MOD Abbey Wood or the organisation Defence Equipment and Support. They all do a great job serving our nation.

It is true that we face some difficult decisions. I will not score any partisan points by talking about our economic inheritance, and especially the inheritance for Defence Ministers, from the previous Government. In a characteristically thoughtful and articulate speech, my hon. Friend the Member for New Forest East (Dr Lewis) spoke about the need for fixed points in programmes for decisions. As he said, such a measure is important given the long period over which such decisions are felt. As I am frequently reminded, the last captain of the aircraft carriers that we are currently building is probably not even born yet, which puts into context the length of time we have.

I think that I can give the hon. Member for Plymouth, Moor View the assurance that she sought about the 10-year equipment programme. As I understand it, we now have a groundbreaking deal with the Treasury, which enables us to plan with much greater certainty the future of defence equipment and support in general.

I also want to pick up something that my hon. Friend the Member for New Forest East said about the previous Secretary of State, my right hon. Friend the Member for North Somerset (Dr Fox). The MOD is now set on a path of real recovery, real hope and real confidence thanks to his excellent work. It now falls to the ministerial team to continue that work as a tribute to his sterling leadership as Secretary of State.

I will concentrate my remarks on the speech of my hon. Friend the Member for Sittingbourne and Sheppey, because I owe him that courtesy. If I cannot deal with everyone else’s comments, I apologise and will write to them. I will not comment on individual cases, but I reassure my hon. Friend that the support that we give to SMEs has a high priority in my portfolio. I pay tribute to Vector Aerospace, which is one of the few companies that have been named in this debate. It is an outstanding example of a medium-sized company.

We are making a few changes that should help the SMEs considerably. We are reducing the threshold at which the MOD advertises contract opportunities and have created the new defence suppliers forum, which meets regularly under my chairmanship, to discuss how SMEs can make a better contribution to defence and how we can help them achieve that. We are learning a lot from that group’s work. We are launching a new Government-wide contracts finder that offers a free-to-access one-stop shop of public sector opportunities over £10,000. There will be more in the White Paper, the publication of which I too look forward to very much indeed. I cannot say too much about its contents but it will include a definition of value for money—something that many Members have mentioned—and talk more about outsourcing. Although there is already extensive outsourcing in defence—more extensive that many people realise—I agree that there is scope for more. The White Paper will also address the framework agreement on technical services and through-life costing, which is essential.

I am happy to reassure the hon. Member for Plymouth, Moor View that our relationship with BIS is excellent and that there is nothing between us. I know that she would expect me to say that, but it happens to be true as well.

The White Paper will also define sovereignty requirements. I do not foresee any change in the definition that was published in the Green Paper last year.

I will now specifically address the remarks of my hon. Friend the Member for Sittingbourne and Sheppey. I note that he worked for GEC Marconi, where he apparently ran rings around our officials. That issue is why Bernard Gray is working at present on the new matériel strategy. One of the principal purposes of that strategy is to ensure that we have the skills in place in Defence Equipment and Support to make sure that these procurement decisions are taken well and that the contracts are well negotiated. My hon. Friend has made a powerful point, and that work is ongoing. I hope that submissions to Ministers will come before the end of the year. And watch this space, because I agree that it is important that we do procurement and acquisition well, which has not always been the case. In the spirit of consensus, I think that the Opposition’s document on acquisition is not at all bad. In my view, all it lacked was an apology, but that is another matter for another day.

Turning to Canada, I am pleased that my hon. Friend and other hon. Members obviously had such an interesting visit to the British Army training unit Suffield—BATUS—over the summer with the armed forces parliamentary scheme. That is a great scheme, which works very well under Sir Neil Thorne’s excellent leadership. I have benefited from it twice with the Royal Navy— I am a “postgraduate” according to the scheme’s definitions. Today has shown how valuable the scheme is in enabling Members to speak with authority about the armed services and to challenge Ministers on things that they find. It is what the scheme is there for, and we need to make even better use of it than we do already.

I slightly disagree with my hon. Friend’s emphasis and what I think was the spirit of his remarks when it comes to Canada. Led by my right hon. and hon. Friends in the Foreign and Commonwealth Office, Her Majesty’s Government are looking to develop even closer ties with Canada, as well as with other Commonwealth countries. A joint declaration of closer working between the UK and Canada has been drawn up by the FCO for signature by the two Prime Ministers, with a desire to seek

“greater interoperability between our defence forces and deepen co-operation on procurement and capabilities, to be enabled in part by a Memorandum of Understanding - MoU - on Defence Materiel Cooperation”,

and so on and so on and so on. The document was signed on 22 September by the two Prime Ministers, and it symbolises the very close relationship that we enjoy with the Canadians.

I will now talk about BATUS in more detail. As my hon. Friend the Member for Sittingbourne and Sheppey reminded us, it was set up in Canada in 1972. The location was chosen for its ability to provide the large-scale manoeuvre exercises that at the time—the middle of the cold war—were seen as being critical to meeting the UK’s operational and tactical requirements. BATUS provides 2,690 sq km of rolling, semi-arid prairie, delivering training on a scale that is unparalleled by anything available in the UK and enabling more than 11,000 troops to be trained each year. I want to place on record our real gratitude to the Canadians, who have been our utterly reliable allies in providing this world-class training location since 1972, which allows us to train in a way that is just not possible in the UK. The training at BATUS has been essential for the preparation of our troops for operational deployments, and we owe the Canadians a great debt for the part that they have played in enabling the training to happen.

[Alison Seabeck]

I want to ask the Minister a simple question: do BATUS and the recent new agreement give scope for any increased use of BATUS, as the German side starts to scale back?

[Peter Luff]

The hon. Lady not unexpectedly anticipates remarks that I will make in a few moments. I will turn to that issue then, if I may.

I will now address the concerns of my hon. Friend the Member for Sittingbourne and Sheppey about the costs involved with BATUS. The BATIC—British Armed Forces’ Training in Canada—agreement makes clear provision for the cost-sharing of goods and services relating to UK training in Canada, including the provision of all goods, services and facilities supplied in Canada or procured through Canadian sources. The costs are shared in accordance with agreed formulae, which my hon. Friend talked about in his speech, and those arrangements are scrutinised carefully. In addition, the memorandum of understanding is open-ended and may be renegotiated—that will give my hon. Friend some encouragement—at any time with the mutual consent of both parties.

In my view, the UK quite rightly pays the lion’s share of the costs of BATUS, on the basis that we use the facility significantly more than the Canadians. That is absolutely right and proper, and I have no problem with the cost-share involved in these arrangements. I agree that there is always scope to reduce costs, but other locations, as suggested by some hon. Members during this debate, are simply not equivalent and they would incur costs of their own, including significant set-up costs. So I am sure that the scope for savings is always there, but it may be more limited than my hon. Friend imagines.

[Gordon Henderson]

I accept what my hon. Friend says about the useful nature of BATUS. Nevertheless, does he not accept that it is wrong for the British taxpayer to have to pay such a high proportion of the costs without the MOD having a greater say in how those costs are accrued?

[Peter Luff]

I will look at some of the specific points that my hon. Friend made during his remarks, but I must say that I am broadly content with the overall structure of this arrangement, which delivers great value to British taxpayers and great opportunities for British armed forces, while strengthening and deepening our relationship with an important ally.

I must also say specifically that there has been no cancellation of helicopter training in BATUS. It is true that there are some different arrangements with contractors, including changes to some of the transport arrangements, but the training facilities involving helicopters have not been affected in any way. It is very important that that is understood.

[Gordon Henderson]

I am not sure whether we MPs were misled during our visit to BATUS, or whether the information has not yet filtered back to London, but I assure the Minister that there are two aspects of helicopter use during battleground operations: one is the use of helicopters to help injured people during the exercise, which is still being maintained and which involves BATUS using Canadian pilots; the other aspect, which has been cancelled, is the training that allows helicopters to be used to take troops into battle, as they would be used during a real battle operation. That second part of the training is the part that has been cancelled.

[Peter Luff]

I will clarify exactly what the arrangements are in a letter to my hon. Friend, so that there is no misunderstanding at all, but my information is that no aspect of our training arrangements has been affected by the new arrangements for helicopters.

Turning to the range control building at BATUS, it is true that there is an existing building, which provides the safety and co-ordination function required. It controls access and oversees safe practice on the range area, which is extremely important where live ammunition and weapons are concerned. Of course, it also controls movement around the prairie during live firing. In 2003, the Canadian Government approached the MOD with a number of infrastructure requirements that they felt needed to be addressed to enable the future use of the BATUS facility, including improvements to the range control building. I agree that the decision to upgrade that facility may not have been the UK’s first priority, but the facility was in very poor condition and met neither UK nor Canadian building regulations. A number of options were considered and the only viable option was to construct a new building. The contract for that was awarded in February this year, so I am afraid that the possibility of cancellation is no longer one that we can countenance.

I promised the hon. Member for Plymouth, Moor View that I would talk about future training in BATUS, which relates to what other colleagues have said. I will simply say that BATUS is 2,690 sq km compared with Salisbury plain’s 375 sq km, so BATUS is about eight or nine times the size of Salisbury plain. We must assess BATUS in the context of our overall training requirement, both in terms of the capacity and the nature of environments in which we need to train. We must also ensure that we end up with an overall solution that is the most cost-effective mix.

There is more work to be done before we can draw any conclusions, but what is certain for BATUS, any other training area and indeed for defence as a whole is that we need to drive out any unnecessary cost and to prioritise ruthlessly between what is “essential” as opposed to what is “highly desirable” or just “desirable”. I know that our Canadian partners will support us, so any work that looks at BATUS will be a truly collaborative effort. Not only does the memorandum of understanding require that collaboration, but Canada is one of our closest and most valued allies, and our interests are closely aligned. So, to answer the hon. Lady’s question, work is being done in this area.

I will briefly address the tank-lifting ramps at Tidworth. In view of the time that I have left to speak, I will not give my hon. Friend the Member for Sittingbourne and Sheppey all the remarks that I have here. It is true that the Royal Electrical and Mechanical Engineers could fix the ramps; it is also true that there are some issues around the contract; and I will look at that matter and write to him about it, because he has a point. I assure him that there has been absolutely no impact on operational capability. It is an important point, but he need not be concerned about the preparation of our armed forces or the health and safety of personnel using the site.

I now turn to the very important issue that my hon. Friend raised, which is drink—beer. The three-mess system is very much at the heart of the military ethos. Junior ranks’ messes are private sector enterprises, because all bar stocks are purchased by the contractor and the messes are wholly commercial ventures. In the officers’ messes and senior non-commissioned officers’ messes, bar stock is purchased by the mess and paid for through mess members’ subscriptions. Any profit is returned directly to the mess and lower prices can be set. I agree that there is a distinction there, but I am told that the three-mess system goes to the heart of military traditions and ethos. It is not a matter of contract—it is a matter of armed forces’ choice—and this politician is not going to interfere in the traditions of the armed services. However, I have been assured that military front-line commands keep this matter under constant review, so I understand my hon. Friend’s concern.

In the minute that I have left, I will address nuclear missile systems. I smiled when the hon. Member for Islington North got to his feet, because I could see the other “usual suspects” in Westminster Hall and I knew what would happen. Actually, I think that the hon. Gentleman’s concerns have largely been addressed. The long-lead items for HMS Victory were bought 15 years ahead of the construction of the ship, and the oak for the ship was laid down accordingly. Long-lead items are an established part of military procurement, and they always will be. I do not think we need to make any apology for that.

I heard what my hon. Friend the Member for New Forest East said, and he is right to keep us to our pledge. I assure him that the main gate decision being delayed until 2016 brings certain advantages, in that there will be a more mature design by then for us to approve. However, I hope he will hold us to the fire on an important capability that guarantees our freedom, as he so rightly reminded the Chamber. I also heard what the hon. Member for Barrow and Furness (John Woodcock) said. He and I have often talked about this issue, and I will correspond with him about some of the specific points that he made.

Finally, as for the aircraft carriers, it is true that we are getting a more capable and stable carrier variant than the previous Government decided to have, and it is also true that that has a cost. However, at least we are buying increased capability for an additional sum, because the previous Government delayed the carriers for a year, which cost £1.6 billion, and just got them a year late.

Rural Broadband (Cheshire East)

Wednesday 19th October 2011 Westminster Hall

16:00

[Fiona Bruce (Congleton) (Con)]

I will first speak about the need for rural broadband, particularly of the superfast variety, in Cheshire East. I will then go on to describe the benefits it will provide for that area and the wider region, to talk about the gaps in coverage and funding, and to ask for reassurances and a response from the Minister.

Cheshire East council considers that investment in superfast broadband is the single greatest action that can be taken to drive economic growth and improve the quality of life of residents. The area served by the council includes my constituency of Congleton and those of Macclesfield and of Crewe and Nantwich, and I am grateful to the Members who represent those constituencies for being here today, and also to my hon. Friend the Member for Warrington South (David Mowat), to whom I will refer later.

The local enterprise partnership has designated the roll-out of superfast broadband across the area, and across the wider area of Cheshire West and Warrington, as its top priority. The Cheshire and Warrington superfast broadband partnership has been established by three local authorities—Cheshire East, Cheshire West and Chester, and Warrington—which, working together, aim to achieve 100% superfast broadband coverage by 2015. To maximise the economic, social and environmental benefits for businesses and residents right across the region, that aspiration exceeds Broadband Delivery UK’s 90% target. Much of what I say today will be in support of the work of that partnership, and I shall highlight the needs of constituents in Cheshire East.

The economic growth that the area needs, particularly to provide jobs for the next generation, will largely be driven by small businesses, and in my constituency it will be almost entirely so, because almost all its 4,000 or so businesses are small. They need the high speeds that superfast broadband provides to be able to compete nationally and globally with their more urban competitors that already have the service. Superfast broadband will enable them to offer existing services at lower costs, expand their market reach, increase productivity, develop new products and provide new services. The area needs high-speed broadband not only to ensure that existing businesses develop but also to attract new ones, but the benefits would not be for just businesses. I heard recently of a business man who was considering relocating to the area but was deterred by his school-student son, who said that he did not want to move because of the poor broadband connections.

It is not just the young who want high broadband speeds; the elderly, and the public and voluntary sectors that serve them, recognise the transformational social impact that comprehensive superfast broadband can bring, through technology that supports health care delivery. This includes telehealth, which is the remote capture of information for clinical review, telecare, which is a range of alarms and sensors in the home to enable independent living, and medical consultations through video teleconsultation. In the Cheshire East area, with its considerably higher than average ageing population, the benefits would be substantial. An excellent example, which demonstrates how the council is keen to capitalise on the use of technology to benefit older people, is the recently developed DemenShare scheme. This is a web-based scheme through which dementia sufferers and their carers can access and share support and know-how.

The need for superfast broadband in rural areas is well documented, and Cheshire East has a higher level of rurality than one might realise.

[Karen Bradley (Staffordshire Moorlands) (Con)]

I am pleased that my hon. Friend has secured this important debate, and I welcome much of what I have heard about the introduction of high-speed broadband in Cheshire East. However, the benefit will be spread much wider than the residents of Cheshire because many of my constituents receive their broadband and their telephone line through the Congleton exchange.

[Fiona Bruce]

That is a point well made. Staffordshire Moorlands is a highly rural area, and it will benefit exponentially from the support.

Cheshire East is 64.4% rural. Rural areas can benefit disproportionately from investment in superfast broadband, and they are there to be benefited. The growth rate in VAT-registered businesses in rural areas is 2.7%, compared with a decline of 0.3% in England and Wales as a whole. Home-based businesses are becoming increasingly important in rural economies. An academic study by Mason and others reported that 50% of businesses in rural areas are home based, compared with 26% in urban areas. In a more local study—of Alsager, in my constituency—of which I was advised by the Alsager partnership, it was calculated that approximately one in 10 homes hosts some form of home-business working.

Bearing in mind the historically low levels of state-funded investment in recent years in many rural areas—including in my constituency and in Cheshire East as a whole—compared with their urban counterparts, there is significant potential to add economic value through superfast broadband investment. England’s rural areas host at least 27% of the country’s enterprises but only 9% of its business revenue. There is genuine potential, and superfast broadband is the platform for unleashing it in Cheshire East.

Turning to the benefits that superfast broadband coverage will provide, I have already touched upon those for the rural economy and for older people. In addition, exponential benefits can be gained in this region as a result of the already-skilled entrepreneurial population. The area is home to a high proportion of knowledge-based industries. In my constituency, there is already a significant presence of digital and creative industries, with a potential for great growth that could be magnified by the benefits of comprehensive superfast broadband coverage. Lying as it does just beyond the main commuter belts of Manchester and Liverpool, the high-level digital connectivity to new business provided from MediaCityUK in Salford has a particular potential to provide transformational impact, both in strengthening existing businesses and in promoting the area as a business location of regional significance. For example, a graphic designer who is able to download large files quickly could work efficiently mainly from home in Cheshire East, with occasional face-to-face meetings in MediaCityUK.

Turning to the educational benefits for our young people, educational attainment is higher than average in Cheshire East, and that is important because young people are likely to adopt superfast broadband and play an important role in using it to create and distribute content. In a constituency from which a disproportionate number of young people have migrated in recent decades to find work, it is particularly important for the intergenerational balance of our communities that we provide work for, and retain, young people within the area, and superfast broadband will be a key factor in ensuring that. In other words, the social and economic returns to the region—and, in turn, the support for the national economy—from investment in superfast broadband through a combination of private and Government funding will, I am assured, be disproportionately greater in the Cheshire and Warrington area than in many other regions.

[Guto Bebb (Aberconwy) (Con)]

I congratulate my hon. Friend on securing the debate. It is fair to say that some of the issues she has raised and the opportunities she has identified are similar across the border in north Wales. Does she agree that in rural areas an industry that would benefit greatly from increased access to fast broadband is the traditional agricultural community? In view of all the paperwork and forms that have to be completed online these days, that community needs superfast broadband.

[Fiona Bruce]

I agree, and I thank my hon. Friend for that intervention. When I speak of the rural economy, I speak on behalf of the farming community in my constituency.

What current gaps in coverage and funding do Cheshire East and the wider Cheshire and Warrington sub-region seek to cover through the superfast broadband initiative? At present, 67% of the population of Cheshire East is covered, a figure provided by Ofcom in August 2011. That figure will increase to 86% by next year through private investment, mainly from BT, leaving a 14% gap representing 50,932 Cheshire East residents. The funding allocation for the area from Broadband Delivery UK will bring the figure up to 90%, but there are complications with the date and procedure for releasing that funding. I will return to that issue later.

The Cheshire and Warrington superfast broadband partnership is also seeking funding from the European regional development fund, but ERDF allocations will not be finalised until March 2012. Meanwhile, the BDUK approval framework will not be concluded until May 2012, leaving a disconnect between the two sets of funding, which are effectively interdependent. I am grateful to the Minister for having met me and representatives from Cheshire East some weeks ago to discuss the issue. I will appreciate his comments today, after his agreement to look into it. Underwriting such funds could be a considerable stretch for local authorities in these constrained economic times.

[David Rutley (Macclesfield) (Con)]

I congratulate my hon. Friend on securing this important debate and recognise some of the concerns that she is discussing, particularly broadband access in communities such as Rainow—which I think she will mention in a minute—those in the peak district such as Wincle and Wildboarclough, and Flash in Staffordshire Moorlands. Is it not important for Government to signpost further and give local authorities such as Cheshire East greater support in securing access to those funds? It is not clear how to secure them quickly and in a co-ordinated way.

[Fiona Bruce]

I agree entirely that the picture is confused and detailed. As I will mention later, it is also split among Departments.

The total funding needed to achieve our aspiration of 100% broadband coverage across the Cheshire and Warrington area by 2015 is £40 million. Although we welcome the BDUK funding support, we recognise that under current plans, it will increase coverage only to 90%. The rural areas to which my colleagues have referred will be among that 10%.

[David Mowat (Warrington South) (Con)]

I, too, congratulate my hon. Friend on leading the charge in this debate and on this subject. During her remarks, I think I have heard the word “rural” two dozen times. Does she accept, however, that it is also an urban issue? In parts of Warrington, urban development has massively outstripped broadband infrastructure capability, and the need there is as great as in some of the rural areas mentioned by her and others.

[Fiona Bruce]

I agree entirely. Chapelford, which I know well from my time as a Warrington councillor, is one such area. One cause of difficulties is that although approximately 85% of telephone exchanges can be upgraded, about 15% of telephone cabinets are deemed by the private sector to be uneconomic or unfeasible to upgrade. BDUK financial support will not necessarily include those, either. Will the Minister comment on how they will be provided for, particularly in the areas to which we have referred?

In some areas, broadband coverage appears on paper to be provided, but the area contains white spots. Timbersbrook in my constituency is a good example—it has no adequate coverage at all—as is the Congleton business park. In the neighbouring constituency, the village of Rainow, only a couple of miles outside Macclesfield, is similarly affected. I heard a councillor for the area say only this week that it is faster to post a letter than to use the internet there.

[Mr Edward Timpson (Crewe and Nantwich) (Con)]

I join the chorus in congratulating my hon. Friend on securing this debate, which is timely given the efforts being made in Cheshire East to introduce superfast broadband across the county. Will she add to that list some areas in my constituency? Businesses have contacted me that are already operational and want to expand, but are frustrated by extremely poor telecommunications infrastructure. If we are to attract new businesses to our county as well as keeping existing ones, we must ensure that we can provide them with that secure future.

[Fiona Bruce]

Absolutely. If we in the county of Cheshire are to achieve our aspiration to compete with the northern cities, we need that infrastructure in place for our businesses.

Funding is available from the European regional development fund—£43 million has been allocated to the north-west region as a whole—and Cheshire and Warrington will bid for £15 million to add to the £3.24 million in BDUK funding and the £430,000 secured from the rural development agency. It is hoped that the balance of the required money will be matched by the private sector. However, the £15 million bid to the ERDF is aspirational. We believe that Cheshire and Warrington have a strong case for the additional economic and social benefits that investment from the fund would secure for the local, regional and national economies, and a strong case within the north-west for securing that sum.

I am aware that there are other bidders to the ERDF funds for the north-west allocation for superfast broadband. Any comments or suggestions from the Minister on how funding towards superfast broadband in Cheshire East and the wider region might be secured from alternative sources, should our £15 million bid not be successful, would be appreciated. Will he also confirm whether today’s announcement from Europe of a further £8 billion in superfast broadband funding is new money? If so, how can our aspiration, and those of other areas of the UK, to attract money from that funding provision be improved?

I seek further support from the Minister on streamlining the time frame for the BDUK and ERDF funds. Also, as my hon. Friend the Member for Macclesfield (David Rutley) mentioned, interdepartmental help could be provided to streamline the complex application process for local authorities.

[Graham Evans (Weaver Vale) (Con)]

I congratulate my hon. Friend on securing this debate. I am grateful to her for mentioning my home town of Rainow. I wonder whether she can do something about the mobile phone signal, which is also weak. Earlier, she mentioned young people leaving Cheshire, Congleton and so on. Young people need places to live, and there is a shortage of affordable homes for newly-weds and young people. Does she agree that any future planning permissions should include good broadband provision as a condition?

[Fiona Bruce]

I agree entirely. I thank my hon. Friend for his intervention; his constituency is part of the Cheshire and Warrington partnership area.

At present, various Departments are involved in funding streams. The Department for Culture, Media and Sport—we are grateful for the Minister’s presence here—is responsible for the BDUK allocations, while European funding for broadband lies within the remit of the Department for Communities and Local Government, and rural development funding is under the control of the Department for Environment, Food and Rural Affairs. In summary, Government support, which is much appreciated and clearly demonstrates the importance the Government place on this issue, is found across Departments. Any help the Minister can give to ensure that funding streams, time scales and application procedures are harmonised would be appreciated.

While I am discussing Government support, I commend the Government’s work on digital inclusion through the website Race Online 2012, which is dedicated to promoting digital inclusion among older people. I ask that similar thought be given to promoting small businesses’ use and maximisation of the benefits of technology, particularly superfast broadband, perhaps through a national business-focused campaign similar to Race Online 2012. It would encourage a groundswell of interest from businesses, which could in turn encourage much-needed additional private sector investment.

In conclusion, it is projected that a superfast broadband-enabled Cheshire and Warrington could add up to £197 million of growth annually to the region, create 5,500 jobs in the area over the next 10 years, and provide innumerable valuable social and economic benefits to the whole connected community.

16:20

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

I am grateful for the opportunity to serve under your chairmanship, Mr Hood. I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on securing this debate. She and I have already met executives from Cheshire East council to discuss the issue. I also know from her own personal history that, before entering the House, she did some extraordinary work in her local community, which she continues to represent forcefully now that she is in Parliament. There could not be a stronger champion than her for broadband in her part of the world. I also thank my hon. Friends the Members for Macclesfield (David Rutley), for Staffordshire Moorlands (Karen Bradley), for Crewe and Nantwich (Mr Timpson), for Aberconwy (Guto Bebb), for Warrington South (David Mowat) and for Weaver Vale (Graham Evans) for their interventions, which show the astonishing amount of engagement and interest from colleagues in this important issue.

I want to use the brief time remaining to outline the progress that we have made in bringing greater broadband access to rural areas, and to try to answer some of the specific points that my hon. Friend the Member for Congleton has made. It is the coalition Government’s aim to have the best superfast broadband network in Europe by the end of this Parliament, with 90% of households having access to superfast broadband, and universal broadband access of at least 2 megabits. It is an ambitious programme, but we have secured more than half a billion pounds to ensure that it happens.

As my hon. Friend has said, in her constituency some 14% of premises are unable to receive a good level of broadband, even after the private sector investment that is already taking place in the area. One in five people live in a rural community, and rural communities are home to more than 1 million businesses, so this is not just a “nice to have”—getting broadband out to rural areas is essential to our economic growth, as my hon. Friend has made clear. Reliable broadband also underpins the social fabric of our rural communities.

We published our plans for superfast broadband in detail at the end of last year. Through Broadband Delivery UK, the Government are working with local authorities and the devolved Administrations to ensure the delivery of broadband infrastructure to those areas that the market will not reach on its own. We have announced indicative funding allocations for every local authority area in England. As my hon. Friend has pointed out, £3.2 million has been set aside for Cheshire and Warrington. If that can be matched with local funding, we believe that that will make it possible to bring superfast broadband to 90% of properties, and standard broadband to all premises.

We are not dictating to each local authority how it should go about installing broadband in its area. It has been our view from the very beginning that local communities and, therefore, local authorities are best placed to determine their own priorities. Every local authority has therefore been asked to produce local broadband plans for each area that set out its approach, how it will deliver the economic benefits from broadband, and how it will ensure local match funding. Many local authorities throughout the country have made clear, detailed and imaginative proposals, and I am confident that this is the right approach.

As my hon. Friend has indicated, I was able to find out about the good progress being made on Cheshire’s plans when I met her and officials from Cheshire East council recently. In my view, the Cheshire local broadband plan is well on the way to being ready, and my officials in BDUK are working closely with council officials on it.

I realise that match funding, particularly money from the European regional development fund, to which my hon. Friend has referred, is key to Cheshire’s broadband future, as well as that of many other parts of the country. We have vigorously pursued the issue with colleagues in the Department for Business, Innovation and Skills and the Department for Communities and Local Government, to try to ensure that broadband can be funded from the north-west region’s programme, and likewise in other regions. We need to ensure that expenditure on broadband is consistent with the ERDF regulations. We recognise the critical nature of this funding to Cheshire and, indeed, others, and I want to make sure that we give as much scope as we can to allow funding for broadband projects.

I will briefly indicate the nature of the problem. Given that ERDF funds exist to promote economic growth and are, therefore, targeted at small and medium-sized enterprises, it has been a task to try to get some flexibility in the programmes. As my hon. Friend has made clear, a pipe going into a domestic home that houses a graphic designer will clearly promote economic growth, but, under current ERDF regulations, that would not be seen as funding to support economic growth, because it would not be going directly to business premises. We have, however, secured a revised definition of the final mile with DCLG, which should allow ERDF funds to be applied. The issue is with DCLG at the moment, and it is important that we work with it to communicate the revision to local offices of DCLG around the country. The issue was raised at the ministerial group on growth, and there was agreement that DCLG needs to address the issue. We continue to work with it on it.

We are also awaiting decisions from the cabinets of Cheshire councils to underwrite the ERDF funding, in lieu of a decision on ERDF to speed up so that we can speed up project approval of the local broadband plan. I would be happy to write in further detail to my hon. Friend on that progress, and to the Minister of State, Department for Communities and Local Government, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), to impress on him the need for clarity from my hon. Friend’s point of view.

The procurement process has been mentioned. There are 40 local broadband projects across the country. We have worked with BDUK to put a framework contract in place to speed up the procurement process and to help local authorities minimise the costs and time taken for procurement. We also have to be mindful of physical limitations. Clearly, we cannot network the entire country at once and it will be important, as I think my hon. Friend has indicated, to ensure that we progress projects in a timely manner, to ensure that the operators who win contracts have the resources to implement them.

We are making a number of other key policy interventions. We will publish a second consultation on the deployment of new overhead lines, which should allow the deployment of broadband much more cheaply. Next month, we will issue guidance on microtrenching and street works. I also impress on my hon. Friends how important it is for them to work with local councils to ensure that the planning process is as simple and as low-cost as possible for operators when they are laying new fibre.

Finally, we have commissioned a review of the electronic communication code and how it applies to wayleaves and access to private land. I recently wrote to the Country Land and Business Association and the National Farmers Union to ask them to speed up the voluntary agreement at which they are meant to arrive to ensure that wayleaves can be dealt with. We have also made significant progress in reducing the cost of access to BT’s ducts and poles. At the Conservative party conference, the Chancellor announced an additional £150 million for mobile coverage.

I hear what my hon. Friend says about responsibility being parcelled among a number of Departments, and I agree with the implications of her remarks, namely that the responsibility should be mine. I hope that she will lobby the Prime Minister on that later tonight.

S4C

Wednesday 19th October 2011 Westminster Hall

16:29

[Hywel Williams (Arfon) (PC)]

I am delighted to have the opportunity to discuss a pressing question in Wales. This debate about S4C—I usually pronounce it “Ess pedwar eck” and if I slip in to saying it like that, I hope hon. Members will forgive me as I will be speaking my first language—could scarcely be more timely.

I have an interest in this matter because part of the Welsh TV industry is located in my constituency. I sometimes tell people much to their surprise that the main industries in my area are agriculture, tourism and TV. Those areas hardly sit together, but there we are. I therefore have a particular interest in the matter. A properly resourced, managed and directed S4C is absolutely essential for the continuing renaissance of the Welsh language. It is vital to secure the plurality of the television provision in Wales because it is crucial for the Welsh television industry both in English and Welsh. Clearly, there is a relationship and an exchange of ideas and staff—they are co-dependent.

It is often left out of the debate that it is essential we have a properly managed, directed and resourced S4C for the future of the workers in the industry. Over the years—in fact, decades—workers in the television industry have lost their jobs and been moved. The unions have complained, studios have been closed and so on. Those people have a proper interest in the matter as well.

A moment ago, I said there had been a renaissance in the Welsh language. Welsh language television has played a significant part in that. Some years ago, I remember speaking at a conference on language planning in Dublin and explaining the utility of having children’s programmes, rock and roll music, drama and soap operas in Welsh and how that was adding to the growth of the language. A voice at the back said, “Are you seriously telling the conference that the renaissance in the Welsh language is all to do with having pop music in Welsh?” Well, that is clearly not the case. There has been movement from this Government, the previous Government and, significantly, the Government in Wales over the legislative status of the Welsh language. Significantly, the Welsh Language Act 1993, which was passed by the preceding Conservative Government, was a huge step forward and I am glad to pay tribute to all those people who were involved with that.

[Mr Mark Williams (Ceredigion) (LD)]

Does the hon. Gentleman not think that the growth of the language—the holistic approach operated by successive Assembly Governments—has necessitated the importance of a meaningful dialogue between Government here and colleagues in the national Assembly? Such an approach is necessary to promote the language agenda required to build the truly bilingual Wales that I know he aspires to.

[Mr Jim Hood (in the Chair)]

Order. Before the hon. Member for Arfon replies, I should point out that this is a half-hour debate and that the rules are different from those for one-and-a-half-hour debates. The hon. Gentleman has secured the debate and it is his decision whom he allows to intervene. Back Benchers are not permitted to speak at all without seeking the relevant permission. Those are the rules on the half-hour debate.

[Hywel Williams]

Thank you, Mr Hood. I have been approached by various hon. Members, and I will certainly allow at least one intervention from each of those people who have contacted me. This debate interests people from across the political and language spectrum in Wales, and I will take further interventions. However, I will also talk very quickly, as is my wont.

The hon. Gentleman makes an excellent point. A consensus has been built in Wales over many years, which I am afraid is in jeopardy because of this decision. That consensus has been built on proper dialogue between people who properly have an interest in the matter. That is not confined to any language group, any class or any political party. I say that as a member of Plaid Cymru.

There has been a lack of clarity about the Government’s intentions and actions in the matter, not least in relation to elected Members such as myself. If I ask the Minister some naive and ill-informed questions, the cause of that may lie not with me but with how the matter has been handled. As with a good deal of the Government’s programme, the impression has been given that it is being made up as they go along, with backtracking and amendment often the order of the day.

I would like to ask some questions, and the debate’s timing in relation to the decisions that are now being made means it is essential we have answers as a matter of urgency. First, I scarcely need to say that the threats to S4C’s future have caused huge concern in Wales and across Welsh society—both Welsh and English speaking—particularly among those who are concerned with the language. We have seen a stronger galvanising of the campaign for the Welsh language than there has been for many years—stronger even than with the campaign for new Welsh language legislation that took place some time ago.

[Glyn Davies (Montgomeryshire) (Con)]

Does the hon. Gentleman welcome yesterday’s statement by a trustee of the BBC that guaranteed funding up until 2017 is on offer? That issue has caused great concern to all of us.

[Hywel Williams]

Indeed, I do. However, I will come on to some questions about that later.

As I was saying, there has been a campaign the like of which we have not seen for some time. A small example of that is the e-mail bombardment of members of the Public Bodies Bill Committee. I served on that Committee with the hon. Gentleman and others. I received 1,200 messages and I answered them all, which offered some relief to the people who sent them. Other Committee members from England were amazed at the volume of correspondence, the like of which they had not seen before. I doubt, in fact, that the Government predicted that supporters of S4C would be so galvanised.

I am not sure if the Minister and his colleagues knew the background to their decision on S4C—although perhaps he will correct me later. The Conservatives would have been wise to consult those in their own party who took the initial decision to set up S4C in the first place. Former Conservative Ministers took an honourable and constructive role in that decision.

[Paul Flynn (Newport West) (Lab)]

I think I am one of the oldest lags in this debate, having written a document called “Television in Wales” in 1973, which became Labour party policy. It has been an extraordinary period, and the most extravagant hopes of those of us who were talking about the subject in 1973 have been more than realised. S4C has been an enormous success both artistically and as far as the language is concerned. I give the hon. Gentleman my full support and that of many members of my party.

[Hywel Williams]

I am very grateful for that point, which was very well made. As I said, the Conservatives and certainly the Liberal Democrats should have known better, with honourable exceptions. They should have read up on the history and on the conflict over the location of Welsh language programmes.

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

As someone who comes from the same town as Ian Jones, I am looking forward to great things from a Morristonian. Does the hon. Gentleman agree that Governments persist in thinking that S4C and the BBC are not in competition with each other when they are? The idea that they will share producers and directors is of great concern.

[Hywel Williams]

I share the hon. Lady’s concerns, which relate to some of the questions I will ask about the involvement of the BBC in S4C. I am sure that that can be managed with good will on all sides and a proper degree of independence and funding for S4C. I will return to that issue in a moment.

I was talking about the history, the conflict over the location of Welsh language programmes, the long campaign throughout the 1970s and the promise to set up the channel in the first place. That broken promise, the conflict, the arrests, the court cases and the jailings led many thousands of reasonable and normally law-abiding Welsh citizens to break the law and not pay their television licences. That consequence was a matter of regret to us all as parliamentarians. In fact, some people went even further in taking what was always non-violent direct action. The Government could have read up on the social conflict engendered and on Mrs Thatcher’s first U-turn. Clearly they did not and they repeated their mistakes.

I have some questions for the Minister on the decision itself in the first place. What consultations were there with the people in Wales before the decision was made on funding, and subsequently on the inclusion of S4C in the Public Bodies Bill and its relationship with the BBC? Is he satisfied that all the relevant people were able to put their point of view forward? Were they heard, or does he concede, as some, possibly wrongly, suspect, that these decisions were made for reasons of policy here—cutting back public spending and cutting back on the size of the state—that had little to do directly with broadcasting in Wales? Indeed, some people suggest that they were heedless of the consequences to Wales, the Welsh language or the broadcasting industry. I have to tell the Minister that that is how it appeared.

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

I congratulate the hon. Gentleman on securing the debate on this very important matter, about which many of my colleagues are concerned. Does he agree that the cuts facing S4C—even prior to the 2015 period, which has now become the 2017 period, for which we are supposed to be grateful—are actually greater and disproportionately greater than those facing the BBC, and that this is a total disgrace and shows the shambolic way the Government have treated S4C?

[Hywel Williams]

I agree that the cuts to S4C are probably going to be very deep indeed, and deeper than any reasonable broadcaster might be able to cope with given the long time scales of planning. I was just saying that that is how it appeared to people in Wales, but also to disinterested commentators. It is not just people who are taking particular sides who saw that. I am sure that that was not what the Government intended.

I would like to ask further questions beyond those about consultation, such as how the whole issue was handled. I will give a small example that will be familiar to those who were members of the Public Bodies Bill Committee. The agreement between the Department for Culture, Media and Sport and the BBC was made on 13 September. On the morning of 15 September, the Bill Committee met to discuss S4C. The debate continued from 1 pm onward. The Minister who replied to the debate, the hon. Member for Somerton and Frome (Mr Heath), referred to the BBC agreement in support of his argument. However, that agreement was not published until the afternoon of that day. It was too late to inform members of the Committee for that debate—although not the Report stage or on Third Reading—other than the Minister, of course, who had it in his hand. Was that completely coincidental? Why was the agreement not available on 13 or 14 September, or even on the morning of 15 September?

I raised this matter in a subsequent sitting of the Committee as a point of order, but to no avail. I have to tell the Minister here today that the impression given, rightly or wrongly, was of, at best, sharp practice. Consequently, he should realise that there are people in Wales who are now even more distrustful of the motives and action of the Government, and they will not be reassured by evasions or warm words. In fact, some might conclude that the wisest course of action for the Government would be to backtrack and restore at least part of the funding to S4C, to take S4C out of the Public Bodies Bill and, instead, consult and include any proposals in the forthcoming broadcasting Bill.

Given that they are unlikely to do that, and pressing on with my questions, I want to ask the Minister, and give him time to answer, rather than answer through his unfortunate friend, the hon. Member for Somerton and Frome who had to face the Public Bill Committee. He did his best to answer. I know he did his best to answer. [Interruption.] Perhaps I would not go as far as “brilliant”, but he is a very nice man.

On money, in the amended Public Bodies Bill, there is an undertaking for the Government to provide “sufficient” funding. This is mainly made up of a contribution by the BBC from the licence fee. I understand that that is supposed to be approximately £76 million in 2014-15. Will the Minister tell us what the contribution will be in 2015-16 and 2016-17, and the next two years? It is not clear to me, at least. I have heard two figures mentioned—£74 million, or is it £76 million? We are only talking about a couple of million, and we are used to talking in trillions in this place, but £2 million is a load of money. Will all the BBC money be devoted to production, as we have heard? Must it all be devoted to production? Must it all be spent in the independent sector? Are these not decisions that S4C should be taking independently, rather than being directed?

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

May I just say that I am very pleased that my hon. Friend has been able to secure this debate? I am pleased with the attendance of hon. Members from all parties today, showing the depth of feeling in Wales about this issue. Will he please ask the Minister, if I can ask a question through him, what is the latest on the editorial independence of S4C?

[Hywel Williams]

I certainly will put those questions to the Minister, given that I have been speaking now for some 14 minutes. First, though, there is the question of administration. I understand that administering the channel costs about £20 million. From where is that to be obtained? I understand that the DCMS is to provide £7 million and that £3 million can be obtained from the channel’s commercial activities. What about the other £10 million? Where will that come from?

On management and governance, the point raised by my right hon. Friend is pertinent. We come to the matter of S4C’s independence. Again, the Government have assured us that S4C’s independence will be guaranteed. Will the BBC be appointing people on the operational side, which is my understanding? If that is so, how many people and at what level? What will be their function? Will they be there to look after the BBC’s interests? How can they avoid literally taking the BBC’s side? For example, if S4C decides to bid for a particular sports event that is in competition with the BBC—the Government are in favour of competition, are they not?—where will the loyalties of those BBC appointees lie? Will it be with the channel, or will it be with the BBC? Will they have a veto or a super majority, whatever that might be?

[Guto Bebb (Aberconwy) (Con)]

I congratulate the hon. Gentleman on securing the debate. On the issue of competition with the BBC, I find that a very odd comment in view of the fact that the most popular programmes provided by S4C are actually provided for the channel by the BBC. Secondly, in terms of the independence of the channel and the concern that the hon. Gentleman raises in terms of BBC involvement, is it not the case that back in 1982 the S4C authority members were a minority on the board of S4C? Indeed, there were representatives from the independent television production sector. Yet S4C, launched in 1982, became a great success.

[Hywel Williams]

Indeed. The hon. Gentleman makes my point for me. It is possible to do this. It is possible to do this without the uncertainty that the Government have caused by how they have handled this issue. We are uncertain and I look to the Minister and the hon. Gentleman to reassure us that the highly successful co-operation that existed before is obtained again in the future. I am glad that he made that point.

As I was saying about the BBC appointees, will they have a veto? What about reporting back to the BBC? Will it be a matter of providing quarterly information reports? That is one thing, I suppose, but day-to-day reporting about individual decisions is quite another, so where does it lie?

In respect of the board, I take it that they will all be DCMS appointees. Perhaps the Minister will confirm that. What will be the BBC representation? What will the split be between the BBC representation and others? Will the Minister confirm that the board members loyalty will be to S4C and not to any body that appointed them? Is it not usually the case with such bodies that the first loyalty is to the body itself, whatever the sponsoring organisation? Surely, in the interests of securing the future, their loyalty must be to the channel.

Huw Jones, I think yesterday, said that S4C

“will be an effective partner for the BBC—managing itself but being accountable to the BBC Trust for its use of licence money and to the Government for the other public money”.

That is a very positive statement, and I hope that all hon. Members will take it as such. However, for this to be the case, all of the questions I put, and possibly more, must be answered before the people of Wales have any confidence that the Government are committed to ensuring the best possible television service for the Welsh-speaking audience and the future of S4C.

16:49

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

It is a great pleasure to appear once more under your chairmanship, Mr Hood. I am delighted to be taking part in this debate. It gives me a chance to outline the secure, new and positive phase in the distinguished history of S4C. Unlike the hon. Member for Arfon (Hywel Williams), who, incidentally, I congratulate wholeheartedly and warmly on securing this important debate, I do not want to look to the past; I want to look to the future. For that reason, I welcome the appointment of the new chair, as well as the exciting announcement yesterday that Ian Jones is to be the new chief executive of S4C.

I want to dwell on the latter appointment, because it is indicative of the positive future of S4C. Mr Jones started his career at S4C in 1982 but went on to have an extraordinarily distinguished career in television broadcasting in the UK and in the United States. His current position is managing director of A&E Television Networks, which is one of the most successful cable companies in America and is based in New York. My hunch—I am sure that the hon. Gentleman will correct me, if I am wrong—is that a man of the calibre of Ian Jones would not leave such a job to join a sinking ship. He leaves such a job to take on an exciting new challenge to rejuvenate a channel that sits at the heart of Welsh life and culture and to take it on to new challenges. The speech that Huw Jones gave yesterday to the Institute of Welsh Affairs was also given in such a climate. He talked about how S4C has to grapple with the challenges, but also about the huge opportunities provided by new technology.

I know my colleagues in Wales well enough to know that most of those taking part in the debate today know Huw Jones and Ian Jones well, and I suspect that they know that both those men are unlikely to be lapdogs of the BBC. Both will be S4C men, who will ensure that the channel has a successful future. My job as the Minister is to do all that I can to help that to happen, so I am grateful that the hon. Member for Arfon indicated that he is prepared to be corrected on any impression or misrepresentation that the Government do not have a strategy for S4C; of course we have such a strategy. I am also grateful to him and his colleagues for reminding the House that S4C is a great achievement of a previous Conservative Government.

I am grateful, too, for the important interventions from the distinguished and hon. Member for Newport West (Paul Flynn), who has been involved in this debate for 40 years—let us put it like that—from the hon. Members for Swansea East (Mrs James) and for Clwyd South (Susan Elan Jones) and from my hon. Friend the Member for Montgomeryshire (Glyn Davies).

[Paul Flynn]

Will the Minister give way?

[Mr Vaizey]

Of course. To someone so distinguished, there can be no other answer.

[Paul Flynn]

It is extremely generous of the Minister to pay tribute to my contribution to the formation of S4C but I am afraid it was a minor one. At the time, I resigned from the office of chairman of the Broadcasting Council for Wales, but that had no significant effect. However, a threat from another, much more prominent politician to starve to death had a galvanic effect on the Conservative Government.

[Mr Vaizey]

I would not say that I remember the occasion well, but I know people who were involved in the debate, and they have told me about the important events which resulted in the creation of S4C.

The positive future of S4C was strengthened by our amendment to the Public Bodies Bill last month. The Bill will therefore ensure that S4C is funded at a level sufficient to meet its statutory remit. I am grateful to have the opportunity to reiterate the Government’s commitment to a strong and sustainable future for S4C and for Welsh-language programming. We fully recognise the importance of the channel and its contribution to the cultural and economic life of Wales. As well as sustaining and promoting the Welsh language, the channel provides a focal point for the celebration of Welsh national events. On that basis, the Government secured the future of S4C in the comprehensive spending review.

We have heard a lot of talk about the amount of money available to S4C. The hon. Member for Arfon said that £2 million is “a load of money”, so S4C has 45 loads of money—it is funded to the tune of £90 million —and by 2015 that funding will have reduced to only £83 million. S4C gets £20 million-worth of BBC programming for free, and it has substantial reserves. I do not need to reiterate the economic climate in which we are all operating, and most sensible people agree that £83 million is significant funding given the tough economic climate.

A partnership with the BBC is the best way to secure S4C’s long-term sustainable future. My officials are working with S4C and the BBC Trust on the governance structure of the new partnership. Discussions have been productive and the agreement will, I am sure, soon be finalised. The amended BBC agreement laid before Parliament on 15 September confirms that the governance arrangements must not be made until discussions between S4C, the BBC and the Secretary of State have been concluded. Also, the hon. Gentleman can be reassured that we are committed to consulting on those governance arrangements with interested parties, including the Welsh Government and the people of Wales. We will consult all those who are interested, and we look forward to hearing his views.

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

The Select Committee on Welsh Affairs has produced a detailed report, which the hon. Member for Aberconwy (Guto Bebb) agreed to. A key recommendation was that there should be no BBC staff on the day-to-day management board of S4C. How much pressure is the Minister putting on the negotiations to ensure that?

[Mr Vaizey]

I would not use “pressure” in that context. The partnership is one of people who are interested in the future of S4C, and includes S4C, the BBC and my officials. I am sure that we will announce our conclusions shortly and then consult interested parties. I also take the opportunity to say how much I enjoyed my appearance before the Welsh Affairs Committee discussing the future of S4C.

To go to the heart of the issue, I assure the hon. Member for Arfon that S4C will remain an independent service. It will retain its brand identity and its editorial independence. Furthermore, the crucial role that S4C plays in sustaining the Welsh independent television sector will be maintained, with 100% of S4C’s commissioning budget being spent in the independent sector, as now. That is a crucial commitment which will ensure that S4C continues to support the Welsh creative industries and the wider creative community in Wales. In Wales, there is a clear-sighted strategy to support the many successful creative industries, which I wholeheartedly support.

[Guto Bebb]

On S4C supporting the creative industries in Wales, does the Minister have any concerns about the administration budget of S4C perhaps being cut by 10%, but the programming budget appearing to be cut by 25% due to decisions taken by S4C?

[Mr Vaizey]

I hear what my hon. Friend says, but it is incumbent on me to say that, given that S4C will be independent of the BBC, it is certainly not for a Minister to tell the channel how to spend its money. Given the accountability and transparency agenda, S4C must have heard his comments and will no doubt be writing to him to explain that position, as well as to the hon. Member for Arfon, who might want to make similar points.

I have already mentioned the Public Bodies Bill and how the new clause will for the first time set in statute a requirement that S4C receives sufficient funding. The hon. Member for Arfon expressed concerns about funding continuing beyond 2015. As my hon. Friend the Member for Montgomeryshire indicated in his intervention, there is effectively an agreement in principle that that funding will continue until 2017, although it still needs to be formally agreed—in effect, that offer is now on the table.

To step back from the details mentioned by the hon. Member for Arfon—if I have missed any, I will write to him—I want to add that S4C will remain independent. S4C staff will be appointed not by the BBC but by the S4C board and executive. S4C has significant funding and a secure future independent of but in partnership with the BBC. It has a great chairman and now a superb new chief executive. The future is bright for S4C. I pay tribute not only to my hon. Friends but to all hon. Members who have participated over the past few months in discussions about the future of S4C.

Question put and agreed to.

17:00

Sitting adjourned.

Written Ministerial Statements

Wednesday 19th October 2011 Written Statements

Wednesday 19 October 2011

Planning Reform

Wednesday 19th October 2011 Written Statements

[The Minister of State, Department for Communities and Local Government (Greg Clark)]

I wish to update hon. Members on progress towards the reform of national planning policy.

The Localism Bill, which has completed its report stage in the House of Lords, makes a significant transfer of power over planning matters from central and regional government to local communities. To enable these powers to be used, national planning policy must be made more accessible; in the course of the last decade, national policy has grown to over 1,000 pages in volume—a significant barrier to the engagement of local residents and their community representatives.

Our reforms are intended to simplify the system, strengthen local participation and to help achieve sustainable development. The planning system has always enshrined the principle that the economic, environmental and social dimensions of sustainable development should be considered in a balanced way—and it will continue to do so.

In December 2010, my Department published a call for evidence and in July 2011 issued a draft new national planning policy framework. The 12-week consultation period on the draft framework closed on 17 October. We will now carefully consider all of the submissions that have been made.

I have asked the Communities and Local Government Select Committee to consider and make suggestions on the draft. We will also take fully into account the comments of hon. Members in a debate to be held in the House of Commons in Government time on 20 October, and in the House of Lords on 27 October, as well as the comments made in the debates during the proceedings on the Localism Bill.

Having fully considered the suggestions made, the Government will then publish the revised text taking into account representations that have been made and a summary of responses to the consultation. The Government are committed to the publication of this final version of the framework by 31 March 2012, but intend to do so well ahead of that time.

The framework aims to strengthen local decision making and reinforce the importance of local plans. We will therefore work closely with local authorities to ensure that appropriate transitional arrangements are in place before the new framework comes into force.

Fuel Poverty Interim Report

Wednesday 19th October 2011 Written Statements

[The Secretary of State for Energy and Climate Change (Chris Huhne)]

In March 2011, I announced the appointment of Professor John Hills of the London School of Economics to lead an independent review of the fuel poverty definition and target. Professor Hills was asked to look at fuel poverty from first principles: considering the nature of the issues at the core of fuel poverty, including the extent to which fuel poverty is distinct from poverty, what the effects of fuel poverty are, and how best to measure it.

Since the review was launched. Professor Hills and his team have gathered, working closely with stakeholders, and analysed evidence, and I am pleased to draw it to the attention of both Houses that he will be publishing the independent review of fuel poverty interim report at 12.00 pm today on the Hills review website¹.

I am grateful for all the work Professor Hills and his team has done to put together this substantive interim report. My officials and I will review the report carefully: and, alongside other stakeholders, we will be discussing the questions raised with Professor Hills in greater detail over the coming months.

I would encourage my parliamentary colleagues and stakeholders to do the same, as Professor Hills and his team further develop their findings towards the publication of the final report, which I look forward to receiving in early 2012.

¹ http://www.decc.gov.uk/en/content/cms/funding/fuel_ poverty/hills_review/hills_review.aspx

Cost Protection for Litigants (Environmental Judicial Review Cases)

Wednesday 19th October 2011 Written Statements

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

I am publishing the consultation paper “Cost Protection for Litigants in Environmental Judicial Review Cases” on 19 October 2011.

This is a formal consultation exercise undertaken by the Ministry of Justice to seek views on the Government’s proposals to codify the current case law on protective costs orders (PCOs) in relation to judicial review claims which fall under the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (the “Aarhus Convention”), including those covered by the Public Participation Directive (Directive 2003/35/EC) (the “PPD”). PCOs are orders developed by the courts which are designed to set a predetermined limit on a claimant’s exposure to a defendant’s costs.

The courts currently retain discretion on both the question of whether a PCO should be granted and the level at which it should be set. The Government have accepted for some time that it would be in the interests of applicants in environmental judicial review cases to provide greater clarity about the level of costs through a codification of the rules on PCOs which sets out the circumstances in which a PCO will be granted and the level at which it will be made.

The proposals in this consultation are designed to establish the basic principles for rules setting out the nature and content of a PCO in a “standard case” and how far, and in what circumstances, it will be possible to depart from the “standard case”.

To keep the overall level of costs down it is also proposed that where a cap on the claimants’ exposure is granted there should also be a linked cap on the liability of the defendant for the claimants’ costs (known as a “cross-cap”).

Copies of the consultation paper are available online, at: www.justice.gov.uk.

The consultation period will be from 19 October 2011 until 18 January 2012 and I will make a further statement regarding the response shortly after the consultation period ends.

Cabinet Secretary's Report

Wednesday 19th October 2011 Written Statements

[The Prime Minister (Mr David Cameron)]

I am placing in the Libraries of both Houses the report by the Cabinet Secretary, Sir Gus O’Donnell, into allegations against my right hon. Friend the Member for North Somerset (Dr Fox).

My right hon. Friend resigned last week as Defence Secretary accepting that he had mistakenly allowed the distinction between personal interest and Government activities to become blurred.

I accepted my right hon. Friend’s resignation from Government and his reasons for resigning while making clear that as Defence Secretary he had implemented fundamental changes that will help to ensure that our armed forces are fully equipped to meet the challenges of the modern era. The report by the Cabinet Secretary confirms that my right hon. Friend did breach the ministerial code.

This Government have already introduced changes that significantly increase Government transparency including publishing lists of ministerial meetings with external organisations and all procurement over £500. The permanent secretary at the Ministry of Defence has already accepted that there should have been much tighter procedures within the Department and is taking steps to strengthen them to ensure that the ministerial code is properly adhered to.

The Cabinet Secretary has recommended further strengthening of procedures across Government. I have accepted these recommendations and the Cabinet Secretary will write to permanent secretaries setting this out.